Goldman Sachs has pledged to bail out WeWork by introducing a line of credit amounting to a staggering $1.75 billion. The credit line, news of which first came in via Bloomberg, will apparently free up money for the struggling office-sharing company that it had kept aside from a previous credit line.
The deal also marks the first step towards the promised $5 billion debt investment by the Softbank group. The move will free up approximately $800 million for WeWork to fulfill standing agreements. Softbank will be named as the borrower, with WeWork being named the co-borrower.
“We are pleased that WeWork and SoftBank Group Corp. have entered into a commitment letter with Goldman Sachs,” Erin Clark, a spokeswoman for WeWork, said in an emailed statement. WeWork won’t be required to post any cash collateral under the new deal, she said. “WeWork and Softbank are co-obligors on a senior-secured and unsecured basis, respectively.”
Representatives of all three firms, Goldman, SoftBank and WeWork have declined to comment on the matter.
The investment is supposed to replace an existing $1.1 billion and free up cash that has been used as collateral. WeWork had about $575 million in restricted cash by June 2019 being used to fulfill lines of credits. Since then, the number has only gone up.
Goldman has announced that the facility will become available to WeWork next month. However, the bank is still looking for other investors to chip in the investment.