Fitch slashes WeWork

Fitch Ratings said it downgraded WeWork Cos. LLC and WeWork Inc.'s long-term issuer default ratings to C from CCC. The agency also cut WeWork's senior unsecured notes to C/RR6 from CC/RR6.

The downgrades follow WeWork reporting it entered a transaction support agreement with bondholders representing about 62% of the company’s public bonds and its largest shareholder SoftBank Group Corp.

The pact, subject to shareholder approval, will shave about $1.5 billion of debt by converting about $1 billion of the notes held by Softbank to equity and the discounted exchange of unsecured notes into convertible notes. Fitch said it considers the agreement a distressed debt exchange.

“Pro forma for the transaction support agreement WeWork will have approximately $445 million of cash on its balance sheet and will have access to a new $475 million delayed draw term loan consisting of $175 million of new capital commitments and $300 million in rolled capital commitments. Fitch expects this liquidity to be sufficient for the next 12 months assuming that WeWork continues its trajectory of improving operating performance,” the agency said in a press release.

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