WeWork in Talks With Lender to Restructure $3B in Debt

Maybe We(can)Work something out?

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Faced with dwindling cash reserves and the possibility of loan defaults, WeWork tapped its investors to raise more funds and restructure its outstanding debt of more than $3 billion to carry the ailing company a few more years.

Among those investors that might give the coworking firm an infusion of funds is Yardi, which has invested in the past, while WeWork shores up its credit with SoftBank (SFTBY), a Japanese investment conglomerate, according to The New York Times.

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WeWork declined to comment on the efforts.

The Times reported that, while an agreement is close, it’s not a done deal and could take weeks to get across the finish line. But if successful, it could give WeWork enough money for operating expenses for “at least a few years,” according to the Times.

While the coworking giant has been struggling financially over recent years, its fourth-quarter 2022 results were an improvement. It pulled in $848 million in revenue then, up 3.6 percent from the previous quarter. But WeWork’s cash flow was still below the $859 million analysts predicted it would bring in.

Net quarterly losses also decreased from $629 million in the third quarter to $527 million in the fourth quarter, Commercial Observer previously reported.

But that doesn’t mean that the ship is on an even keel.

WeWork has nearly spent all of its rescue package from Softbank and had $287 million cash in hand at the end of last year, according to the Wall Street Journal and the company’s earnings call. 

Its cash problem along with “deteriorating macro conditions in 2023” caused Fitch to downgrade WeWork’s rating to one of its lowest ranks, saying that “default is a real possibility” for WeWork.

In January, WeWork announced major cutbacks with up to 300 employees being laid off globally as part of a larger effort to reduce its physical footprint, bring expenses under control and stave off loan defaults.

WeWork’s revenue leapt 24 percent year-over-year in the third quarter of 2022, but the company wasn’t letting its guard down and planned to close 40 underperforming locations in the U.S. and shrink its headquarters at Brooklyn Navy YardsDock 72, owned by Rudin Management and Boston Properties (BXP), executives said in November

Mark Hallum can be reached at mhallum@commercialobserver.com.