WeWork to be rescued by biggest shareholder SoftBank

Cornelia Mascio
Ottobre 22, 2019

WeWork has reached an agreement to be taken over by SoftBank Group, in a deal that will value the embattled office-space company between $7.7 billion and $8 billion, people familiar with the matter told The Real Deal.

The emergency refinancing proposals come only two months after Neumann prepared to float the company on the USA stock market.

Softbank is ready to invest an additional $4 billion to $5 billion in WeWork, taking a majority stake in the NY company while valuing it at $8 billion overall, the source said, asking not to be identified. Its offer was chosen over a proposal from JPMorgan Chase that involved a $5 billion debt deal. The bank has been pitching investors on a $5 billion junk-debt offering, but it has yet to outline the details.

Adam Neumann, the flamboyant co-founder and ex-chief executive of WeWork, could be stripped of his outsize voting power and chairmanship of the money-losing property company under a $9.5-billion rescue proposal from its largest investor, SoftBank, set to be considered by the board on Tuesday.

WeWork, SoftBank and JPMorgan all declined to comment. Marcelo Claure, SoftBank's chief operating officer, would become chairman.

The financing deal would also make SoftBank the controlling shareholder. Neumann would be left with less than 10% of votes. It is also proposing to accelerate a previous $1.5 billion equity commitment to WeWork in the form of warrants that are due in April, the sources added. The plan also includes an offer to buy as much as $3 billion of stock from existing shareholders, giving SoftBank a 60% to 80% stake, depending on how many shareholders agree to sell.

WeWork has lined up Mizuho Financial Group Inc as part of its syndication of the $5bn debt package, which comprises letters of credit for more than a billion dollars, as well as senior secured and subordinated bonds.

The bailout situation underscores the rapid unraveling of the once-high-flying startup.

WeWork could run out of cash as early as next month without new financing, sources have said, after the company pulled plans in September for an initial public offering (IPO).

An IPO filing by We Co. revealed that WeWork, which had a high-flying valuation of $47 billion following a $2 billion funding round by SoftBank announced in January, had a net loss of $1.9 billion a year ago. But public investors spurned the company, which lost US$900 million in the first half of this year.

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