"I believe they will absolutely understand our decision to enter into the grace period," WeWork's interim chief executive, David Tolley, said in an interview. He called the move "typical" as a "precursor to a conversation.""Skipping an interest payment is not necessary to negotiate with lenders. But it is a move sometimes used by indebted companies to put pressure on lenders to restrike deals under more favorable terms," NYTimes noted. In early September, Tolley said the co-working start-up "will seek to negotiate terms with our landlords" and "part of these negotiations, we expect to exit unfit and underperforming locations and to reinvest in our strongest assets as we continuously improve our product." A month before that, WeWork shares crashed after the company stated in a filing:
...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:WeWork shares have been in freefall for most of the year. Covid killed the flexible office industry. WeWork might be on its last leg. Read more at: ZeroHedge.com
- Reducing rent and tenancy costs via restructuring actions and negotiation of more favorable 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.
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