WeWork announced that it had accepted a $9.5 billion rescue package from Japan’s SoftBank Group. The company said that the Japanese conglomerate will provide $5 billion in new financing and up to $3 billion in a tender offer for existing shareholders. The company is also going to stimulate an existing commitment by investing $1.5 billion into the short term real estate rental company.
Moreover, Neumann will also walk away with almost $1 billion in cashed-out stock. SoftBank believes coworking has a bright future and that WeWork will continue to be the market leader. Also, Dan Alpert, managing partner at New York-based investment bank Westwood Capital said that while SoftBank’s bailout is a stabilizing move,” the logical next step for debt-ridden WeWork would involve the company declaring bankruptcy so that it can “aggressively restructure its real liabilities, which are the leases.”
“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,” SoftBank Chairman and CEO Masayoshi Son said in a statement.
Alpert also said that they have never seen a so-called unicorn restructure in bankruptcy as no other company would see any real benefit in doing so. Further, the company has also planned to raise $3 billion by going public and had arranged a $6 billion financing package from major lenders contingent on a successful IPO. SoftBank also said that it will not hold a majority of voting rights at any general stockholder meeting or board of directors meeting and does not control the Company.
“Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, its employees, its member customers, and landlords,” Masayoshi Son added.