WeWork, the struggling co-working giant that spent last year in a valuation nosedive and burning through cash, is looking to put out the fire by restructuring its debt and raising new investment.
The company is close to a deal to restructure more than $3 billion in outstanding debt and raise additional cash, people with knowledge of the talks told the New York Times. The cash boost would be in the hundreds of millions, enough to keep the company afloat for another few years.
Real estate software provider Yardi is among those considering a new investment in WeWork.
SoftBank, the company’s largest investor and creditor, is part of negotiations but not expected to put more money into a company it has already dumped $10 billion into since 2017. In January, it lent WeWork $250 million, while in February, it increased the size of a debt facility and postponed a repayment deadline.
A potential deal is still likely weeks away, at least. The possibility of restructuring debt has been in the works for longer, however, as CEO Sandeep Mathrani raised the possibility last month during a call with Wall Street investors.
While the company’s performance is improving under Mathrani’s leadership following the catastrophic end to Adam Neumann’s time, WeWork is still struggling to right the financial ship. The company burned through $700 million in cash in 2022, closing the year with $287 million in its coffers; at the end of 2021, it had $924 million in cash.
The company lost $568 million in the fourth quarter. Heading into this year, WeWork had $15.6 billion of lease obligations on the books.
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WeWork said at the start of the year it would be cutting 300 positions. Since the company went public by merging with a special purpose acquisition company in October 2021, WeWork’s stock is down 90 percent, hovering around $1.
WeWork’s financial difficulties amid a lagging office market has led short sellers to pile into onto the firm, holding short positions on more than 27 percent of the company’s publicly tradable shares as of Dec. 15.
— Holden Walter-Warner