- Fitch Scores downgraded WeWork’s status even further into scrap territory late on Tuesday, saying that it had “uncertain liquidity profile” after stopping working to raise the $3 billion in money needed to go public.
- On Monday, WeWork revealed it was pulling the plug on its long-awaited IPO.
- Fitch said, “in the lack of an IPO and associated senior protected financial obligation raise, WeWork does not have adequate moneying to satisfy its development plan.”
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Fitch Scores downgraded WeWork’s credit rating even more into junk area, stating that the business did not have “enough financing to satisfy its development plan,” after the company pulled its IPO earlier this week.
In a declaration late on Tuesday, the score firm dropped WeWork from a currently scrap B status, to a CCC , a downgrade of two notches. in addition to putting its future outlook as negative.
The ranking firm added that it expects “WeWork will dramatically downsize its development aspirations,” that led the business to its “precarious liquidity position.”.
” The downgrade and outlook show WeWork’s unpredictable liquidity profile in the absence of its earlier plan to raise at least $3 billion in an IPO plus $4 billion in senior secured debt together with $2 billion in letter of credit capacity,” Fitch said in the declaration.
Fitch expects that WeWork will considerably downsize its development aspirations and associated overhead expense that resulted in its precarious liquidity position.
Fitch had a harsh assessment:
” While Fitch is not seeing evidence of this at present, Fitch sees the potential for WeWork’s service and market position to be harmed by customers that hesitate to sign subscription agreements, particularly business. This remains in addition to the business’s potential retrenchment from the leasing market, especially in entrance cities where it has ended up being one of the largest private renters, decreasing the relative attractiveness of a WeWork lease but also potentially lowering property owner incentive to purchase capital improvements going forward.”.
Fitch did include that it might revisit the ranking if WeWork “has the ability to work out a securely devoted financing strategy and demonstrate successful execution of any turn-around plan.”