SoftBank said to plan taking control of WeWork

Marco Green
October 22, 2019

Marcelo Claure, SoftBank's chief operating officer, would become chairman.

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 previous year.

SoftBank Group Corp offered close to $10bn to WeWork owner The We Company, its employees and its investors on Monday under a plan to keep the struggling United States office space-sharing start-up afloat. This summer, WeWork appeared to be headed toward a rich initial public offering. The startup had amassed more than US$10 billion in commitments from SoftBank.

One of Silicon Valley's highly coveted "unicorns" - a company valued over $1 billion - WeWork has suffered a stunning fall from grace in the weeks since it pulled its plans to go public late last month.

The deal could give WeWork a reprieve as it scrambles to cut costs. Those voting rights, as well as a series of deals Neumann conducted with the company, emerged as a major source of concern for investors when the group was preparing for its IPO.

Neumann now controls an economic stake of just over 20% in an investment vehicle with his co-founder, Miguel McKelvey. The package is also expected to include $5 billion in debt financing.

The debt in the SoftBank proposal would be on better terms than the debt financing cobbled together by JPMorgan, one person briefed on the rival offers said.

The We Company's board will meet on Tuesday to evaluate SoftBank's offer.

Buffeted by skepticism from investors and questions about its governance, the company - which has yet to turn a profit - is reportedly working with JPMorgan Chase (JPM) to arrange fresh capital as a cash crunch looms.

Representatives for WeWork and SoftBank did not immediately return Yahoo Finance's request for comment.

Other reports by Click Lancashire

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