Layoffs At WeWork? Startup Company Could Cut 2,000 Employees As Losses Mount

WeWork, which was forced to postpone its initial public offering last month amid plummeting valuations, reportedly plans to lay off at least 2,000 people, about 13% of its workforce, as soon as this week.

The Guardian reported Tuesday the timing of the cuts is uncertain as the co-working office space rental company attempts to raise cash before it runs out of funds, likely by the first quarter of 2020. Growth has all but stopped in its two largest markets, New York and London, as landlords grow reluctant in light of the company’s continuing financial losses, $1.6 billion last year alone. WeWork had just $2.5 billion on hand as of June 30.

“The atmosphere is toxic. A lot of people worked so hard for this company. We thought we were in on something really big,” an anonymous staffer told the Guardian.

WeWork, which was founded in 2010, rents and retrofits buildingsm dividing them into tiny workspaces. It appeals to millennials with such perks as beer taps and communal spaces. At one point. WeWork was valued at $47 billion and had begun attracting such major tenants as IBM and Microsoft. The company has a junk credit rating and its valuation currently hovers around $20 billion.

Softbank, which already owns a third of WeWork, reportedly has prepared a multibillion-dollar financing package that would give it control of the company and further sideline founder Adam Neumann, who was forced to resign under pressure after parent We Co. pulled the IPO Sept. 30 because of ballooning losses. Neumann still has a substantial stake in the company.

“WeWork has retained a major Wall Street financial institution to arrange a financing,” a company spokesman told the Wall Street Journal. “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”

New co-CEOs Artie Minson and Sebastian Gunningham are reported working on a turnaround plan that includes examining company leases and buildings around the world.

Money isn’t WeWork’s only problem: Phone booths at its U.S. and Canadian rental offices have tested positive for elevated levels of formaldehyde, Business Insider reported.

WeWork tested the phone booths, which function as private rooms in its open-plan offices, after a tenant complained of eye irritation. An email obtained by Business Insider indicated the company was pulling 1,600 phone booths from service and is conducting additional tests on 700 more.

Formaldehyde is a toxic chemical used as a particleboard and wood product sealant that can cause eye, nose and throat irritation.