WeWork
- SoftBank is preparing to offer WeWork a $5 billion financing deal with less restrictive terms than an earlier version under consideration, Nikkei Asian Review reported on Wednesday.
- JPMorgan is also working with 100 potential investors on a refinancing package with a high interest rate.
- WeWork needs to make a decision soon, since the embattled office company could run out of money by the end of next month.
- For more WeWork stories, click here.
As WeWork faces a cash crunch, its biggest investor is preparing to offer a bailout with fewer restrictions than it had earlier planned.
SoftBank could provide about $5 billion in financing to the embattled office company, with the money coming from the Japanese investor directly, rather than its Vision Fund, Nikkei Asian Review first reported on Wednesday.
See more: How WeWork spiraled from a $47 billion valuation to talk of bankruptcy in just 6 weeks
The debt and equity deal would give SoftBank more stakes, but not a majority of voting rights, and the company would not become a SoftBank subsidiary, the outlet reported.
WeWork will likely choose between SoftBank's deal and a financing package put together by JPMorgan, which has lined up 100 investors to review the transaction.
SoftBank's latest deal may not solve WeWork's governance issues, depending on how the voting shares work out, said Erik Gordon, a professor at the University of Michigan's business school.
"If they do it without getting voting control away from Neumann, they will miss their best chance of solving the governance problem that will keep the company from going public," he told Business Insider in an email.
On Sunday, The Wall Street Journal reported that SoftBank could invest several billion in equity and debt in a deal that would value WeWork at under $10 billion. The company was last privately valued at $47 billion in January. The Wall Street Journal reported that this deal would see much of Neumann's voting power shift to SoftBank, which already has two board seats, and the company would play a bigger part of leading WeWork's turnaround. The money could also be used in part to help Neumann repay his hundreds of millions in personal bank loans.
It's unclear if SoftBank now plans to help Neumann repay his debt, and how the deal would affect the investor's board seats.
A representative for SoftBank did not immediately respond to a request for comment. A spokeswoman for WeWork declined to comment.
SoftBank CEO Masayoshi Son picked Marcelo Claure, the company's chief operating officer, to help WeWork's new co-CEOs. Claure, the former CEO of Sprint, has been working with about 20 SoftBank employees to evaluate WeWork's global leases and real estate.
SoftBank isn't WeWork's only option for a bailout. The company has been working with major lender JPMorgan to work out a $5 billion debt package.
A source told Business Insider that top WeWork executives spent last week in JPMorgan's New York headquarters.
"WeWork has retained a major Wall Street financial institution to arrange financing," a WeWork representative told Business Insider in a statement on Sunday. "Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company's management and its bankers over the course of this past week and this coming week."
WeWork was expecting to raise $3 billion last month in an initial public offering that would have also unlocked $6 billion in additional debt financing, but all that fell through when it shelved its IPO.
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