SoftBank enters unprecedented 'unicorn restructure' with WeWork

Oct 23, 2019 | News On Japan

Oct 23, 2019 (Nikkei) - The board of WeWork decided Tuesday to accept a $9.5 billion rescue package from SoftBank Group that would offer the coworking startup a much-needed lifeline, but also put the Japanese conglomerate on an unprecedented quest to restructure and revive a battered unicorn.

As part of the deal, the Japanese company will buy up to $970 million of stock in WeWork parent, We Co., from its co-founder, Adam Neumann, according to a person familiar with the matter.

SoftBank Group is buying up to $3 billion of We Co. stock from existing shareholders in total, in addition to a $1.5 billion equity investment it previously promised to the startup, originally scheduled for next year. The Japanese company is also preparing $5 billion in debt financing.

The package will give SoftBank a controlling stake.

Neumann, who will retain a less than 10% stake in We Co., will step down from the company's board, The Wall Street Journal reported. Marcelo Claure, a top SoftBank executive and former CEO of U.S. wireless carrier Sprint, will replace Neumann as chairman of We Co. as part of the deal.

SoftBank, which has already poured over $10 billion into the coworking startup, "believes coworking has a bright future, and that WeWork, which disrupted the multi-trillion-dollar real estate sector, will continue to be the market leader," said a person familiar with the rescue package.

But the jumbo rescue package for WeWork, which industry watchers had expected to run out of money as early as this year, has raised eyebrows on Wall Street.

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