WeWork board weighs up $10bn rescue plan from Japan's SoftBank
WeWork's co-founder Adam Neumann has reportedly signed a $1.7bn deal to step back from the troubled office rentals company he founded.
The move comes as the board of WeWork meets to consider a rescue plan worth almost $10bn (£7.7bn) from its biggest investor, Japan's SoftBank.
According to The Wall Street Journal, Softbank will give Neumann almost $1.7bn as part of the deal, $1bn from the sale of his shares plus a $185m consultancy fee and a $500m line of credit.
The payout comes as WeWork weighs up sacking about 2,000 people. Those redundancies are on hold while WeWork refinances but are expected soon.
Earlier this year some bankers had predicted WeWork could be worth as much as $65bn, valuing Neumann's stake in the company at $14bn. However, after the publication of the company's share sale prospectus investors began to question WeWork's business model, its huge losses and Neumann's sometimes eccentric behavior.
The initial public offering (IPO) was pulled in September after WeWork's valuation was slashed by more than half.
Under the terms of the rescue deal, Marcelo Claure, SoftBank's chief operating officer, would become chairman. The Japanese conglomerate would end up owning 60% to 80% of WeWork under the proposal, which includes $5bn of new debt, as well as injecting $1.5bn in equity and an offer to buy up to $3bn of existing shares.
There is a rival funding package also on the table, from JP Morgan Chase, worth $5bn. That deal includes $2bn of unsecured debt. The board will decide on Tuesday which one to accept.
Without an injection of new funds, the company risks running out of cash by the end of November.
The emergency refinancing proposals come only two months after Neumann prepared to float the company on the US stock market.
However, it was forced to postpone the planned initial public offering (IPO) last month after failing to drum up enough interest from investors, who questioned WeWork's large losses, business model and the way the company is run by Neumann.
The company's valuation was slashed to $15bn-$20bn, from $47bn at the start of the year, under its IPO plans. It will be cut to about $8bn under the refinancing plan.
Neumann holds special voting shares that enable him to dismiss dissident directors, which sparked concern among investors when the company was preparing for its flotation. His voting rights, which initially gave him 20 times the voting power of other shareholders, were cut to three times those of ordinary shares when he stepped down as chief executive last month.
Neumann has also previously taken $700m out of the company through personal loans and stock sales.Topics
SoftBank Group is tapping Marcelo Claure to help turn around WeWork, after ousting co-founder and Chief Executive Officer Adam Neumann from the corner office earlier this week. Masayoshi Son, the head of SoftBank, WeWork's largest investor,
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