WeWork signs forbearance for 2027 notes, skips payment on 2025 notes

By William Gullotti

Buffalo, N.Y., Oct. 31 – WeWork Inc. entered into a seven-day forbearance agreement for the interest payments it skipped on Oct. 2 for multiple series of PIK notes due 2027 issued by WeWork Cos. LLC and WW Co-Obligor Inc. and further decided to withhold the Nov. 1 interest payment for its 7 7/8% senior notes due 2025 on Oct. 30, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The agreement was reached prior to the expiration of the grace period that gave WeWork 30 days to make the skipped payments without triggering an event of default.

As previously reported, the affected notes from the first set of skipped payments involve:

• $1,012,500,000 outstanding 15% first-lien senior secured PIK notes due 2027 ($525 million in series I, $306.25 million in series II, $181.25 million in series III);

• $687,212,250 outstanding 11% second-lien senior secured PIK notes due 2027;

• $187.5 million outstanding 11% second-lien exchangeable senior secured PIK notes due 2027; and

• $269,625,000 outstanding 12% third-lien exchangeable senior secured PIK notes due 2027.

With the exception of the 15% series I first-lien notes and the 11% second-lien notes, 100% of the above noteholders entered into the forbearance agreement. 95.6% of the first-lien noteholders and 93.9% of the second-lien noteholders entered the agreement, under which the holders agreed to forbear from exercising any of their rights and remedies, including with respect to an acceleration, under the applicable indentures governing the above series or applicable law during the forbearance period as a result of WeWork’s failure to make the interest payments on Oct. 2.

The forbearance agreement terminates at 11:59 p.m. ET on Nov. 6, unless extended or terminated earlier in the event of non-compliance with certain representations, covenants and other requirements.

In the same filing, WeWork reported electing to withhold the approximately $6.4 million cash interest payment, scheduled for Nov. 1, for its 7 7/8% senior notes due 2025. Although the company reported having the liquidity to make the interest payment, it has instead entered the 30-day grace period before this latest non-payment constitutes an event of default.

WeWork is a New York-based provider of shared workspaces and related business services.

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