WeWork’s board has approved investor SoftBank’s multi-billion dollar rescue deal, which will see the Japanese telecoms giant assume control of around 80% of the troubled property start-up.
In a statement, Softbank said it would provide $5 bn (€4.5 bn) in new financing and will launch a tender offer of up to $3 bn for existing shareholders. In addition, SoftBank will be accelerating an existing commitment to fund $1.5 bn.
The funding provides WeWork with 'significant liquidity to execute its business plan to accelerate the Company’s path to profitability and positive free cash flow', Softbank 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,' said Masayoshi Son, Chairman & CEO of SoftBank Group Corp. 'It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced. Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support.'
In connection with the agreement, WeWork’s board will appoint Marcelo Claure, Chief Operating Officer of SoftBank Group Corp., to the position of executive chairman of the board of directors of WeWork. Adam Neumann, the founder of the company, will leave the board but retain 'observer' status. The size of the board will be expanded and it will receive voting control over Neumann’s shares.
'The new capital SoftBank is providing will restore momentum to the company and I am committed to delivering profitability and positive free cash flow,' said Marcelo Claure.
The deal marks the end of a tumultuous period for WeWork - once valued at nearly $50 bn - that saw Neumann step down as chief executive as questions over his leadership emerged.
The US-based company, which rents shared office space and helped to popularise co-working, last month cancelled plans to raise money via a stock market listing after receiving a lukewarm reaction from investors.
WIth around 500 locations across the world, WeWork lost about $900 mln in the first six months of this year.