WeWork gets new $1.1 billion commitment from SoftBank,
cuts burn rate
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[August 14, 2020] By
Herbert Lash
NEW YORK (Reuters) - The owner of
money-losing shared office provider WeWork told employees on Thursday it
has slashed its cash burn rate almost in half from the end of last year
and obtained a $1.1 billion commitment in new financing from majority
owner SoftBank Group Corp.
The company said in an e-mail to employees that its second-quarter
results show the coronavirus pandemic has hurt business but its
financial position remains strong.
"Our early efforts to become a more streamlined, cash-conscious
organization puts us in a better position to adapt quickly, navigate new
realities and deliver our future business objectives," said Kimberly
Ross, chief financial officer of WeWork, in the e-mail seen by Reuters.
Revenue in the quarter reached $882 million, a 9% increase from a year
earlier, Ross said. WeWork in the first quarter reported revenue of $1.1
billion, the first time it had exceeded nine figures, and its cash burn
was $482 million.
WeWork has $4.1 billion in cash and unfunded cash commitments, including
the $1.1 billion in new financing, Ross said. WeWork in July indicated
it expected to be cash flow positive in 2021, according to the Financial
Times.
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A sign is seen above the entrance to the WeWork corporate
headquarters in Manhattan, New York, U.S., November 21, 2019.
REUTERS/Mike Segar
The $1.1 billion is the last of the debt facilities included in a wide-ranging
transaction announced in October 2019, a source at SoftBank said.
WeWork ended the quarter with 612,000 members, a decline from 693,000 in the
prior quarter. But 48% were from prized "Enterprise" customers, businesses with
500 employees or more.
The results were released almost a year to the day after it filed plans to go
public, when the company was valued at $47 billion and looked poised to be one
of the year's hottest IPOs.
WeWork soon entered a tailspin as revelations of corporate mismanagement
emerged. The company has since undergone an enormous management shake-up and
remains enmeshed in lawsuits over a $3 billion tender offer to existing
shareholders.
(Reporting by Herbert Lash; Editing by William Mallard)
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