2023-11-02 13:39:00
The giant of the “coworking » and the provision of offices makes heads. And for good reason, WeWork plans to file for bankruptcy next week, according to “ sources close to the case », reveals the Wall Street Journal. Since these announcements in the press, the group has seen its shares fall by more than 45% on Wednesday, November 1, on the New York Stock Exchange, to settle at $1.22 this Friday around 2 p.m. The company, valued at nearly 47 billion dollars (44 billion euros) in 2019, before its first setbacks, is now worth less than 100 million.
At issue: WeWork encountered difficulties paying interest on its massive $3 billion debt in early October, leading Standard and Poor’s to downgrade the company to the ” partial defect “. It was therefore able to obtain a thirty-day grace period, during which it initiated discussions with creditors, which ultimately continued beyond October 30 until reaching an agreement with the creditors not to exercise their rights related to unpaid interest from October 2, for an additional seven days.
The company added that it intends to also suspend the payment of interest due on November 1, for an amount of approximately $6.4 million. Although it indicated that it had this amount, the company prefers to activate the thirty-day grace period on this tranche.
WeWork very close to bankruptcy, does the fallen champion of coworking still have a future?
From hope to disillusionment
Yet in its early days, WeWork was the darling of the start-up world. The concept of providing coworking premises was popular, at a time when the idea of flex-office was attracting more and more people. The company then raised billions of dollars from the Japanese holding company SoftBank Group.
But since then, the disappointments have continued for this former coworking heavyweight. In 2019, founder Adam Neumann was ousted. Investors have criticized him in particular for his controversial management of the company. The founder, among other things, appointed relatives to key positions, reaped profits by renting his own real estate to the company and above all spent the company’s money lavishly by organizing parties in a private jet paid for by the company.
What followed was the pandemic, which emptied the offices rented by WeWork. Teleworking has not helped the company’s affairs either, which has seen demand for professional premises dry up. SoftBank has since injected billions into this company to save it from bankruptcy, and took control of it in 2019. WeWork, which was to be listed on the stock exchange that same year, had to make its debut later, in 2021.
« Substantial doubt about the company’s ability to continue as a going concern »
Since then, things have gotten worse. In August, the coworking group announced a net loss of $397 million, or around 360 million euros, in the second quarter. The company points to the gloomy economic context which prevents it from attracting new clients to rent its shared offices.
To the point that the group has already expressed its fears this summer to the Security and Exchange Commission (SEC), the American stock market watchdog, regarding its survival. “ There is substantial doubt about the company’s ability to continue as a going concern “, he then declared. Already last March, WeWork had succeeded in renegotiating its debt with its creditors and obtaining new financing. Present in 39 countries with more than 770 sites, the fall of the coworking space giant would take with it several thousand employees.
(With agencies)
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