In latest headache for cash-strapped company, WeWork says it has closed about 2,300 phone booths amid formaldehyde scare

This article is more than 11 months old

This article is more than 11 months old

WeWork, the cash-strapped office-sharing company, has a new problem that may prove costly. It has closed about 2,300 phone booths at some of its 223 sites in the United States and Canada after it says it discovered elevated levels of formaldehyde.

The company said in an email to its tenants on Monday that the chemical could pose a cancer risk if there is long-term exposure.

WeWork has been trying to negotiate a financial lifeline after abandoning plans for an initial public offering last month, when investors questioned its mounting losses and the way it was being run. WeWork’s co-founder Adam Neumann stepped down as chief executive last month after the failed stock market launch.

The latest headache for the company began after a tenant complained of odor and eye irritation. WeWork started testing and, based on the results, took 1,600 of the phone booths out of service, the company said in the email to tenants. Phone booths function as private work stations frequently used by WeWork members to make voice and video calls.

An additional 700 booths are closed while more testing is conducted, it said. All the phone booths closed were installed over the past several months, WeWork said.

“The safety and well-being of our members is our top priority and we are working to remedy this situation as quickly as possible,” WeWork said in a statement to Reuters.

Facebook Twitter Pinterest WeWork offices in San Francisco. Phone booths function as private work stations frequently used by WeWork members to make voice and video calls. Photograph: Kate Munsch/Reuters

More costs are the last thing needed at the company, which some analysts say is fast running out of money. WeWork declined to comment on the cost of testing and replacing the booths.

It is currently in talks for a multibillion-dollar rescue deal that could lead to its largest shareholder, Japan’s SoftBank Group Corp, taking control, two people familiar with the matter said. WeWork is also talking to JPMorgan Chase over a possible debt package, they said.

WeWork declined to identify the manufacturer of the phone booths.

“Long-term exposure to formaldehyde, such as that experienced by workers in jobs who experience high concentrations over many years, has been associated with certain types of cancers,” WeWork told tenants in the email.

In 1987, the US Environmental Protection Agency classified formaldehyde as a probable human carcinogen under conditions of unusually high or prolonged exposure. Some studies since then suggested that formaldehyde exposure is associated with certain types of cancer, according to the National Cancer Institute.

A tenant, who did not wish to be identified, said she was worried about the risk of cancer as she had spent hundreds of hours inside phone booths at a San Francisco WeWork that has the problem.

Phone booths are popular in WeWork’s open-plan offices as they provide privacy and noise reduction, the tenant said.