WeWork Inc (NYSE:WE) has elected to withhold interest payments on five of its bonds, initiating a 30-day grace period before a potential default.
The co-working firm withheld $37.3 million in cash and $57.9 million in in-kind payments, despite having the liquidity to make the payments, according to SEC filings.
“Entering the grace period is intended to allow discussions with certain stakeholders in the company’s capital structure to commence, while also enhancing liquidity as the company continues to take action to implement its strategic plan," it said.
“As part of this strategic plan, the company is focused on rationalising its real estate footprint and improving its capital structure.”
The bonds in question are trading at distressed levels, as low as nine cents on the dollar.
In August, WeWork disclosed there was “substantial doubt” about its ability to remain in business, leading to a 24% plunge in its stock.
The company reported a loss of $397 million in the second quarter, with $680 million of liquidity available at the time.
The office space provider reported a 7% year-on-year increase in revenues to $1.6 billion in the first half of 2023. However, it also reported an underlying loss of $65 million, albeit an improvement from the $346 million loss in the same period in 2022.
“As a result of the company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the company’s ability to continue as a going concern,” WeWork said at the time.