Shares in coworking group WeWork have sunk again after US media reports that it may file for bankruptcy as early as next week.
WeWork has declined to comment on the reports that it was considering filing a Chapter 11 petition in New Jersey, as reported by the Wall Street Journal. It described the reports as "speculation".
Earlier on Tuesday, the company told the US financial regulator it had agreed with creditors to temporarily postpone payments for some of its debt. WeWork shares fell by more than 40% after hours in New York trading on Tuesday.
WeWork warned in August "substantial doubt exists" about its ability to continue as a going concern and in September announced it was attempting to renegotiate most of its leases globally. It typically leases buildings on long-term leases and then agrees deals with tenants for the space with a package of services agreed at much shorter terms.
For a review of how those negotiations are playing out click here. In October WeWork said it had missed $95 million in interest payments as it begins negotiations with its lenders.
In London WeWork has been serving notice to tenants at some buildings it has decided are surplus to requirements. Last month the Daily Mail reported WeWork is shutting down 133 Houndsditch in the City of London. The company has said it will find alternative options for occupiers at the office.
Market sources, who declined to be quoted because of the sensitivity of negotiations, suggest that where WeWork wants to retain its occupancy at key buildings it has been calling for a rent reduction of a minimum of 15%, up to as much as 60%. A source negotiating said: "These are not always over-rented buildings but at offices where rents have been rebased and are in fact reversionary."
On Monday CoStar News revealed it had reached an 11th hour agreement with Helical to return to The Bower in Old Street after its tenants had temporarily been accommodated in nearby offices.
WeWork's immediate problem is it is fast running out of cash. In its second quarter results it said cash and cash equivalents declined to $205 million from $625 million in the year-earlier second quarter. It said then it has already exited or amended 590 leases since the fourth quarter of 2019 and cut $12.7 billion in future lease payments.
It was trading at a near record low of 13 cents a share in late August and New York Stock Exchange rules meant it needed to ensure its stock price moved above $1 a share for it to remain on the exchange. It concluded a 1-for-40 reverse stock split in August to resolve the problem and by 31 October was trading at $2.28 a share, or a market cap of $121.41 million. Its shares sunk in after hour trading to around $1.30 a share.
When WeWork finally listed in 2021 it was valued at $9 billion, down from the $47 billion valuation that the company and majority shareholder SoftBank had attached to it at its first failed attempt at listing in 2019.