Troubled co-working firm WeWork has secured $1.1 billion in debt financing from its existing investor Softbank. According to reports, the co-working startup, , which is owned by Embassy Group, 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.
Last year, Wework was valued at an attractive $47 billion and was even heading for an IPO, it however fell to a mere $2.9 billion valuation and is now subject to the wrath of the coronavirus pandemic.
The co-working firm 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 organisation puts us in a better position to adapt quickly, navigate new realities and deliver our future business objectives," said Kimberly Ross, the Chief Financial Officer of WeWork, in the e-mail seen by Reuters.
Revenue in the quarter reached $882 million, a nine per cent increase from a year earlier, Ross said. WeWork in the first quarter reported revenue of $1.1 billion, the first time they had exceeded nine figures, and its cash burn was $482 million.
In a recent interview to Forbes, SoftBank head Masayoshi Son had said, -
We paid too much valuation for WeWork, and we did too much believe in the entrepreneur. But I think even with WeWork, we’re now confident that we put in new management, a new plan, and we’re going to turn it around and make a decent return.
WeWork's membership stood at 6,12,000 reporting an 11.6% quarterly decline, indicating that the coronavirus pandemic and people working from home have hit the company.
In May this year, WeWork India signed an office deal with Commonwealth Bank of Australia and reportedly closed deal of 2400 seats office at WeWork's Manyata tech park facility in Bengaluru.