WeWork loans leave Leumi, Hapoalim, Phoenix exposed

Adam Neumann  / Photo: Reuters

The Israeli banks and insurance company have extended credit lines totaling about $100 million to the tech real estate company.

Amidst the difficulties that shared workspace real estate company WeWork is facing in its planned Wall Street IPO at a controversial valuation, details have emerged about the exposure to its debt of three Israeli institutions. Bank Leumi (TASE: LUMI), Bank Hapoalim (TASE: POLI) and The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) are exposed to debt of about $90-100 million. Leumi and Hapoalim participated in a consortium of international banks that extended credit lines totaling $500 million to the New York-based company, which was founded by Israeli CEO Adam Neumann, his wife Chief Brand and Impact Officer Rebekah Neumann and Miguel and Chief Culture Officer Miguel McKelvey.

Hapoalim extended credit of about $20-25 million and Leumi Between $40-50 million. Israeli insurance company Phoenix has made about $30 million in credit available to WeWork.

WeWork has been successful in branding itself as a startup in high tech real estate and has consequently been able to enjoy greater tolerance regarding its loss making financial results than a regular real estate company as well as massive demand and impressive valuations during equity financing rounds. Over the years, the company has also raised debt and been extended credit lines, although it is unclear how much has been taken. WeWork has substantial cash reserves.

In recent months, WeWork has been planning the largest IPO of 2019 but the offering has been delayed indefinitely by lingering doubts about its financial results and its valuation.

Reports in the US say that WeWork still plans its IPO for 2019 at a valuation of $47 billion. However, harsh criticism of the company's corporate governance including WeWork's share structure, which gives complete control to Adam Neumann, parties of interest deals between him and the company, as well as serious concerns about the company's business model and the huge amounts of cash it is burning through, are making a 2019 IPO increasingly unlikely.

Published by Globes, Israel business news - en.globes.co.il - on September 22, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019 

Adam Neumann  / Photo: Reuters
Adam Neumann / Photo: Reuters
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