WeWork just agreed to SoftBank's bailout which values the company between $7.5 billion and $8 billion, according to CNBC
- WeWork is taking a bailout from SoftBank, a deal which will value the company between $7.5 billion and $8 billion, CNBC reported on Monday.
- The embattled office company, whose valuation was once as high as $47 billion just a few months ago, was set to run out of money next month.
- WeWork had planned to raise billions from going public this fall, but its initial public offering was shelved after investors raised questions about its business model and leadership.
- For more WeWork stories, click here.
WeWork picked SoftBank to rescue the embattled office company, capping a tumultuous autumn that saw co-founder Adam Neumann ousted and his successors scramble to keep the company afloat.
CNBC reported Monday that the Japanese investor will spend $4 billion to $5 billion on new equity, valuing WeWork between $7.5 billion and $8 billion. It's a far cry from the $47 billion the company was valued at just a few months ago.A spokeswoman for WeWork declined to comment. A representative for SoftBank did not immediately respond to a request for comment.
WeWork earlier this year was in talks to borrow $6 billion from banks which was contingent on raising at least $3 billion in a public float. But after the company released its IPO filing in mid-August, investors, analysts, and the media highlighted problems with its business model, conflicts of interest, and leadership. Six weeks later, WeWork's board of directors ousted controversial CEO Adam Neumann and replaced him with two co-CEOs, who shelved the IPO indefinitely.
Co-CEOs Artie Minson and Sebastian Gunningham immediately turned their attention to rescuing WeWork, which didn't have enough money to get through November, according to reports. They looked to sell some of WeWork's acquisitions and the company's corporate jet; lay off up to a quarter of the company's workforce; wind down non-core businesses like WeGrow, its educational arm; ax members of Neumann's inner circle; and line up billions in funding.
To keep the lights on, WeWork had two options: a debt-and-equity package from SoftBank or an all-debt deal from JPMorgan. WeWork's seven-member board tapped directors Bruce Dunlevie and Lew Frankfort to form a two-man committee to evaluate the plans, Reuters reported. Dunlevie is a general partner at WeWork investor Benchmark Capital, while Frankfort was the CEO of handbag company Coach.
The pair were advised by investment bank Perella Weinberg Partners and law firms Skadden, Arps, Slate, Meagher & Flom and Wilson Sonsini Goodrich & Rosati, Reuters said.See more: Inside WeWork's troubled $850 million Lord & Taylor building: A tale of outsize ambition, audacious renovations, and now financial worries