With a new capital infusion, SoftBank Group is extending a lifeline of up to $8 billion into the office space and workspace solutions firm WeWork. The infusion will see SoftBank committing $5 billion in new financing as well as issuing a tender offer for an additional $3 billion in buybacks for shareholders, while the firm would also speed up a commitment to put $1.5 billion into the company, according to reports.
Masayoshi Son, chairman and chief executive of SoftBank Group Corp., said in a statement, “SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution. It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced.”
With the deal’s terms, SoftBank will speed up the cash infusion of $1.5 billion that was expected next April for $11.60 per share. It is forecasted to arrive seven days following the time the deal is inked (with shareholder approval needed for closing). At the same time, there is a tender offer for a maximum of $3 billion worth of shares that are not owned by SoftBank at a price of $19.19 each that will start in Q4 (subjected to regulatory approvals for closing).
There is also a joint venture share swap, in which all of the Vision Fund’s interests in regional joint ventures not in Japan will be traded for shares in WeWork at the price of $11.60 per share, along with a debt facility. That will be comprised of unsecured notes of $2.2 billion, senior secured notes of $1.1 billion and a letter of credit facility of $1.75 billion that will happen following completion of the tender offer.
In separate news, reports recently surfaced that WeWork will get rid of 4,000 jobs in an effort to become profitable. According to reports, the company will cut 30 percent of its workforce, and approximately 1,000 of those layoffs will be jobs such as cleaning staff, which WeWork aims to outsource.