WeWork Lost $2.1 Billion on Closings, Neumann Deal
(Bloomberg) -- WeWork lost $2.06 billion in the first quarter, overwhelmed by effects of the coronavirus pandemic and a settlement with the ousted co-founder Adam Neumann, according to a person familiar with the financials.
The mounting loss was due largely to a variety of one-time costs, which also include office closings and other restructuring, said the person, who asked not to be identified because the details are private. The settlement with Neumann resulted in a non-cash writedown of nearly $500 million, the person said.
The quarterly loss was almost four times larger than it was in the same period a year ago, according to the Financial Times, which reported the details earlier Thursday. A representative for WeWork didn’t immediately have a comment, and a spokesman for Neumann declined to comment.
Neumann resigned in 2019 after a plan to take the company public imploded. SoftBank Group Corp. bailed out the business and clashed with Neumann in court over an unfulfilled stock transaction. They agreed to settle in February.
Under a new chief executive officer, Sandeep Mathrani, WeWork is refocusing on its core business of renting office space and is seeking to shed costs. The adjusted loss before interest, tax and other expenses narrowed from the fourth quarter to $446 million, the person said.
The pandemic was tough on WeWork’s business, but executives have said the company is well-positioned for a post-outbreak economy. Marcelo Claure, WeWork’s executive chairman, said at a Bloomberg conference this week that customer demand now exceeds pre-pandemic levels. Customers have committed $1.9 billion in future sales, the person familiar with the financial details said.
After its failed attempt at an initial public offering, WeWork plans to try again this year by merging with a special purpose acquisition company, BowX Acquisition Corp. WeWork had liquid assets of $2.2 billion in the first quarter and is expected to have $3 billion when its merger closes sometime in the third quarter, the person said.
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