March 26, 2020 / 2:33 PM / 12 days ago

CORRECTED-UPDATE 1-WeWork has enough cash to meet coronavirus challenges -letter

(Corrects to say bond yield almost tripled, not fallen, in last month in penultimate paragraph)

By Herbert Lash

NEW YORK, March 26 (Reuters) - WeWork told investors on Thursday the $4.4 billion in cash and cash commitments it had on hand at year-end 2019 is sufficient to execute its five-year plan, including managing the challenges posed by the recession-bearing coronavirus crisis.

WeWork, whose losses more than doubled to $1.25 billion as of the third quarter of 2019, told bond investors in a letter reviewed by Reuters that it was in a sound financial position to execute its previously announced plan through 2024.

WeWork said it had $1.3 billion in cash at year end, $800 million of cash that became unrestricted when it closed on a new letter of credit facility in February and $2.2 billion senior unsecured debt funding from major shareholder SoftBank Group.

WeWork said there was another $100 million of remaining capital commitments from SoftBank, according to the letter. WeWork did not indicate the size of its losses by year-end.

The company has said it will release full-year 2019 results to bond holders after markets close at 4 p.m. on Thursday.

WeWork faces a tough business environment as its costs rise due to the coronavirus outbreak. The yield on its junk bonds in the past month has almost tripled as markets plunged on pandemic-induced recession fears, a slowdown that is likely to further erode WeWork revenues and increase its costs.

S&P Global’s credit rating unit on Monday cut WeWork’s 7.875% bond further into junk territory and put the company on watch for possibly another downgrade over concerns about the commitment to WeWork of major shareholder SoftBank Group . (Reporting by Herbert Lash Editing by Chizu Nomiyama and David Gregorio)

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