WeWork Gets One-Week Extension To Make Missed Debt Payments
Beleaguered coworking giant WeWork has negotiated a seven-day extension with creditors to make interest payments it missed at the beginning of October, but it simultaneously missed another loan payment deadline.
In a stock exchange notice issued Tuesday morning, WeWork said it agreed to a forbearance period to make $95M of bond interest payments that were due on Oct. 2. A 30-day grace period to make the payments was due to expire Tuesday, but WeWork now has until 11.59 p.m. ET on Nov. 6 to pay the interest, the announcement says.
WeWork said the extension was granted to give it more time to renegotiate leases with landlords and try and reduce the amount it is paying in rent, the main factor behind its huge losses. It made a net loss of $397M in the second quarter.
At the same time as receiving one extension over missed interest payments, WeWork said it had chosen to withhold another interest payment of $6.4M. It now has a 30-day grace period to make that payment.
"We have a clear, long-term vision for the future and over the past few months we have taken a series of decisive actions to improve our business," a WeWork spokesperson said in a statement. "We are confident that our ongoing and productive discussions with our key financial stakeholders will enable us to address our capital structure and position the company for long term success.
"This forbearance agreement provides time to continue these positive conversations as we continue to engage with them to implement our ongoing strategic efforts to enhance our capital structure. This agreement does not relate to our day-to-day operations and our top priority remains providing members with best-in-class office space and services across the globe."
WeWork has been in talks with its landlords for more than four years to try and reduce lease liabilities, and this summer it initiated a process where it contacted every one of its more than 600 landlords around the world to try and seek rent cuts. It had more than $12B of lease liabilities at the end of 2022.
The company said there is no certainty that its creditors would extend the forbearance period beyond seven days, and the fine print to the agreement shows it came with myriad caveats.
Bondholders can bring the extension to an end if WeWork misses payments to the legal and restructuring firms advising it on negotiations or if it makes any large cash payments to landlords that they don’t agree to. The bondholders also have rights to updates on how lease renegotiations are progressing and the right to a cash flow projection for the 13 weeks from Nov. 6.
The small print also provided insight on to whom WeWork owes money and who is deciding whether it goes into bankruptcy.
It refers to three main groups of bondholders — SoftBank, WeWork’s main backer since 2016, which has poured more than $20B into the company; an ad hoc group of bondholders being advised by law firm Davis Polk & Wardwell, which is thought to include King Street Capital and BlackRock; and a company called Cupar Grimmond LLC.
The latter company has no internet footprint, but a trawl through previous WeWork filings showed that in March 2023, Cupar Grimmond owned about 35 million shares in WeWork. That stake made it WeWork’s third-largest shareholder after SoftBank and King Street.
The filing says Cupar Grimmond is controlled by an individual called Badri Krishnamachari. Internet searches provide details of individuals of that name, but none who was clearly identifiable as the owner of Cupar Grimmond or the backer of WeWork’s IPO.
UPDATED, OCT. 31, 10:50 A.M. ET: This story has been updated to include a statement from a WeWork spokesperson.
CORRECTION, OCT. 31, 12:50 P.M. ET: An earlier version of this story said that Cupar Grimmond bought into WeWork at the time of the company's 2021 IPO.
