WeWork to withhold interest payment on some notes

2 months ago 74

WeWork offices in San Francisco

WeWork logos are seen at a WeWork office in San Francisco, California, U.S. September 30, 2019. REUTERS/Kate Munsch/File Photo Acquire Licensing Rights

Oct 2 (Reuters) - WeWork Inc (WE.N) on Monday said it had decided to withhold interest payments of about $95 million related to some of its notes, as it tries to improve its capital structure.

The flexible workspace provider, backed by SoftBank (9984.T), 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.

The company has a 30-day grace period to make the interest payments before a non-payment can be considered an "event of default", WeWork said in a regulatory filing.

The company has the liquidity to make the interest payments and may decide to pay "in the future", it added.

The company withheld interest payments of about $37.3 million payable in cash and $57.9 million of payment-in-kind (PIK) notes, each payable on Monday.

Earlier this year, the company raised a "substantial doubt" over its ability to continue operations and conducted a one-for-forty reverse stock split to retain its listing on the New York Stock Exchange.

Once a start-up darling, the cash-strapped company on Monday said it continued to take actions to implement its strategic plan and was focused on rationalizing its real estate footprint.

Shares of the company were down about 2% in trading after the closing bell.

Reporting by Shivansh Tiwary in Bengaluru; Editing by Maju Samuel

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