On Thursday, the beleaguered company that was once valued at $47 billion took its first concrete steps to stem the flow of red ink, in hopes of regaining some measure of confidence among investors and creditors.
Initial reactions have been negative, judging from the sharp drop in WeWork bond prices after the company said it would cut about 2,400 jobs worldwide.
WeWork's $669 million in bonds that come due in 2025 were trading on Thursday afternoon at a record low of less than 70 cents on the dollar, down from 80 cents earlier this month and $1.05 as recently as August. That was back before Wall Street got a detailed look at WeWork's IPO paperwork and started questioning the company's approach to hefty losses and its chaotic corporate governance.
In late September, amid mounting pressure and criticism of how the IPO was handled, WeWork pulled the plug on the deal, and co-founder Adam Neumann was forced to step down as CEO. To avert a cash crisis in the absence of fresh funding from an IPO, the company accepted an $8 billion rescue package in October that handed SoftBank 80% control of the company.
Succeeding Neumann, the company named WeWork executive Artie Minson and former Amazon executive Sebastian Gunningham as co-CEOs, and the two immediately set to work to right the ship by focusing on core business units along with a cost-cutting plan that is now taking shape with the announced layoffs.
A spokesman for the New York-based company said the job cuts began last week at some overseas offices. The cuts amount to almost 17% of the work force, as about 14,500 people were on the payroll before the layoffs began.
WeWork said the workforce reductions are needed "to create a more efficient organization." Affected workers will receive severance, continued benefits and other forms of assistance to aid in their career transition, according to WeWork.
Featured image via Michael Vi/iStock Editorial/Getty Images Plus