WeWork’s Chief Financial Officer (CFO), Andre Fernandez, is set to resign from his position on June 1, less than a year after taking up the role. The news comes just days after Sandeep Mathrani, CEO of the workspace provider that offers spaces for startups and entrepreneurs, also announced his departure from the company.
Fernandez played a key role in the company‘s debt restructuring efforts as WeWork struggled to achieve profitability. The company is now worth around $200 million, with one of its bonds trading at 56 cents on the dollar, significantly below the healthy rate of 100 cents on the dollar.
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Kurt Wehner, WeWork’s Chief Accounting Officer, will replace Fernandez as CFO.
WeWork’s debt restructuring efforts have failed to impress rating agencies, with Standard & Poor’s (S&P) labeling the move “tantamount to default” as lenders will receive less than originally promised. Fitch Ratings upgraded WeWork’s issuer default rating to ‘CCC-‘ in recognition of the debt restructuring, but noted that “default is a real possibility” with a CCC rating.
The company has struggled to turn a profit since going public, reporting an operating loss of $204 million and a net loss of $299 million in Q1 of 2021.
Fitch expects the company’s cash flow burn to persist through 2023, making it uncertain when the company can become cash flow positive.
WeWork, which enjoyed a surge in demand for flexible workspaces during the pandemic, has been hit hard by mass layoffs across the tech industry in recent months.
The company’s shares have plummeted by about 87% this year, with a current market capitalization of $404.7 million, down from $47 billion in 2019.
In March, WeWork reached agreements to cut its debt by $1.5 billion and to extend the date of some maturities to preserve cash.
While the restructuring provided WeWork with some breathing room, Fitch Ratings cautioned that the company’s improvement in operating performance would be critical to its success over the next 12 months.
WeWork made headlines in 2019 as a Silicon Valley unicorn that failed to go public due to concerns raised by investors regarding its financial stability, debt, and corporate governance practices. Initially valued at $47 billion, SoftBank invested $18.5 billion in the company. However, after taking over WeWork, SoftBank reevaluated the company’s value and lowered it to $5 billion.
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