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WeWork tells investors it can beat virus

Coworking giant WeWork has promised investors it has the cash to survive the corona virus crisis and called reports it was shedding workers and trying to get out of its office leases old news.

The company said 250 layoffs announced last Thursday were part of its previously announced restructuring and not connected with the current pandemic.

WeWork has been working with consultants from both JLL and NKF since November 2019 on a previously announced five-year plan devised following the collapse of its IPO.

“Last November, we began conducting an in-depth review of operations and assets globally in order to right-size the business and optimize our real-estate portfolio. As we work through this process, we are working with industry partners where appropriate,” said the spokesman.

“WeWork is continuing to execute its new strategic plan. As a result, we are realigning certain functions and teams to reflect our business priorities. Employees impacted by the layoffs received severance, continued benefits and other forms of assistance to aid in their career transitions.”

Following the IPO implosion last summer, the company began working with JLL to provide facilities management services in North America, offering staff the opportunity to transfer to the real estate services company’s payroll.

NKF is also on board as a consultant in “eliminating and scaling back certain functions and responsibilities, which will increase efficiency and also accountability.”

ROHIT DAVE

The restructuring includes the sale of community meeting platform provider, Meetup, to a consortium of investors led by AlleyCorp. Rohit Dave, head of corporate development at WeWork, said, “Our decision to divest Meetup aligns with WeWork’s renewed focus on the company’s core workspace business and marks a positive step forward for both WeWork and Meetup.”

Earlier this year, it also shed its share of The Wing women’s coworking company and the cloud based meeting app, Teem.

The shake-up came as chairman Marcelo Claure reassured bondholders that the company has enough cash on hand to get it through the corona virus crisis

In a letter to investors late last week, Claure said WeWork had $4.4 billion in commitments — including $1.3 billion in cash — at the end of 2019, enough to get it through the current crisis and to execute its five-year plan.

The company said it has another $100 million of remaining capital commitments from SoftBank and would oppose any effort by SoftBank to alter its planned $3 billion tender offer amid reports that the Japanese banking conglomerate is looking to renegotiate that deal as the pandemic decimates global markets.

MARCELO CLAURE

WeWork has vowed to push through the pandemic and all of its spaces remain open and staffed, albeit in reduced numbers by key personnel being paid a $100 daily bonus.

“WeWork has implemented a work from home policy for global employees and has moved to reduced staffing posture in our locations,” said a spokesman, “This is in addition to WeWork’s mandatory 14-day work from home policy for all employees who exhibit flu-like symptoms.

“We have a robust global emergency preparedness plan in place … In certain circumstances, depending on the severity of the incident, this plan could involve shutting down a building or floor for an extended period of time.

“From healthcare and insurance providers to cleaning product suppliers and transit authorities, companies rely on us in order to operate. For that reason, we continue to remain open and accessible.

“As we navigate the COVID-19 pandemic, we are committed to supporting our members and will continuously evolve our plans.” 

Several space sharing companies including Knotel — its biggest rival — Convene and Lyric announced COVID-19 related layoff and furloughs in the past week.

Knotel laid off or furloughed 195 employees worldwide while Convene let 150 workers go as it closed all 28 locations. Co-living company Lyric confirmed it has laid off nearly 20 percent of its staff and women-focused The Wing has closed its 11 locations.

In a statement Knotel said it has laid off 30 percent of global staff and furloughed another 20 percent.

AMOL SARVA

“Business as usual is over,” said Amol Sarva, Knotel CEO. “The global pandemic and its inevitable economic consequences will be dramatic. Knotel has decided to take sharp action to prepare for the worst case – a long health and economic crisis. We hope for speedy improvement, but Knotel has always been disciplined and the present situation is extraordinary.

“In the longer term, this moment shows us exactly why flex has grown so quickly: professionally managed, flexible, one-vendor, global office operations are the future. We will be there when businesses resume their business. And we know that the workplace will never be the same — we are hard at work on creating the post-virus office.”

“The coronavirus pandemic has had a huge impact on the hospitality and meetings and event industries, and Convene has not been immune to that,” said Convene co-founder Ryan Simonetti.

Ryan Simonetti

“After closing all of our locations, we have had to take the additional measure of saying goodbye to nearly 20 percent of our team across the company and furloughing others, while ensuring they receive compensation and healthcare coverage for an extended period. ”

In the last 10 years, the co-working sector has grown to over 70 million square feet of space across the globe, according to CBRE. With the pandemic paralyzing major U.S. cities, a survey by Coworker magazine found that 71.67 percent of shared space operators have witnessed a significant drop in the number of people working from their space since the outbreak. 67 percent have experienced a drop in the number of new membership enquiries.

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