Sep 17, 2019

Why WeWork waits

Dan Primack, author of Pro Rata

Illustration: Sarah Grillo/Axios

WeWork yesterday slammed the brakes on its beleaguered IPO, with sources saying that the process should resume in mid-to-late October.

  • Who's at fault? The "other guy," per multiple other guys. But everyone agrees that the calendar played a key role.

Between the lines: As of this past weekend, it was still all systems go. WeWork and SoftBank were hammering out final structure and size details of SoftBank's cornerstone IPO commitment, and bankers were booking ballrooms. The idea was to launch the roadshow either Monday or Tuesday, with a pricing next Thursday night into first trades on Friday.

That's when things get murky. I've heard that the SoftBank deal couldn't quite be finalized in time, although I've also heard it's all sewn up. I've heard that some big investors kept pushing for additional governance changes, but I've also heard that the book is effectively covered.

  • The IPO needed to launch by yesterday in order to price in September, as this isn't the sort of company that can afford a truncated roadshow.
  • Rosh Hashanah begins a week from this Sunday night, and Yom Kippur is the following week. It's generally considered disrespectful to roadshow during the Jewish high holidays, and it would have been a particular no-go for Israel-born CEO Adam Neumann.
  • That brings us to the week of Oct. 16.
  • WeWork could launch then, but only if it can do so with at least preliminary Q3 numbers. Company finance execs today have been charged with determining when those figures can be compiled and reported.
  • WeWork isn't saying much publicly, except putting out a statement last night that it expects to complete the IPO by year-end. Remember, the corresponding credit facility commitments expire if the public offering pushes past 2019.

The bottom line: This is obviously a negative event, with WeWork bonds tumbling deep on the news. And it provides more schadenfreude for those in Silicon Valley who want to see SoftBank suffer. At the same time, however, so far it's more of a procedural fail than a material one.

Go deeper: The battle over WeWork's IPO

Go deeper

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