According to the Wall Street Journal quoted people familiar with the matter, SoftBank has prepared a financing plan to control WeWork and further let the company’s founder, Adam Neumann, move out. In addition, sources told The WSJ that SoftBank at present owns one-third of WeWork, but its goal is to reinvest billions of dollars in the company to increase its equity and debt. According to the WSJ, potential deals will transfer Neumann’s reduced voting rights to Japanese corporate groups. This will allow SoftBank to play a vital role in turning the company’s business operations. The situation is unstable, and there is no guarantee that an agreement will be reached.
Last month, Neumann announced that he had resigned as CEO because of the company’s resurgence in governance and valuation, postponing the initial public offering (IPO). At the time, a source told CNBC that Neumann agreed to reduce its voting rights from 10:1 to 3:1, thus giving up most of the control. He was the largest individual shareholder of the company, with approximately 115 million shares. Informed sources told CNBC that Masayoshi Son, the billion-dollar SoftBank CEO who invested in WeWork, led the allegation of dismissing Neumann as CEO.
In January, SoftBank invested US$ 2 billion in WeWork with a valuation of US$ 47 billion. According to research firm Bernstein analysts, WeWork’s IPO failure will force SoftBank to mark its investment. If the value of the public offering reaches US$ 20 billion, the operating profit will hit by 15%. Softbank is not the only rescue option for WeWork. The company, along with major lender JPMorgan, has been working to develop a multi-billion-dollar debt package. A source told that last week, WeWork executives were in New York headquarters of JPMorgan. According to the WeWork representative said in a statement that WeWork retained a significant financial institution on Wall Street to arrange finance. In the last and following week, about 60 financing sources have signed privacy agreements and are holding meetings with company management and their bankers.