With $2.5 billion in cash as of June 30th, WeWork only has enough money to last until next spring. Deep cuts could free up some resources –– the company spent $184 million on payroll last year. WeWork also announced that it’s halting all new lease agreements with property owners, FT reported.
- Good start: The co-working company is selling the luxurious plane Adam Neumann used to travel the world. WeWork recklessly bought the Gulfstream G650 for $60 million last year.
- Burning through capital: After its failed IPO, money has become an even bigger issue. WeWork could try tapping the high-yield bond market again, but credit investors would demand a steep price. WeWork’s existing bonds yield about 9.8%, far above the average 5.7% for junk bonds, according to Bloomberg… S&P Global Ratings lowered its issuer credit rating on the company from ‘B’ to ‘B-‘, and revised the outlook to negative..
- Be Smart: The new $3 to $4 billion loan from JP Morgan and Goldman Sachs being discussed is contingent on the company raising additional capital. SoftBank is reportedly considering injecting another $1 billion into the company.
- Cleaning house – too little too late: Around 17 friends and family members of Neumann, including his wife Rebekah have been fired. Prominent names include Michael Gross, Chris Hill (Neumann’s brother-in-law), Zvika Shachar, Roni Bahar. Many of those let go were part of a group referred to internally as Adam’s “oval office”, sources close to the company told the WSJ.