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Once valued at $47 billion, the New York-based company has experienced substantial losses and grappled with a massive debt load for a few years now.

A WeWork logo is seen at a WeWork office in San Francisco, California, U.S. September 30, 2019.
The company’s stock is currently trading at a historic low of $1.22. (Photo: Reuters)Shares of WeWork fell nearly 50 per cent to reach a record low on Wednesday in response to reports suggesting that the flexible workspace provider was preparing to file for bankruptcy as early as next week.

Once valued at $47 billion, the New York-based company has experienced substantial losses and grappled with a massive debt load for a few years now.

The company’s stock is currently trading at a historic low of $1.22, marking the latest in a series of record lows and reflecting a decline of approximately 98.86 per cent in its value this year.

It now carries a market capitalisation of approximately $121 million, marking a significant fall from its previous heights.

 

The potential bankruptcy filing comes after a series of challenges for the company, which is backed by SoftBank.

Its initial public offering plans fell apart in 2019 amid doubts about its business model of taking long-term leases and renting them out for short periods.

Although it finally went public in 2021 at a considerably reduced valuation compared to its initial expectations, WeWork remains a troubled endeavor for SoftBank, which invested billions in an attempt to salvage the startup that has yet to turn a profit.

The company also decided to withhold interest payment due on November 1 on senior notes due in 2025, despite having the cash to meet the obligation. This decision followed WeWork’s warning in August that it could face bankruptcy.

On Tuesday, WeWork revealed that it had reached an agreement with its creditors to temporarily defer payments on a portion of its debt, with the grace period set to expire soon.

As of the end of June, the company held net long-term debt totaling $2.9 billion and was burdened with more than $13 billion in long-term leases. These financial obligations came at a challenging time when increasing borrowing costs were negatively impacting the commercial real estate sector.

In August, WeWork expressed “substantial doubt” about its ability to sustain its operations, and throughout the year, several top executives, including CEO Sandeep Mathrani, departed the company.

In light of recent WeWork global developments, Karan Virwani – CEO at WeWork India, said, “WeWork India is a separate entity from WeWork Global. The recent news around the potential bankruptcy and Chapter 11 filing in the US will have no impact on the members and stakeholders in India.”

“Any development globally has no bearing on the operations of the business. In India, we will continue to operate and serve our members, landlords, and partners as usual,” he added.

Virwani went on to say that WeWork India is backed by the Embassy Group, which holds the majority stake and control to run and operate the business in India.

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