2023-11-02 05:38:36
The shared workspace giant, which is struggling with heavy debt and significant losses, once valued at $47 billion was now worth only $64 million at Wall Street’s close on Wednesday.
The slide is accelerating for WeWork following media reports that the flexible workspace provider plans to file for bankruptcy protection as early as next week.
The bankruptcy filing reportedly follows a series of problems for the SoftBank-backed company since its IPO plans imploded in 2019 due to skepticism over its business model of taking long-term leases and selling them. rent short term.
WeWork plans to file for Chapter 11 in New Jersey, as The Wall Street Journal reported Tuesday.
The company decided to withhold payment of interest due Nov. 1 on senior notes due 2025, even though it has the cash to make the payment, it said Tuesday.
Failure to pay
“In our view, this constitutes a partial default on several tranches of its capital structure because WeWork is in dire straits, has not fulfilled its contractual obligations by paying interest on time and has not adequately compensated. adequate all creditors for having temporarily waived their rights,” S&P explained in a statement on Wednesday.
WeWork had warned the American stock market watchdog (SEC) in early August that it feared for its survival: “There is substantial doubt regarding the company’s ability to continue its activities,” he declared.
The cause, according to the company: financial losses, liquidity needs and the drop in the number of tenants. It explained that it had lost billions of dollars during the first six months of 2023, due to the drop in demand linked to poor economic conditions.
Once a start-up star, WeWork has raised billions of dollars from SoftBank Group. But the controversial management of its founder, Adam Neumann, worried investors, who ended up ousting him in 2019.
Then the pandemic emptied the offices and the company failed to recover while demand for professional premises fell with the rise of teleworking.
The group was valued at up to $47 billion. Its market capitalization was $64.36 million at the close of the New York Stock Exchange on Wednesday, for a share worth $1.22.
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