By Clare Duffy, CNN
New York (CNN) — WeWork’s stock plunged more than 20% on Tuesday morning after the company said a day earlier that it would not make two sets of interest payments totaling more than $95 million.
The move comes two months after WeWork said it had “substantial doubt” about its ability to stay in business over the next year, and could raise questions about whether the company is approaching bankruptcy. For now, the embattled coworking company says the missed interest payment will buy it time to negotiate with creditors and free up liquidity as the company attempts to institute its turnaround plan, which includes efforts to renegotiate leases and stem membership cancellations.
WeWork (WE) noted in a securities filing Monday that it has a 30-day grace period to make the interest payments. It added that it has the cash to make the payments and that it “may in the future decide to do so.”
The company said in August that it had $205 million in cash on hand as of the end of June. At the same time, it reported a $696 million net loss in the first six months of this year.
WeWork was valued at $47 billion at its peak, but it struggled to fully recover after a failed attempt to go public in 2019. At the time, IPO paperwork revealed larger-than-expected losses and potential conflicts of interest with the company’s founder and then-CEO Adam Neumann. The company eventually went public two years later at a valuation of about $9 billion, but it has continued to burn through cash and struggle to retain members, who pay to rent desks at WeWork’s office spaces.
™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.