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WeWork accepts multi-billion dollar Softbank rescue deal WeWork accepts multi-billion-dollar Softbank rescue deal
(about 2 hours later)
Struggling property start-up WeWork has been thrown a lifeline from Softbank, with a multi-billion dollar rescue deal. WeWork has been thrown a multi-billion-dollar lifeline from Softbank that will give the Japanese company more control of the troubled property start-up.
In a statement, Softbank said it would provide $5bn (£3.9bn) in new financing and up to $3bn for existing shareholders.In a statement, Softbank said it would provide $5bn (£3.9bn) in new financing and up to $3bn for existing shareholders.
The deal will see Japan's Softbank increase its stake in the US company to around 80%. The deal will see Softbank increase its stake in the US office-space sharing start-up to roughly 80%.
Co-founder Adam Neumann will leave the board but retain "observer" status.Co-founder Adam Neumann will leave the board but retain "observer" status.
The bailout follows the collapse of WeWork's plans to raise money via stock markets. The deal marks the end of a tumultuous period for WeWork - once valued at nearly $50bn - that saw Mr Neumann step down as chief executive as questions over his leadership emerged.
In addition to new financing and a tender offer for existing shareholders, Softbank said it will "accelerate" an existing commitment to fund $1.5bn. The former boss is expected to be handed a sizeable payout. The Wall Street Journal reported the deal could see Mr Neumann receive nearly $1.7bn as he sells his shares in the company and through other fees.
Rescue deal
Under the agreement, Softbank will "accelerate" an existing commitment to fund $1.5bn, in addition to new financing and issuing a tender offer for existing shareholders.
The Japanese investment giant already owned about a third of WeWork.The Japanese investment giant already owned about a third of WeWork.
"SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work," Softbank Chairman Masayoshi Son said in a statement. "Softbank has decided to double down on the company by providing a significant capital infusion and operational support," Softbank chairman Masayoshi Son said in a statement.
"Since the vision remains unchanged, Softbank has decided to double down on the company by providing a significant capital infusion and operational support," he said. "SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work," he said.
Marcelo Claure will take over as executive chairman of the WeWork board.
Investor concernsInvestor concerns
The deal marks the end of a tumultuous period for the start-up that saw Mr Neumann step down as chief executive as questions over his leadership emerged. The bailout will supply much-needed funds to WeWork and follows the collapse of plans to raise money via a stock market listing.
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 company, 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 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.
Questions about its complicated financial ties to Mr Neumann also frustrated plans and led to him stepping down from the top job.
The 40-year-old billionaire built WeWork in his own image, creating a buzzy, multi-billion dollar company known with a stated mission to "elevate the world's consciousness".
But the co-founder's brash charisma, which once attracted investors, emerged as a liability.