SoftBank allegedly ends WeWork ownership stake with a potential $ 1.7 billion fall for Adam Neumann – TechCrunch
After erasing more than $ 30 billion in estimated unit value, Adam Neumann could walk away from the We Company with a windfall of $ 1.7 billion, according to a report in The Wall Street Journal.
This is how the company will end, not with the pop of a successful public offering, but with a whim of defeated investors likely tired of the month-long saga of trying to make sense of how a smart estate plan ballooned to one of the biggest scam in venture capital history.
Already discharged as the company's CEO, Neumann controlled shares in the company that gave him what constituted significant control even after he was removed.
The drama The Company (1[ads1]9459003) has it all. Of course, directors, terrible leadership, fierce greed – wrapped in a package of holistic spirituality and the invention of a new type of conscious capitalism. Although, ultimately, it was capitalism that was only conscious of its ability to deceive.
When Neumann leaves, SoftBank will gain control of the company it once valued at $ 47 billion, but to a far more modest $ 8 billion dollar figure. Still, the bid was more attractive to the board of The Company than a competing offer from JPMorgan Chase, according to the magazine's report.
Under the agreement, SoftBank will buy nearly $ 1 billion in stock from Neumann, which was already forced out of the company he was co-founding when public markets overstepped his executive power. The Japanese conglomerate, which had squeezed the $ 100 billion private market valuation of WeWork through its $ 100 billion Vision Fund, will also invest Neumann $ 500 million in credit to repay a loan facility and give him a $ 185 million consulting fee. As a result, Neumann will now be on the hook of Softbank for the loan.
Even with the Hindenburg-level disaster that Neumann piloted as CEO of the money-losing real estate venture, the former CEO will still retain a stake in the company and remain an observer on the board.
In all, SoftBank is bidding for as much as $ 3 billion to go to the company's employees and other investors. In fact, WeWork needs the money to afford the layoffs it allegedly wants to do when trying to fix the ship.
People with knowledge of the company's plans said that the decision could be announced today, according to the journal's reporting.
One of the reasons for the $ 500 million loan was that Neumann's withdrawal from the executive role of the company risked defaulting on his JPMorgan loans.
WeWork revealed an unusual IPO prospect in August after collecting more than $ 8 billion in equity and debt financing. Despite finances showing nearly $ 1 billion in losses in the six months ended June 30, the company still managed to accumulate a valuation of as high as $ 47 billion, largely as a result of Neumann's fundraising ability.
"As a co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade," Neumann said in a statement confirming he resigned last month. “Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members every day. Although our business has never been stronger, the control directed at me has become a significant distraction, and I have decided that it is in the company's best interest to retire as CEO. Thank you to my colleagues, our members, our landlord partners and our investors for continuing to believe in this wonderful business. "