NEW YORK CITY- WeWork has halted the launch of its public offering as the firm withdrew its prospectus not more than a week after former CEO Adam Neumann stepped down.
The firm tumbled downhill when it filed its IPO form to the Securities and Exchange Commission in August. A firestorm of criticism ensued about the filing, outlining stunted cash-flow and a questionable corporate governance structure.
WeWork attempted to rebrand its image, tempering Neumann's shareholder voting power and corporate governance, but it came too late, leading to the present-day demotion and replacement of the co-founder.
All eyes are now on We Co, WeWork's parent and the new co-CEOs Artie Minson and Sebastian Gunningham, who said in a prepared statement they've decided to postpone the IPO to focus on the core business.
In a note to staff this week, the pair said, "rest assured, WeWork will become a public company, but we can only IPO once, and we want to do it right."
WeWork is expected to delay the IPO until next year, putting the mother of all IPOs year-to-date on the back-burner. Meanwhile, many are left wondering how a company that burned through $2 billion in 2018 and is on track to do the same this year, will secure the much-needed cash the IPO would have provided with its bruised reputation and recent downsizing efforts.
Leasing agreements have halted at the company, and the firm is expected to sell three businesses it acquired in recent years, including Managed by Q, Meetup and Conductor. Also, the new pair of CEOs plan to lay off thousands of workers, according to news reports.
With a $6 billion credit line that was contingent upon a successful IPO no longer in play, WeWork has made calls to investment banks for a $3 billion loan, contingent on the firm raising new equity; capital that is expected to come from the company's largest shareholder SoftBank Group Corp., according to news reports.
WeWork's IPO has served as a cautionary tale to the market about falling for companies too soon because of a compelling pitch and not consistent cash flow.
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Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
