WeWork May Lay Off Thousands - 3 minutes read

WeWork May Lay Off Thousands

Mr. Claure said that he would share his plans for the company’s future at an all-employees meeting that was originally scheduled for Tuesday but will now take place on Friday.

The layoffs represent the human cost of a remarkable reversal in WeWork’s fortunes. Under its co-founder and former chief executive, Adam Neumann, the company piled billions of dollars into an erratic expansion that included adding huge office spaces in the world’s most expensive cities, offering discounts to lure tenants and buying other businesses. WeWork, which leases office space from landlords, refurbishes it and rents it out to its customers, shelved plans for an initial public offering in late September after investors were put off by the company’s losses and had questions about its corporate governance.

SoftBank, the Japanese conglomerate that is WeWork’s largest outside shareholder, last month announced a plan to bail out the company and is now trying to stabilize the business. But it is not clear how far the plan, which rests on selling billions of dollars of new WeWork bonds to investors, has progressed. The prices of the company’s existing bonds have tumbled in recent days, a sign that investors are worried about its prospects.

WeWork last week reported that it lost $1.25 billion in the three months that ended in September, more than twice as much as the company had lost in the same period a year earlier. A corporate presentation provided to investors revealed that WeWork opened nearly half of its locations in the 12 months that ended in September. Many of these locations are losing money and are likely to be depleting WeWork’s cash, which stood at $2 billion at the end of September.

Mr. Neumann, who agreed to cede control over WeWork after stepping down from the chief executive post in September, stands to receive an exit package worth around $1 billion. As part of that, he will receive a $185 million consulting fee for four years and can sell nearly $1 billion of his shares in the company to SoftBank. The soft landing for Mr. Neumann deepened anger among employees as the layoffs loomed.

Source: The New York Times

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