WeWork, once worth $ 47 billion, will be worth as little as $ 7.5 billion on paper that SoftBank takes control of the struggling collaboration business, CNBC reports.
SoftBank, a long-time WeWork investor, plans to invest between $ 4 and $ 5 billion in exchange for new and existing shares, according to CNBC . The deal, which is expected to be announced as soon as tomorrow, represents a lifeline for WeWork, which is said to be just weeks away from running out of cash and has traded several of its assets as it tries to reduce its cash burn.
WeWork declined to comment.
To be clear, it is reportedly the Vision Fund's parent company, SoftBank Group Corp. that takes control, and SoftBank International CEO Marcelo Claure stepped out to support the company's management, per reports.
The Japanese telecom giant's move comes exactly four weeks after co-founder and former CEO Adam Neumann left control of the company and switched to a non-executive board role, and about three weeks after WeWork decided to postpone highly anticipated public offers. WeWork's Deputy Sebastian Gunningham and the company's President and CEO Artie Minson currently serve as WeWork's co-CEOs.
In addition to staff advancement, WeWork has lost its communications manager, Jimmy Asci, its marketing manager Robin Daniels and several others. Meanwhile, the company has cut down hundreds of jobs, opting to shut down the WeGrow school by 2020.
Now expected to go public by 2020, WeWork was also said to be in talks with JPMorgan for cash at the last minute infusion. The company, which is now a cautionary tale, will surely continue to reduce the soaring costs of its money-losing business in the coming months.
WeWork revealed an unusual IPO prospectus in August after collecting more than $ 8 billion in equity and debt financing. Despite finances showing nearly $ 1
"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. "