WeWork shares fall to record low on impending bankruptcy reports

A sign indicates a WeWork location in Boston, Massachusetts, US, August 14, 2023. REUTERS/Brian Snyder Obtaining licensing rights

Nov 1 (Reuters) – WeWork (WE.N) shares fell nearly 50% to a record low on Wednesday after media reports that the flexible workspace provider was planning to file for bankruptcy as early as next week.

The New York-based company, which has had a heavy debt load and heavy losses for a few years now, had a private valuation of $47 billion, and now has a market capitalization of only about $121 million.

The potential bankruptcy filing would come after a series of setbacks for the SoftBank-backed company since IPO plans collapsed in 2019 due to doubts about its business model of taking long-term leases and leasing them short-term.

WeWork, which finally went public in 2021 at a much lower valuation than initially expected, remains a black spot for SoftBank, which has spent billions in its efforts to prop up the startup that has never turned a profit.

WeWork is considering filing a Chapter 11 petition in New Jersey, the Wall Street Journal first reported Tuesday.

The company said on Tuesday that it had decided to withhold interest payments due on November 1 on senior bonds due in 2025, even as it has the cash to make the repayment. WeWork warned of possible bankruptcy in August.

“Whether or not WeWork can reach a short-term settlement with bondholders to avoid bankruptcy in the near term, it will likely retain many long-term office leases that will need to be restructured or written off,” said Jason Benowitz, senior portfolio manager. At CI Roosevelt Private Wealth in New York.

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“WeWork remains an important tenant in some major urban office markets and its failure or restructuring could further pressure industry fundamentals.”

The stock last traded at a historic low of $1.18, the latest in a string of record lows, having lost about 96% of its value this year.

(Reporting by Medha Singh in Bengaluru; Preparing by Mohammed for the Arabic Bulletin) Editing by Shinjini Ganguly and Shaunak Dasgupta

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