WeWork, backed by SoftBank, has chosen to withhold interest payments of around $95 million on certain notes as part of its capital restructuring efforts. The company faces a 30-day grace period before these missed payments could trigger an “event of default.” WeWork maintains that it has the liquidity to cover these payments and may choose to do so in the future. This decision comes after a turbulent period for the flexible workspace provider, which had previously expressed doubt about its operational continuity and executed a reverse stock split to maintain its NYSE listing. Its stock declined by about 2% in after-hours trading.
On Monday, WeWork Inc announced its intention to abstain from making interest payments of approximately $95 million on certain notes, as part of its efforts to enhance its financial framework. The company, supported by SoftBank, has faced significant challenges since its failed attempt to go public in 2019 due to concerns from investors about substantial losses and doubts about its strategy of securing long-term leases and subletting them for shorter durations.
According to a regulatory filing by WeWork, the company has a 30-day window in which it can make the interest payments before they are categorized as an “event of default.” WeWork further stated that it possesses the financial means to fulfil these interest obligations and may choose to do so at a later date. These payments, totalling approximately $37.3 million in cash and $57.9 million in payment-in-kind (PIK) notes, were withheld, and they were originally due on Monday.
Earlier this year, the company expressed uncertainty about its ability to sustain its operations and carried out a reverse stock split of one share for every forty to maintain its listing on the New York Stock Exchange. Once considered a promising startup, the financially challenged company stated on Monday that it remains committed to executing its strategic plan and is actively working on streamlining its real estate holdings. The company's stock experienced a decrease of approximately 2% in after-hours trading following the market’s closing.
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