Business

WeWork, Rejected by Wall Street, Accepts Lifeline From SoftBank

In addition to the takeover offer from SoftBank, WeWork’s board had also been considering a $5 billion debt financing offer from JPMorgan Chase.

The SoftBank deal will mean a huge payout for Adam Neumann, WeWork’s co-founder who stepped down as chief executive last month. Under Mr. Neumann, the company grew at a breakneck pace, drawing ardent backers like SoftBank’s chief executive, Masayoshi Son, and making Mr. Neumann wealthy.

But prospective investors for the company’s initial offering were skeptical of his leadership, and existing WeWork backers — including SoftBank — pushed for his ouster.

Yet Mr. Neumann will receive roughly $1.7 billion in consideration as part of the SoftBank deal, according to the people with knowledge of the offer. The Tokyo-based technology giant will buy roughly $1 billion worth of WeWork shares from him, and give him about $500 million worth of financing to repay a credit line from JPMorgan. Mr. Neumann also will receive a $185 million consulting fee.

In exchange, he will back the SoftBank deal and step down from WeWork’s board.

As part of the agreement, SoftBank will accelerate a $1.5 billion investment in WeWork that it had planned to make next year, and it will help assemble a $5 billion loan from a consortium of financial institutions, including itself.

Article source: https://www.nytimes.com/2019/10/22/business/dealbook/wework-softbank.html?emc=rss&partner=rss

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