A sign points to a WeWork location in Boston, Massachusetts on August 14, 2023. REUTERS/Brian Snyder Get license rights
Nov 1 (Reuters) – Shares of WeWork ( WE.N ) fell nearly 50% to record lows on Wednesday. The flexible workplace provider plans to file for bankruptcy early next week, according to media reports.
The New York-based company, which has been struggling with heavy debt and heavy losses for a few years now, was once privately valued at $47 billion and now has a market capitalization of just $121 million.
The bankruptcy filing could follow a series of setbacks for the SoftBank-backed company amid suspicions that its IPO plans in 2019 involved taking long-term leases and short-term rentals.
WeWork finally went public in 2021 at a much lower valuation than expected, a black mark for SoftBank, which has sunk billions into trying to shore up a startup that never turned a profit.
The Wall Street Journal first reported Tuesday that WeWork is considering filing for Chapter 11 in New Jersey.
The company has decided to suspend interest payments due Nov. 1 on senior notes due 2025, even though it has cash to make the payments, it said Tuesday. WeWork had warned of bankruptcy in August.
“Whether or not WeWork can reach a short-term accommodation with bondholders to avert a short-term bankruptcy, it may have many long-term office leases that may need to be renegotiated or written off,” said senior portfolio manager Jason Benowitz. At CI Roosevelt Private Wealth in New York.
“WeWork is a significant tenant in some key urban office markets and its failure or restructuring could further weigh on industry fundamentals.”
The stock is trading at an all-time low of $1.18, after losing about 96% of its value this year.
Medha Singh reports in Bangalore; Editing by Shinjini Ganguly and Shaunak Dasgupta
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