WeWork Withholds Interest Payments to Improve Capital Structure

WeWork Inc, the flexible workspace provider backed by SoftBank, has announced its decision to withhold interest payments of approximately $95 million related to some of its notes. The move comes as the company aims to improve its capital structure amidst ongoing financial challenges.

WeWork’s plans to go public in 2019 fell through, leading to investor concerns over its substantial losses and doubts about its business model. The company leases office spaces on a long-term basis and rents them out for shorter durations. As a result, it has faced significant setbacks and has been working to regain stability.

According to a regulatory filing, WeWork has a 30-day grace period to make the interest payments before it would be considered an “event of default.” The company clarified that it has the liquidity to fulfill the payments and may choose to do so in the future.

The interest payments withheld include approximately $37.3 million payable in cash and $57.9 million in payment-in-kind (PIK) notes. WeWork has been taking strategic measures to implement its plans and is currently focused on rationalizing its real estate footprint.

Earlier this year, the company raised concerns about its ability to continue operations and underwent a one-for-forty reverse stock split to maintain its listing on the New York Stock Exchange. Despite its previous status as a start-up success story, WeWork is currently facing financial challenges.

Shares of WeWork were down around 2% in after-hours trading following the announcement. The company remains committed to its strategic plan and is actively working towards a more sustainable future.