WeWork’s CEO says the company is “here to stay” as it renegotiates leases

WeWork CEO David Tooley, who took over the office-sharing company in a temporary role in May, wrote in a public letter on Wednesday that the beleaguered company is “here to stay” and is immediately under an effort to rework its leases around the world.

“Today, we are launching a global engagement process with our landlords to renegotiate virtually all lease contracts,” Tolley wrote. “As part of this negotiation, we expect to exit unsuitable and underperforming sites and reinvest in our strongest assets while continually improving our products.”

The latest chapter in the extended WeWork saga involves the company trying to stay solvent. It warned in a statement a month ago that bankruptcy could be a concern, as there was doubt about its ability to continue operating due to mounting losses and dwindling liquidity.

With a market capitalization of around $200 million, down from its private market peak of $47 billion, WeWork announced in mid-August a 1-for-40 reverse stock split to re-trade its shares above $1, a condition of keeping its shares in New York. stock exchange list. The stock fell to a low of about 10 cents and is now at $3.53 after the reverse split.

WeWork’s business has been in decline since the company failed to make its initial public offering in 2019. Main owner SoftBank poured billions into the company to try to save it, eventually taking it public through a special purpose acquisition company. But the combination of coronavirus lockdowns and the ensuing faltering economy left WeWork with huge leases on unoccupied buildings worth far less than what the company paid.

“Despite significant actions we have taken over time to improve our company and our real estate footprint, our current rental liabilities – which amounted to more than two-thirds of total operating expenses in the second quarter – remain extremely high and grossly inadequate given market conditions,” Tolle wrote. “We are taking immediate action to permanently reform our inflexible and high-cost rental portfolio to achieve the sustainable operating model we need to serve our members for many years to come.”

Tolle, who has more than 25 years of corporate experience, mostly in private equity and restructuring, insists WeWork isn’t going anywhere – but he has to act fast. Cash and cash equivalents decreased to $205 million as of June, from $287 million at the end of December and $625 million in mid-2022.

“Let me finish by making one thing clear: WeWork is here to stay,” Tolley wrote.

Watch: Former SoftBank COO Marcelo Clore in the next chapter