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WeWork Says It'll Divest Businesses and Focus on Co-Working

WeWork Says It'll Divest Businesses and Focus on Co-Working

Friday, 08 November 2019 05:06 PM

WeWork said Friday that it added twice as many rented desks at its co-working spaces in the third quarter compared with same period the year before, even as its hotly anticipated initial public offering was imploding. The company also confirmed that it would divest businesses, including Meetup and its investment in the Wing.

The New York-based company shared new information publicly about its business that had been compiled for lenders in October for a potential debt package organized by JPMorgan Chase & Co. The data was previously only available to those who signed nondisclosure agreements, WeWork said.

As it added new members, the beleaguered company reported a drop in occupancy rate, down to 80% from 83% the year before. Occupancy in China and elsewhere in Asia were particularly low.

The investor presentation, which is dated Oct. 11, tries to put a positive spin on the upheaval it went through in the past few months. It describes the “member experience” for its customers as “focused.”

The news comes a day after WeWork said it fired 13 employees accused of violating company policies, the first major action since SoftBank Group Corp. took a majority stake in the troubled co-working business.

The dismissals affected workers in business regions encompassing Canada, Israel, Latin America and the U.S., according to an email to staff from Marcelo Claure, the WeWork chairman and a SoftBank executive, sent late Thursday and reviewed by Bloomberg. He said the violations related to “vendor selection and management processes.”

“WeWork will not tolerate behavior that disrespects our people, members or business,” Claure wrote. “We are a culture that believes in making the impossible possible. I want that culture to continue, but always with integrity and respect—respect for the law, our policies and, most importantly, each other.”

Separate from the HR investigations, WeWork is expected to soon dismiss thousands of employees in a bid to cut costs. In the email to staff, Claure said the layoffs will be completed in the next several weeks. A spokeswoman for the company declined to comment.

Claure told employees that he’s working on a five-year strategic plan for WeWork that further addresses governance issues, which have been a central criticism of the company and helped derail its initial public offering. Part of SoftBank’s takeover involved parting ways with Adam Neumann, the co-founder who leased space to the company as it lent him money.

Organizational and compensation changes are coming, Claure said, without offering details. The new plan will be designed to help WeWork grow sustainably without needing to raise more capital, he said.

To minimize personnel issues in the future, Claure asked staff to share concerns through an internal helpline. He assured employees they won’t be “retaliated against for coming forward in good faith.”

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Friday, 08 November 2019 05:06 PM
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