WeWork Bondholders Spooked by Debt Pile-On in Softbank Rescue
- Softbank deal won’t allow holders a change of control payout
- Debt plunged Wednesday morning to match record low close
This article is for subscribers only.
Bondholders aren’t cheering SoftBank Group Corp.’s $9.5 billion WeWork rescue, even though the new financing will help keep alive the company that was on track to run out of money as soon as next month.
The problems? The package includes $1.1 billion of secured bonds which rank ahead in line for repayment compared to WeWork’s existing debt. It adds another $2.2 billion of unsecured debt which increases credit risk. And the takeover, which hands 80% of the company to the Japanese conglomerate, won’t be considered a “change of control” that can allow bondholders to sell back their holdings for a premium.