As per the latest development, Japanese billionaire Masayoshi Son led SoftBank is taking control of WeWork as part of a desperately needed lifeline. As per the agreement, SoftBank said it would provide $5 billion (£3.9bn) in new financing and up to $3bn for existing shareholders at $19.19 per share.
Masayoshi Son, Chairman & CEO of SoftBank Group Corp:
SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, its employees, its customers, and landlords.
80% stake!
On top of that, SoftBank will be accelerating an existing commitment to fund $1.5 billion. This deal gives the Japanese conglomerate SoftBank an 80% stake in the company.
The deal provides the company with much-needed cash to execute its plan to accelerate the company’s path to profitability and positive free cash flow.
WeWork will be an associate of SoftBank!
It’s worth mentioning that this deal marks the end of an era for the troubled coworking space company, which is now valued at less than $8 billion in the bailout.
However, SoftBank confirmed that it will not hold a majority of voting rights and does not control the company. Furthermore, WeWork will not be a subsidiary but an associate of SoftBank.
Artie Minson and Sebastian Gunningham, co-CEOs of WeWork, said:
This financing provides WeWork with the capital to fully realize its objective of being the partner of choice to our members and landlords, while at the same time providing a platform for growth and capital returns for shareholders and employees.
Marcelo Claure as Executive Chairman!
As a part of the package, WeWork founder Adam Neumann will leave the company’s board and will be replaced by SoftBank executive and newly appointed Executive Chairman Marcelo Claure. Adam Neumann will be connected with the company as a board observer.
Marcelo Claure said:
As important as the financial implications, this investment demonstrates our confidence in WeWork and its ability to continue to lead in disrupting the commercial real estate market by delivering flexible, collaborative, and productive work environments to our customers. I look forward to helping WeWork realize its vision for the benefit of WeWork employees, members, landlords, and communities worldwide.
Adam Neumann leaves the company’s board with a sizeable payout!
People familiar with the matter said that Neumann will is set to walk away with a sizeable payout – $1.2 billion in WeWork stock, a $500 million credit line from SoftBank, and a roughly $185 million consulting fee. He still sits pretty at the top with his net worth somewhere around $1 billion, as per the Bloomberg Billionaires Index.
Two options to keep WeWork afloat!
WeWork board was considering two options to keep the company afloat – First, the SoftBank rescue package and the second was a $5 billion debt package presented by JPMorgan Chase & Co. However, the latter was considered as one of the riskiest junk-debt offerings in recent years.
Claure added:
The new capital SoftBank is providing will restore momentum to the company, and I am committed to delivering profitability and positive free cash flow.
WeWork!
Founded by Adam Neumann and Miguel McKelvey in 2010, WeWork has earned a name for itself as a global network of coworking spaces. Right now, it is one of the largest coworking space chains in the world, with around 2000 employees and 580 office locations across 100 cities in 27 countries.
William Rudin, CEO & Co-Chairman, Rudin Management Company, Inc., and co-developer of Dock 72, WeWork’s first ground-up development:
SoftBank’s new strategic investment in WeWork instills strong confidence among the company’s partners and employees and will help it to grow and succeed well into the future.
Main image credit: WeWork
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