WSJ: SoftBank, WeWork's largest investor, takes control of the embattled office company, with co-founder Adam Neumann stepping down

Business Insider Finance 1 month ago

SoftBank, WeWork's largest investor, is attempting to rescue the embattled office company with a bailout plan reported Tuesday by the Wall Street Journal.

The Japanese investor will provide WeWork co-founder Adam Neumann with almost $1.7 billion. He'll sell about $1 billion of stock to SoftBank. Neumann will step down from the board, where he's currently the chairman, and will receive a $185 million consulting fee as well as a $500 million credit line, per the Wall Street Journal.

Full details of the deal are not yet clear. Representatives for SoftBank and WeWork did not immediately respond to requests for comment.

Reuters reported on Monday that the company would offer WeWork $5 billion in debt; accelerate a $1.5 billion equity commitment slated for next year; and buy $3 billion worth of stock from investors including co-founder Adam Neumann. SoftBank would own between 60% and 80% of WeWork.

WeWork earlier this year was in talks to borrow $6 billion from banks, a deal contingent on raising at least $3 billion in a public float. But after the company released its initial-public-offering filing in mid-August, investors, analysts, and the media highlighted problems with its business model, conflicts of interest, and leadership. Six weeks later, WeWork's board of directors ousted the controversial CEO Neumann and replaced him with two co-CEOs, who shelved the IPO indefinitely.

After taking the co-CEO role on September 24, Artie Minson and Sebastian Gunningham immediately turned their attention to rescuing WeWork. They looked to sell some of WeWork's acquisitions and the company's corporate jet; lay off up to a quarter of the company's workforce; wind down noncore businesses like WeGrow, its educational arm; ax members of Neumann's inner circle; and line up billions in funding. 

WeWork's seven-member board tapped the directors Bruce Dunlevie and Lew Frankfort to form a two-man committee to evaluate the plans from SoftBank and JPMorgan, Reuters reported. Dunlevie is a general partner at the WeWork investor Benchmark Capital, while Frankfort was the CEO of the handbag company Coach. 

The pair were advised by the investment bank Perella Weinberg Partners and the law firms Skadden, Arps, Slate, Meagher & Flom and Wilson Sonsini Goodrich & Rosati, Reuters said.

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