The shares of WeWork Inc. plummeted after business hours on Tuesday following a report that the once-popular co-working space provider plans to file for bankruptcy protection as early as next week.
The news, reported Tuesday by the Wall Street Journal, comes after the convulsions on office work and the commercial real estate market due to the pandemic, and after WeWork’s WE,
The once lofty vision for a new workplace culture collapsed amid questions about its finances and corporate structure.
The Journal reported that WeWork was considering filing for Chapter 11 protection in New Jersey. When reached, WeWork would not confirm the report and said it did not “comment on speculation.”
Shares fell about 42% in after-hours trading on Tuesday. The stock is down 97% so far this year amid problems paying bills and efforts to renegotiate leases.
WeWork said in August that there was “substantial doubt” about its ability to continue operating. At the time, David Tolley, then interim chief executive, warned of ‘an oversupply of commercial real estate, increasing competition in flexible space and macroeconomic volatility’, along with ‘softer demand’.
During the second quarter, WeWork lost $397 million. The company said it had $680 million in cash, including $205 million in cash.
Tolley became WeWork’s permanent CEO this month. Chief Operating Officer Anthony Yazbeck also left the company this month.
Earlier on Tuesday, WeWork entered into a seven-day forbearance agreement with bondholders after a 30-day grace period on interest payments expired.
The company skipped interest payments on some of its bonds earlier this month in an effort to buy itself more time to talk about options with its lenders and preserve some of its liquidity. Creditors include SoftBank’s Vision Fund II and Goldman Sachs International Bank. SoftBank 9434,
has been a major supporter of WeWork.
The current financial problems paint a very different picture than in 2019. At the time, SoftBank estimated WeWork’s valuation at $47 billion. But the company’s efforts to go public imploded, following investor concerns about steep losses and concerns about conflict and behavior associated with Adam Neumann, the company’s CEO, founder and chief pitcher.
Neumann stepped down as CEO that year. WeWork went public in 2021 through a special purpose acquisition company, SPAC.