WeWork Inc.'s stock (WE, +5.74%) showed a 2.7% rise early Tuesday following the announcement that the company has entered into a seven-day forbearance agreement with its bondholders. This agreement comes after a 30-day grace period on the payment of interest expired.
To preserve liquidity and engage in discussions with lenders, WeWork had previously chosen to skip interest payments on certain bonds in early October. The company has now reached this forbearance agreement with creditors, including SoftBank Vision Fund II and Goldman Sachs International Bank.
As part of the agreement, WeWork will withhold the cash payment of approximately $6.4 million in interest due on November 1 on its 7.875% notes, which are set to mature in 2025.
WeWork's ongoing financial challenges have been evident since August when the company expressed "substantial doubt" about its ability to sustain its operations. This disclosure led to a significant 24% drop in its stock value.
In the second quarter, WeWork suffered a loss of $397 million, with liquidity amounting to $680 million at that time. Consequently, the stock has experienced a staggering decline of 95% year-to-date, while the S&P 500 (SPX, +1.20%) has recorded a positive gain of 8.5%.
