Failing communal workspace firm WeWork’s co-founder, Adam Neumann, stands to receive a payout of $1.7bn (£1.3) as thousands of employees await to hear if they will lose their jobs.
The deal is an attempted rescue of a firm that has been haemorrhaging cash for since 2016 - making losses of $400m in 2016 an as much as $1.6bn in 2018. WeWork lost close to $700 in the first two quarters of 2019 and the confidence of investors.
Japanese investment conglomerate, SoftBank - WeWork’s largest stakeholder - will now take control of the company after committing $5.8bn to saving the company and inheriting $5b of new debt.
When WeWork attempted to float on the stock exchange some estimates valued the company at nearly $65bn - giving Neumann a stake of nearly $14bn.
Failures in Mr Neumann’s other business ventures, including a $42,000 a year school system called WeGrow, investors had begun to lose faith in him.
This wasn’t helped by claims that he would be the “world’s first trillionaire”, “could live forever” or that his chain of communal workspaces could “solve the problem of children born without parents.”
The rescue will see Mr Neumann ousted from the company’s board with close to $1bn for the sale of his shares and a $185m “consultancy fee” say unnamed sources close to the board.
WeWork is now considered to be worth $8bn, a full $2bn less than SoftBank had invested in the company even prior to this latest rescue deal.
The last time Softbank injected money into the business it was valued at $47bn, despite losing $3bn in the last three years.
When WeWork attempted to float on the stock exchange some estimates valued the company at nearly $65bn - giving Neumann a stake of nearly $14bn.
After winning out over a rival company-saving package from JP Morgan Chase, SoftBank’s chief operating officer, Marcelo Claure, would become chairman. But who does he really work for?
Who are SoftBank?
Forbes listed SoftBank as the 36th largest public company in the world. But they certainly don’t strike you as the kind of business that would have beer taps on every floor and halfpipes in the lobby.
Founded in Tokyo’s electronic hub in 1981 by 24-year-old Masayoshi Son, SoftBank was a computer parts store. They now own large stakes in Yahoo Japan and Alibaba - as well as an increasingly large one in WeWork.
Marcelo Claure might bring a little more fun to the company he has inherited than the identity of his employers might suggest. He runs Bolivian football club Bolivar and David Beckham's Inter Miami.
