USA – Office-sharing company WeWork, that is trying to negotiate a financial lifeline, has revealed that it discovered elevated levels of formaldehyde in some of the phone-booths installed in some of its offices.

The company said that the discovery informed the decision to close about 2,300 phone booths at some of its 223 sites in the United States and Canada

Although WeWork declined to comment on the cost of testing and replacing the booths, this new problem that may prove costly to a company that is already cash strapped and in need of urgent capital injection to continue operating.

The company, which abandoned plans for an initial public offering last month after investors questioned its mounting losses and the way it was being run, said in an email to its tenants in October that the chemical could pose a cancer-risk if there is long-term exposure.

In 1987, the U.S. 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.

WeWork began testing its phone booths after a tenant complained of odor and eye irritation, the company said in the email to tenants, which it calls members.

Based on the results, the office-sharing company took 1,600 phone booths out of service with an additional 700 booths being closed recently while more testing was being conducted.

The company further revealed that all the phone booths closed were installed over the past several months, it however declined to identify the manufacturer of the phone booths

“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.

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 current closures would thus affect the overall working offices at the affected offices.

WeWork is currently in talks for a multi-billion-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 that will enable it to have enough working capital to continue conducting its operations.