And the hits keep coming for the 'trillionaire-to-be' CEO of WeWork as Bloomberg reports that the lenders are looking to revise terms on Adam Neumann's massive personal credit line amid collateral concerns as the real estate company's valuation plummets.
Bloomberg details that Neumann arranged a credit line of as much as $500 million from JPMorgan Chase & Co., UBS Group AG and Credit Suisse Group AG secured by some of his shares in WeWork, according to the company’s regulatory filings.
As of July 31, he had drawn $380 million of the principal amount available, the filings show.
The last few weeks of farce as WeWork's prospective valuation has collapsed along with the chances of it IPOing anytime soon, has raised concerns that the collateral value of the shares pledged to cover Neumann's massive personal line of credit may not cover the additional risks that are now evident to the once greedy consortium who were just weeks ago willing to fall over each other to lend him cash.
Additionally the cost of debt on the company itself has soared to almost 700bps over Treasuries as the IPO has fallen apart...
Neumann’s lenders have the ability to make a margin call if the stock declines below specific prices, regulatory filings show, without indicating what impact -- if any -- estimated valuations might have. The credit line is scheduled to mature next September, but may be extended at the discretion of lenders.
And remember, the company is still burning $2 in cash for every $1 of revenue that it takes in.
Of course, none of this is a real problem for Neumann, as he intends to live forever after all.