A WeWork coworking workplace house in Berkeley, California, Aug. 9, 2023.
David Paul Morris | Bloomberg | Getty Images
WeWork CEO David Tolley, who took over the office-sharing firm in an interim position in May, wrote in a public letter Wednesday that the embattled enterprise is “here to stay” and that it is instantly present process an effort to transform its leases worldwide.
“Today, we are kicking off a process of global engagement with our landlords to renegotiate nearly all our leases,” Tolley wrote. “As part of these negotiations, we expect to exit unfit and underperforming locations and to reinvest in our strongest assets as we continuously improve our product.”
The newest chapter within the prolonged WeWork saga includes the corporate attempting to remain solvent. It warned in a submitting a month in the past that chapter could possibly be a priority, as there’s doubt about its means to maintain working because of mounting losses and dwindling money.
With its market cap at about $200 million, down from a personal market peak of $47 billion, WeWork in mid-August introduced a 1-for-40 reverse inventory cut up to get its shares buying and selling again above $1, a requirement for preserving its New York Stock Exchange itemizing. The inventory had fallen to a low of about 10 cents and is now at $3.53 following the reverse cut up.
WeWork’s enterprise has been on a downward slide because the firm’s failure to conduct its preliminary public providing in 2019. Principal proprietor SoftBank poured billions of {dollars} into the enterprise to attempt to rescue it, ultimately getting it public by means of a particular goal acquisition firm. But the mixture of Covid-19 shutdowns and the sputtering financial system that adopted have left WeWork with huge leases in buildings which might be underoccupied and value far lower than what the corporate paid.
“Despite the important actions we’ve taken over time to improve our company and real estate footprint, our current lease liabilities — which were over two-thirds of total operating expenses in the second quarter — still remain too high and are dramatically out of step with current market conditions,” Tolley wrote. “We are taking immediate action to permanently fix our inflexible and high-cost lease portfolio to achieve the sustainable operating model that we need to serve our members for many years to come.”
Tolley, who has greater than 25 years of company expertise, largely in non-public fairness and restructurings, insists that WeWork is not going wherever — however he has to work rapidly. Cash and equivalents sank to $205 million as of June from $287 million on the finish of December and $625 million in mid-2022.
“Let me finish by making one thing clear: WeWork is here to stay,” Tolley wrote.
WATCH: Former SoftBank COO Marcelo Claure on subsequent chapter
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