London (CNN Business)WeWork has a new problem: It's taking 2,300 phone booths out of service at its rental offices in the United States and Canada because they may have elevated levels of the chemical formaldehyde.
The startup said it performed tests on phone booths after a tenant complained of eye irritation and discovered "potentially elevated levels of formaldehyde caused by the manufacturer."
The phone booths function as private rooms in WeWork's open-plan offices.
WeWork said in a statement that 1,600 phone booths that may be affected would be removed "as soon as possible." Another 700 are being taken out of service while additional tests are conducted.
Formaldehyde is used in building materials and household products, and exposure can cause irritation of the skin, eyes, nose and throat. High levels of exposure may cause some types of cancers, according to the US Environmental Protection Agency.
"The safety and well-being of our members is our top priority, and we are working to remedy this situation as quickly as possible," said a company spokesman.
Another setback
The chemical scare is the latest blow to the fast-growing office rental company, which is struggling to right itself after steep losses and concerns over its governance derailed an IPO that was expected to be one of the biggest of 2019.
The failed attempt to go public cost co-founder Adam Neumann his job as CEO. He remains a non-executive chairman of the board.
Investors disliked the control Neumann wielded over the company and were skeptical of its $47 billion private market valuation, particularly after its IPO prospectus showed losses of $1.9 billion in 2018.
WeWork management said last month that a public listing was still under consideration. But another attempt at an IPO would need the backing of Japan's SoftBank, one of WeWork's biggest shareholders.
SoftBank (SFTBF) has pumped nearly $11 billion into the We Company over the past two years, taking a stake of at least 27%, according to brokerage firms CLSA and Bernstein Research.
The Wall Street Journal reported earlier this week that SoftBank (SFTBF) is preparing a financial package that would give it control of the company while further sidelining Neumann.
WeWork declined to comment Tuesday on news reports that it's preparing a round of job cuts.
CNN Business' Sherisse Pham and Seth Fiegerman contributed to this report.
