WeWork to withhold interest payment on some notes

(Reuters) – Debt-laden WeWork said on Tuesday it has decided to withhold interest payment of about $6.4 million on some of its notes as the flexible workspace provider looks to improve its balance sheet.

The company has been in turmoil ever since its plans to go public in 2019 imploded as investors worried over its hefty losses and began to doubt its business model of taking long-term leases and renting them for the short term.

It finally went public in 2021 at a much reduced valuation.

WeWork said on Tuesday it elected to withhold interest payment due on Nov. 1 on senior notes due 2025, though it has the cash to make the payment. It now has a 30-day grace period.

The SoftBank-backed company added it has entered into an agreement with creditors for temporary postponement of payments for some of its other notes, with the debt-grace period nearing an end.

WeWork’s shares were up 3.9% at $2.68 in premarket trading.

Earlier this month, the company withheld interest payments of about $95 million related to some of its notes and entered into a grace period.

The company is seeking to finalize a restructuring deal in the coming weeks, and may execute it as part of a bankruptcy filing as soon as November, Bloomberg News reported last week.

WeWork raised “substantial doubt” about its ability to continue operations in August in a stunning reversal of fortune for a company that was once privately valued at $47 billion.