Nobody wants to WeWork these days

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The US’s office collapse may soon claim its first victim.

From WeWork’s second-quarter earnings release, with our emphasis:

In addition, as disclosed in WeWork’s Quarterly Report for the three and six months ended June 30, 2023 (the “Second Quarter 10-Q”), 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. The Company’s ability to continue as a going concern is contingent upon successful execution of management’s plan to improve liquidity and profitability over the next 12 months, which includes, without limitation:

•Reducing rent and tenancy costs via restructuring actions and negotiation of more favourable lease terms;
•Increasing revenue by reducing member churn and increasing new sales;
•Controlling expenses and limiting capital expenditures; and
•Seeking additional capital via issuance of debt or equity securities or asset sales.

This follows the resignation of Sandeep Mathrani, the company’s CEO and Chair, after dismal first-quarter results in May. And its CFO and Treasurer. Also a handful of board members.

Anyway, the office-sharing company reported a $351mn loss from operations in the second quarter, and a $397mn net loss.

But hey, once you add in stuff like $150mn in net gains on lease terminations, WeWork’s adjusted quarterly loss was only $36mn.

Here’s its outstanding debt, from the company’s 10-K:

The vast majority of its outstanding debt was issued in a restructuring transaction completed in May:

That transaction cut 20 per cent off of the principal owed on its long-term net debt, as you can see above. And at the time, it was probably more important that the restructuring termed out most of its maturities to 2027.

But today’s going-concern warning shows it may not have been all that helpful in the end.