Embattled office rental unicorn WeWork could be taken over by its largest investor as part of an emergency financing deal to stave off a looming cash crunch.
Japan’s SoftBank has prepared a financing package that would give it full control of WeWork and further sideline founder Adam Neumann, the Wall Street Journal reported on Monday.
The possible financing package comes after WeWork was forced to pull its planned stock market listing last month. Investors baulked at the company’s huge losses, various side deals involving founder Neumann, and its proposed $47bn (£37bn) valuation. Despite reducing its valuation by $30bn and addressing governance concerns, WeWork was forced to pull its IPO due to weak demand and founder Neumann was pushed out as CEO shortly after.
The collapse of the IPO has left WeWork facing a possible cash crunch, according to the Financial Times. The SoftBank deal is one of multiple deals being assessed to keep the company afloat.
WeWork rents space in office buildings on long leases and then offers flexible, short-term subleases to startups. It business model requires consistent strong cashflow to meet rental payments. Filings last week showed that just three London buildings were committed to over £250m in long-term lease payments.
SoftBank already owns around a third of WeWork through its $100bn Vision Fund and SoftBank founder Masayoshi Son has been one of the company’s biggest supporters. The Wall Street Journal reports that the new funding deal being considered would shift share voting power within the company away from Neumann to SoftBank. It is not clear how big the proposed SoftBank financing package is.
A spokesperson for WeWork told Yahoo Finance UK: “WeWork has retained a major Wall Street financial institution to arrange a financing. Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
SoftBank declined to comment.