WeWork confirms a lifeline of up to $ 8 billion from SoftBank Group; appoints new CEO – TechCrunch
Confirmed previous reports, The Company and SoftBank Group agreed on a new capital investment that will see SoftBank commit $ 5 billion in new financing and issue a $ 3 billion additional offer in share buybacks.
The company also said it would speed up an existing commitment to put $ 1.5 billion into the short-term real estate rental company.
Under the specific terms of the agreement, WeWork will receive $ 1.5 billion committed from SoftBank's April 2020 cash infusion to the Company at $ 11.60 per share. With the money expected to be received seven days after the agreement is signed (subject to shareholder approval).
There are also bids of up to $ 3 billion worth of non-SoftBank-owned shares at a price of $ 1[ads1]9.19 per share, which will begin in the fourth quarter of this year, with regulatory approvals ending.
Finally, there is a joint venture stock swap where all SoftBank Vision Fund's interests in regional joint venture companies outside Japan will be exchanged for WeWork shares at a price of $ 11.60 per share and a debt facility consisting of 1 , $ 1 billion in senior insured notes, $ 2.2 billion in unsecured notes and a $ 1.75 billion credit facility, which will be completed after the tender offer is completed.
After the closing and in the tender offer, SoftBank will own approximately 80 percent of We Company, according to a statement.
But SoftBank does not actually want a majority of the voting rights of any shareholder or many board members, thanks to WeWork's transformed ownership structure. Therefore, even with its 80 percent stake in the business, WeWork is not a subsidiary, but an "affiliate" of SoftBank.
As part of the agreement, the company confirmed that Adam Neumann will become a board observer and Marcelo Claure, CEO of the SoftBank Group will assume the position of CEO of WeWork – as soon as the company receives $ 1.5 billion in payment from SoftBank.
“SoftBank is a firm belief that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution. It is not uncommon for the world's leading technological disruptors to experience growth challenges that WeWork just faced, said Masayoshi Son, chairman and CEO of SoftBank Group Corp, in a statement. “Since the vision remains unchanged, SoftBank has decided to double the company by offering significant capital investment and operational support. We remain committed to WeWork, its employees, its customers and landlords. "
The vision may remain unchanged, but the story that SoftBank wants to tell about its new" affiliation ". Under Neumann's management, We Company was a cash-burning, earth-spanning, all-encompassing social developer who would launch a new type of capitalism, operating under the banner "We".
Now the company is more than a struggling supplier of temporary office space, having a mountain of leases it owns and looking down the barrel to a potential cash crash – even with the SoftBank lifeline.
Still, SoftBank executives and WeWork's new management stand by their rhetoric for what the company is … and can be.
“WeWork redefines the nature of work by creating meaningful experiences by integrating design, technology and society. The new capital SoftBank provides will give the company momentum again, and I am committed to delivering profitability and positive free cash flow, ”Claure said in a statement. "As important as the financial implications, this investment demonstrates our confidence in WeWork and its ability to continue to disrupt the commercial real estate market by providing flexible, collaborative and productive work environments to our customers."
