WeWork just may live to order another keg of complimentary kombucha.
Just weeks after reports revealed WeWork could run out of cash by the end of next month, CNBC reported Tuesday that SoftBank is poised to bail out the company. Citing sources familiar with the matter, CNBC reported the cash-filled life preserver involves SoftBank spending between $6 billion and $7 billion on equity and shares.
According to the report, the deal would give Softbank “as much as 70% or more” control of the shared workspace company — up from about a third—and would value WeWork at up to $12 billion.
Bloomberg reported last week that such a financing plan from SoftBank was in the works, reporting the $12 billion valuation figure at the time. That’s a steep fall from the $68 billion the company was valued at during the start of the year. An earlier Bloomberg report said that JPMorgan Chase was in talks about a $7 billion debt package to bandage WeWork’s dire financial problem.
According to CNBC, SoftBank executive Marcelo Claure will step in to help manage WeWork, presumably alongside the company’s co-CEOs Artie Minson and Sebastian Gunningham who took over after the company’s co-founder and former CEO Adam Neumann stepped down from the role amid the We Company’s spectacularly bombed, and subsequently delayed, initial public offering. CNBC reports that the SoftBank deal would drop Neumann’s stake to “low double digits.”
The bailout comes at a very tumultuous time for the company. The Guardian reported last week that the company was readying to lay off at least 2,000 people, or about 13 per cent of its workforce.
The paper reported that low morale amid uncertainty about the firings meant “little or no work is getting done” at the company. One employee who spoke to the Guardian described the environment as “toxic,” adding: “A lot of people worked so hard for this company. We thought we were in on something really big.”
Spokespeople for neither SoftBank nor WeWork immediately returned requests for comments. According to CNBC, official word of SoftBank’s deal to take over WeWork could be announced as soon as Wednesday.