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WeWork
Struggling property firm WeWork has reportedly accepted a rescue deal with a generous payout for controversial co-founder Adam Neumann.
The deal will see current investor, Japanese firm Softbank, buy billions more dollars worth of WeWork shares, including almost $1bn from Mr Neumann.
The agreement, which also includes $5bn in debt financing, gives Softbank control of the company.
It follows the collapse of WeWork’s plans to raise money via stock markets.
The Wall Street Journal first reported terms of the rescue plan.
It is said to value WeWork at about $8bn (£6.1bn), a sharp comedown from the nearly $50bn Softbank estimated when it invested in WeWork previously.
The Japanese investment giant, which already owned about a third of WeWork, has now spent about $19bn on the firm – more than double the firm’s current valuation, according to Reuters.
Reports said that Mr Neumann agreed to back the rescue plan over a rival offer from JP Morgan, in exchange for his shares, a $185m consulting fee and a $500,000 credit line. He is also expected to step down from WeWork’s board. He will retain a smaller stake in the company.
‘Significant chunk of cash’
Ronn Torossian, chief executive of the public relations firm 5W PR, called the exit package a “win” for Mr Neumann, who was forced out as chief executive last month after WeWork’s planned flotation ran into trouble.
“Many CEOs who get pushed out of the company they founded don’t exit with a billion dollars plus in cash,” he said. “It clearly shows that while Neumann was not right to lead the company at the time, his contributions were large enough to warrant a significant chunk of cash.”
WeWork, which rents shared office space and helped to popularise co-working, has grown from a single office in New York City to more than 500 locations around the world. But it lost about $900m in the first six months of this year.
The firm’s share offering received a lukewarm reaction from investors, who raised concerns about the firm’s financing and governance. WeWork officially dropped the flotation plan last month.
The company is now said to be preparing job cuts and sales of parts of the business in an effort to right its finances.