WeWork bond drops, spread hits a record on report of delayed share tender

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© Reuters. FILE PHOTO: WeWork offices in San Francisco© Reuters. FILE PHOTO: WeWork offices in San Francisco

(Reuters) – WeWork’s junk bond price dropped and its risk premium shot to a record high on Thursday following a report that its main backer had yet to deliver on a plan to buy $3 billion of stock from existing shareholders.

The Real Deal, citing anonymous sources, said Japan’s Softbank Corp has yet to commence the tender offer planned as part of a rescue package for the co-working office space startup.

The tender was supposed to have begun five business days after an initial payment of $1.5 billion to WeWork was in place, Real Deal said, citing a letter from Softbank to WeWork investors. The payment was made Oct. 30, but sources told the publication that no tender offer has been extended, it said https://therealdeal.com/2019/11/14/softbanks-3b-payout-to-weworks-investors-is-delayed.

WeWork’s 7.875% note due in May 2025 fell 2.25 cents on the dollar to a bid of 74 cents, according to Refinitiv data. The bond now yields a record 15.02% and its spread, a measure of the premium investors demand for the added risk of holding WeWork’s bond rather than safer securities like U.S. Treasury debt, widened to a record 13.40 percentage points.

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