Sources have revealed that WeWork is considering freezing its expansion plans in China, Hong Kong and South Korea.
This news comes just after WeWork formally delayed its IPO for this year and ousted Adam Neumann as CEO. Now, executives at the company are attempting to gather up a $3 billion debt deal led by JPMorgan and Chase, which is contingent on the company raising new equity.
The company is also considering selling off its non-coworking businesses and laying off thousands of employees.
WeWork’s Asia expansion plans were driven by its largest backer SoftBank. Its Asia business was valued at $1.6 billion and featured joint ventures in China, Japan and the Pacific region.
WeWork’s investments in China have likely decreased the company’s likelihood of making a profit. Its prospectus revealed that a WeWork profit margin, known as the contribution margin, dropped 3 percentage points due to its China business.
“A significant part of our international growth strategy and international operations will be conducted through joint ventures and disputes with our partners may adversely affect our interest in these joint ventures,” according to the company’s S-1.
Another chapter in the company’s series of unfortunate events is that its main competitor in China, UCommune, has twice the locations and recently raised $650 million from investors.