After JPMorgan Chase & Co. reports its earnings this week, many will be eyeing what the bank plans do with WeWork after the coworking firm’s disastrous path to an IPO.
Currently, WeWork is seeking more cash flow, or risks running out of money as soon as next month. Right now, the firm is weighing whether it should opt for a $5 billion financing package led by JPMorgan or selling a controlling stake to its biggest backer SoftBank. Reports say that the company prefers the former.
The deal would include at least $2 billion with a 15% coupon and would be structured as payment-in-kind notes, allowing the firm to pay interest through the issuance of additional bonds. Essentially, this gives WeWork a chance to push back repayments.
JPMorgan’s CEO Jamie Dimon has made the extra effort to stay by WeWork’s side, investing billions into the coworking firm, as well as winning other big IPO deals by pitching the bank as a start-to-finish operation.
Still, WeWork’s losses could directly impact the bank as has been proven by others already. For example, potential losses from WeWork have led analysts to cut earnings estimates for Goldman Sachs, who is also expected to report its earnings this week.
Despite the potential negative effect WeWork could have on JPMorgan, it is not likely to be significant enough to impact the megabank. It may just be the hero needed to save the coworking company from imminent doom.
