Office sharing group WeWork plans to file for bankruptcy as early as next week, the Wall Street Journal reported late on Tuesday, as the SoftBank Group-backed company struggles with a massive debt pile and hefty losses.
Shares of the flexible workspace provider fell 32 per cent in extended trading after the news was first reported. They have fallen roughly 96 per cent this year.
The company had one of the most dramatic trajectories of the last start-up boom – reaching a valuation of $47 billion (€44.5 billion) before a disastrous attempt at an initial public offering and challenges to its co-working model during the pandemic.
In a filing Tuesday, the company said it has been holding discussions with creditors about “improving its balance sheet” and taking steps to “rationalise its real estate footprint”. On Monday, the company entered into a forbearance agreement with its creditors that will end in seven days.
The company had net long-term debt of $2.9 billion at the end of June and more than $13 billion in long-term leases, at a time when rising borrowing costs are hurting the commercial property sector.
A spokesperson for the company said it would “not comment on speculation,” and pointed to the filing, saying the forbearance agreement will give the company “time to continue in the positive conversations with our key financial stakeholders and engage with them to implement our ongoing strategic efforts to enhance our capital structure”. The company has “a clear, long-term vision for the future”, the spokesperson said.
WeWork is one of the biggest office tenants in Dublin, occupies space at the 2 Dublin Landings building in the docklands as well as on Harcourt Road and the Charlemont Exchange near the Grand Canal.
As recently as September, the company said it remained on course to occupy most of the former Central Bank of Ireland building in Dublin, even as it was seeking to renegotiate nearly all of its leases around the world and leave some buildings it currently occupies.
[ Hines and Peterson Group secure €80m refinancing deal for Central PlazaOpens in new window ]
WeWork is the anchor tenant at the 11,148 sq m (120,000 sq ft) office block on Dame Street in Dublin 2, and will occupy seven of the nine floors in the building. A spokesman for developer Hines, which owns the building, said at the time that the move would not have “any impact on the commercial agreement in place for One Central Plaza”, as the building is now known.
The New York-based co-working company debuted in 2010, just as the market for venture capital was beginning a decade-long boom. With co-founder Adam Neumann as its charismatic pitchman, WeWork raised billions of dollars and grew rapidly, often doubling in revenue each year. At its peak, it was one of the world’s most valuable start-ups and operated offices around the world.
It also dabbled in somewhat tangential projects, like a private elementary school called WeGrow, two residential buildings called WeLive, and a gym concept called Rise By We.
WeWork may file its Chapter 11 petition in New Jersey, the Journal reported. – Bloomberg / Reuters
