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WeWork accepts SoftBank bailout plan valuing WeWork at USD 8 bn: source

AFP  |  New York 

Japan-based SoftBank will take control of WeWork in a bailout plan that will see the office-sharing startup's co-founder Adam Neumann exit the board, a person close to the matter said Tuesday.

SoftBank, which already holds 29 per cent of WeWork, will invest at least USD 5 billion more, the source said, which will give it control of the company.

About USD 1.7 billion will go to Neumann, who will step down from the board of directors.

The deal values WeWork at about USD 8 billion, a far cry from the USD 47 billion at the start of the year and a fraction of the sum envisioned in an initial public offering that was abandoned last month.

WeWork, which had also been weighing a bailout plan from JPMorgan Chase, declined comment.

The plan provides needed funds the troubled office sharing company, which sources have said must raise at least $3 billion to cover its financing needs through the end of the year.

Neumann stepped down as chief executive in September amid questions over perceived self-dealing between his personal assets and WeWork, and over unconventional personal conduct, including drug use.

The SoftBank deal pays Neumann USD 1 billion for his SoftBank shares, USD 500 million for reimbursements of personal debts and USD 185 million in consulting fees, the source said.

Neumann will maintain a small stake in the company.

The company in late September canceled a plan to go public amid questions over its long-term profitability prospects.

The company reported USD 1.9 billion in losses last year.

The startup, which launched in 2010, has touted itself as revolutionising commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, October 22 2019. 23:00 IST