Former WeWork CEO and Co-Founder Adam Neumann was offered a reported $1.7 billion in stock, cash and credit to exit the company as investor SoftBank takes control, The Wall Street Journal reported on Tuesday (Oct. 21).
SoftBank, led by Japanese billionaire Masayoshi Son, plans to spend $4 billion to $5 billion in new funding and existing shares, sources told WSJ. SoftBank previously invested $10.65 billion in the space-sharing company and won control over a competing JPMorgan Chase deal.
As part of the bailout deal, Neumann will also give up his voting shares and reportedly will sell about $1 billion in shares to SoftBank. Sources said he will also get an approximate $500 million credit line from Softbank and a $185 million consulting fee.
The deal is supposed to be announced on Tuesday (Oct. 22) but sources told WSJ it could be postponed.
This proposal is the latest in the WeWork saga as it struggles to stay afloat. Neumann resigned as WeWork’s CEO on Sept. 24, with CFO Artie Minson and another executive, Sebastien Gunningham, taking over as co-CEOs. On Sept. 30, WeWork backed out of its initial public offering (IPO). Its IPO prospectus in August showed a $900 million loss in the first half of 2019, sparking worry over how it was being managed.
Marcelo Claure, a SoftBank executive, is probably going to be chairman of the newly acquired company.
Following Neumann’s exit as CEO last month, and the company has been diligently chasing down financing leads in an attempt to raise new capital. It met with JPMorgan about debt financing, and all of the negative press and inner company strife led to a difficult relationship between Son and Neumann.
WeWork was also reportedly laying off about 13 percent of its staff, or around 2,000 people, and more layoffs could be on tap.
It was rumored that the company could run out of cash in November.