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WeWork just like GPA aviation

So 30 years ago GPA aviation at the time the largest aircraft lessor was about to do an IPO; at my bank was a lender to the group and we were becoming concerned by the performance of the aircraft lessor.  We had, by some strange coincidence a buyer for our stake, they wanted to be part of the lender's group so that they could get in the "pre IPO bandwagon"  we were not interested in that business (for many many reasons), and they were buying our participation slightly over PAR.

My recommendation was SELL SELL SELL, but my boss was a greedy SOB and wanted more, and so in the end that lender lost about 50% of its loan in the bankruptcy...my boss actually kept his job...typical the bigger you screw up the more they keep you!

Now looking at WeWork we see a similar situation in that the company is fast running out of cash (burning about US$ 2 billion per annum) and no end in sight.  today the board decided to sell the CEO's GV aircraft (yes a $60 million dollar toy).

The reality is that WeWork needed the IPO so that it could continue to raise money for its on-going operations.  WeWork's business is simple -- enter into long term (cheap) leases and lease the space to small companies at higher rates. 

The idea is that WeWork would make money on the difference, but somehow, WeWork failed at that, overheads massive expansion and possibly ego, and there we have it.  First, it was worth $47 billion, now its $20 billion. 

Still seems no one has noticed that they can buy IGW for about $2.5 billion -- with similar revenue streams but profitable (not massive but decent).  Like GPA, WeWork could go the same way -- to zero!  CEO is lucky he got kicked out yesterday, he gets to keep his money (around $700 million according to the press), Softbank is somewhat screwed, and the world gets to watch a train wreck -- always entertaining!


 



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