WeWork(WE.N) plans to file for ruin as early as coming week, a source familiar with the matter said 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 in extended trading after the Wall Street Journal first reported the news. They’ve fallen roughly 96 this time.
New York- grounded WeWork is considering filing a Chapter 11 solicitation in New Jersey, the WSJ reported, citing people familiar with the matter. before on Tuesday, WeWork said it had entered into an agreement with creditors for temporary holdback of payments for some of its debt, with the grace period nearing an end.
The company had net long- term debt of$2.9 billion as of June end and further than$ 13 billion in long- term plats, at a time when rising borrowing costs are hurting the marketable real estate sector.
WeWork’s form for ruin would mark a stunning reversal of fortune for the company that was intimately valued at$ 47 billion in 2019 and a black spot for investor SoftBank that sunk billions.
The company has been in fermentation ever since its plans to go public in 2019 collapsed following investors’ dubitation over its business model of taking long- term plats and renting them for the short term and worries over its hefty losses.
WeWork’s straits didn’t abate in posterior times. It eventually managed to go public in 2021 at a important- reduced valuation.
Its major backer, Japanese empire SoftBank, sunk knockouts of billions to prop up the incipiency, but the company has continued to lose plutocrat.
WeWork raised” substantial mistrustfulness” about its capability to continue operations in August, with multitudinous top directors, including CEO Sandeep Mathrani, departing this time. Reporting by Anirban Sen in New York, Manas Mishra and Manya Saini in Bengaluru; Editing by Shailesh Kuber and AnilD’Silva
