WeWork Suspends Interest Payment on Select Notes
WeWork, burdened by debt, announced on Tuesday its intention to defer the interest payment of approximately $6.4 million on certain notes. This strategic move is aimed at bolstering the flexible workspace provider's balance sheet.
The company has been grappling with internal challenges since its ambitious plans to go public in 2019 fell apart. Concerns arose among investors due to the significant losses it incurred and doubts emerged regarding its business model, which entailed acquiring long-term leases and subleasing these spaces for short-term use. Finally, in 2021, WeWork went public, but at a considerably reduced valuation.
On Tuesday, WeWork disclosed its decision to withhold the interest payment due on November 1 for senior notes maturing in 2025, even though it possesses the necessary funds for the payment. A 30-day grace period is now in effect.
The SoftBank-backed company also revealed it has reached an agreement with creditors for a temporary deferral of payments on some of its other notes, as the debt-grace period is approaching its conclusion. In premarket trading, WeWork's shares were up 3.9% at $2.68.
Earlier this month, the company suspended interest payments of approximately $95 million related to certain notes and entered into a grace period.
WeWork is actively working to finalize a restructuring agreement in the coming weeks, and there's a possibility that this could be executed as part of a bankruptcy filing as early as November, as reported by Bloomberg News last week.
In a dramatic reversal of fortune, WeWork expressed "substantial doubt" about its ability to sustain its operations in August, a stark contrast to the time when it was privately valued at an impressive $47 billion.