WeWork said on Monday that it would not make two sets of interest payments for a total of $95 mln (€90 mln), a move intended to kick off negotiations with its lenders as it tries to cut costs with its landlords.
The missed interest payments are expected to spur speculation of a bankruptcy filing. But WeWork says it has the cash on hand, and the company has a 30-day grace period to make the payments, which were due Monday. At the end of June, it had $205 mln in cash and access to a credit line worth $475 mln.
Last month the flexible office specialist announced that it would be seeking to renegotiate nearly all of its leases around the world.
Writing a letter on the firm's "next phase", CEO David Tolley admitted that the 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'.
'We are taking immediate action to permanently fix our inflexible and high-cost lease portfolio,' he commented, adding that the firm is kicking off a process of global engagement with its landlords to renegotiate nearly all its leases.
'We will seek to negotiate terms with our landlords that allow WeWork to maintain its unmatched quality of service and global network, in a financially sustainable manner,' Tolley wrote.
As part of these negotiations, the New York-based firm expects to exit unfit and underperforming locations but said that it will remain in most of its buildings.
As of June, WeWork was in 777 locations in 39 countries.
WeWork has already spent several years seeking to cut its long-term lease liabilities, which exceeded $18 bn at the time Adam Neumann stepped down as chief executive after a failed initial attempt at going public in 2019.