SoftBank Wants Control Of WeWork

The parent company of WeWork is at a junction after its initial public offering (IPO) tanked and its chief executive officer stepped down, Reuters reported on Sunday (Oct. 13)

Lead investor SoftBank has a financing package in place to command WeWork and put the firm’s founder — Adam Neumann — further aside, sources told The Wall Street Journal.

SoftBank gave WeWork a financing offer that would give it control. SoftBank told the news outlet it wants to put money into WeWork and have a bigger role in operations.

Directors of the We Company are expected to meet as soon as Monday (Oct. 14) to consider the best “financial rescue package,” three sources told CNBC.

SoftBank CEO Masayoshi Son, who invested billions of dollars in WeWork, led the charge to remove Neumann as CEO.

Neumann had announced last month that he was stepping down as CEO after the company delayed its initial public offering amid an uproar over its governance and valuation.

SoftBank had invested $2 billion in WeWork at a valuation of $47 billion in January. WeWork’s aborted IPO would have forced SoftBank to write down its investment, with operating profit taking a 15% hit if the public offering had been valued at $20 billion, according to analysts at research firm Bernstein.

WeWork needs to be financed by the end of November or it will run out of money. The co-working company, which allows people to share office space, is working on a deal to help its cash woes. It is reportedly talking to investor SoftBank Group about an equity injection; the deal could be completed in the next few weeks.

Previous projections said WeWork would run out of money by the middle of 2020, and that its parent company, We Co. was working toward an initial public offering (IPO). It was also counting on a $6 billion loan dependent on the IPO, but that didn’t move forward due to a number of reasons.