WeWork received a rescue deal from SoftBank to pull away from a $1.5 billion payout. The Japanese tech giant will offer $5 billion of financing and offer up to $3 billion for current shareholders and investors. Before this bailout, SoftBank already owned approximately 30 percent of WeWork. However, now they have 80 percent ownership of over the distraught startup. This is a massive jump. SoftBank’s Vision Fund plans to exchange its activity in the regional WeWork joint ventures in Asia, aside from Japan, for dividends in WeWork.
Inside sources state that the rescue deal makes the financial worth of WeWork about $8 billion. This is a substantial drop from $47 billion. There is also an added decline in company morale because there was an aim to go public soon. At this point, SoftBank is investing more capital into WeWork than the company’s value. After the deal became public, SoftBank’s stock fell 2.5% in Tokyo. WeWork’s doubtful co-founder, Adam Neumann, departed from his CEO position and will also leave the company’s board. He will be placed as a board observer.
How Will SoftBank Operate WeWork
SoftBank’s chief operating officer, Marcelo Claure, is appointed as the executive chairman of the extended WeWork board. The board is going to be in charge of voting for Neumann’s shares. Although the details of Neumann’s payout are unavailable, estimations are that he will walk away with about $1.7 billion. SoftBank’s proposal to purchase Neumann’s shares is limited to $975 million. This bundle includes a supplementary of a $500 million loan to compensate for the credit line. Additionally, there is a $185 million advising expense for SoftBank.
Masayoshi Son, the chairman of SoftBank, mentioned they are amplifying their reform on the organization by supporting operational support and a substantial capital infusion. Moreover, SoftBank strongly believes that the world is facing serious reforms towards working styles and organizational methods.
This deal reveals a bumpy two months for WeWork, which was also the time period Neumann made an effort to make the company public. The long-awaited reveal to the public received suspension and postponement. The investors resisted after its valuation and disapproved of the shared workspace co-founder’s operations roles and responsibilities towards the company.
SoftBank Stands By WeWork
This relief will help WeWork receive necessary funds. The bailout also follows the failing plans to promote financial gains through stock market listings. Son states that it is not uncommon for world-dominating reformers to face challenges in growth and progression. There are big hopes that this reformative organization will, in fact, turn around with the help and tenacity of SoftBank. WeWork is an organization that will bring reform to the work cultures and spaces of modern-day offices. Thus, there is still hope that this bailout will help save WeWork from any further misfortune. The company has seen immense growth in the beginning stages. With the hope that investors will be supportive and not abandon the firm, WeWork may be able to make a comeback. However, investors are obviously concerned and skeptical about the future of the company. Hopefully, the determination SoftBank corp exhibits is enough to keep investors on board.