WeWork Skipping $95M in Interest Payments as It Hopes to Negotiate With Lenders
The coworking giant’s stock plunged 24 percent Tuesday morning following the move
By Nicholas Rizzi October 3, 2023 11:43 am
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WeWork has opted to skip $95.2 million in interest payments as it hopes to negotiate with its lenders to improve its capital structure, the company announced.
Missing the payment brings WeWork into a 30-day grace period with its lenders to make the payments, which were due Monday. WeWork CEO David Tolley said in a statement that the company has “sufficient liquidity” to make the $95.2 million payments “and may in the future decide to do so.”
The move, announced late Monday, sent WeWork’s stock dropping by 24 percent to $2.24 per share as of Tuesday morning.
And it comes nearly two months after WeWork reported it has “substantial doubt” about its ability to stay afloat as it continued to lose money and members. It posted $397 million in net losses in the second quarter of 2023 and a 1 percent decrease in membership year-over-year.
After that disclosure, Tolley developed an action plan to keep WeWork in business. Last month, he said the company was going to try to renegotiate almost every lease it has and likely close underperforming outposts.
Tolley said Monday night that the move to negotiate with its lenders — which it doesn’t need to miss interest payments to do — is part of that plan and would hopefully help the firm shore up its balance sheet.
“By improving our capital structure, we will be better positioned to continue to invest in our industry-leading member experience and in our own economically sustainable growth for years to come,” Tolley said in a statement.
WeWork has faced a tough road since the company went public in 2021 through a merger with a special purpose acquisition company. That followed the infamous implosion of its first attempt to go public, which in turn led to the ouster of its bombastic co-founder and CEO Adam Neumann.
In April, the New York Stock Exchange sent a notice to WeWork that it was in danger of delisting after its price dipped below $1 per share for more than a month. To bolster its stock price, WeWork announced in August that it would move forward with a 1-for-40 reverse stock split, which raised the share price to $4.40 when it took effect Sept. 1.
Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.
