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.
The offer would lead to the exit of its cofounder and Chairman Adam Neumann, people familiar with the matter told the Reuters News Agency.
WeWork could run out of cash as early as next month without new financing, after the company pulled plans in September for an initial public offering (IPO).
It abandoned the IPO when investors questioned its large losses, the sustainability of its business model, and the way WeWork was being run by Neumann – who gave up his CEO title last month and now serves as board chairman.
SoftBank has offered five billion dollars in new money to WeWork in the form of debt, the sources said. It is also proposing to accelerate a previous $1.5bn equity commitment to WeWork in the form of warrants that are due in April.
This commitment was made in January at a $47bn valuation, but SoftBank is now seeking to renegotiate it at a valuation of about eight billion dollars.
SoftBank is also proposing to launch a tender offer for up to three billion dollars to acquire WeWork shares from existing investors and insiders, including Neumann.
Based on the outcome of the tender offer, SoftBank could own between 60 percent and 80 percent of WeWork – but will seek to avoid consolidating the company on its books.
Neumann could step down from The We Company’s board as part of the deal with SoftBank and become an adviser. SoftBank Chief Operating Officer Marcelo Claure would succeed Neumann as chairman, the sources said.
The We Company’s board will meet on Tuesday to evaluate SoftBank’s offer. Meanwhile, JPMorgan Chase & Co has been trying to put together an alternative financing package.
WeWork, SoftBank and JPMorgan all declined to comment.
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.
SoftBank and its $100bn Vision Fund already own about a third of WeWork through previous investments totalling $10.6bn.
The We Company’s seven-member board tasked two directors with representing the interests of all investors in the company by sitting on the special committee considering the financing plans.
Reuters news agency