- WeWork’s options to avoid running out of cash could include a SoftBank financing deal that would give the Japanese company — WeWork’s largest investor — control of the office rental startup, The Wall Street Journal reported on Sunday.
- SoftBank’s deal could value the startup below $10 billion. The Japanese investment group valued WeWork at $47 billion in its January funding round.
- WeWork is also working with JPMorgan on another option, lining up billions for a debt deal.
- WeWork could run out of money as soon as the end of November, The Financial Times reported last week. The company’s new co-CEOs are slashing thousands of jobs, selling off businesses, and closing non-core activities like WeGrow.
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WeWork’s cash problems could lead to a takeover by its largest investor that would see its valuation dip below $10 billion, The Wall Street Journal reported on Sunday.
The office rental company had planned to raise billions by going public, but its initial public offering was shelved after investors raised concerns about its leadership, business model, and conflicts of interest. After co-founder Adam Neumann stepped down last month, new co-CEOs shelved the IPO, made plans to lay off thousands, and embarked on other cost-cutting measures like selling the company’s private jet and closing WeGrow, its educational arm.
Now, WeWork, which has seen its credit rating sink to junk status, could run out of cash as soon as the end of November, The Financial Times reported last week. The company is exploring options to help with the cash crunch.
One solution could be taking more money from its largest investor. SoftBank could invest several billion in new equity and debt, the Journal said.
The Japanese investor calculated that WeWork needs at least $3 billion to operate through next year, according to the Journal. The SoftBank deal would reportedly see much of Neumann’s voting power shift to the investor, which already has two board seats, and the company would play a bigger part of leading WeWork’s turnaround.
SoftBank could buy in at a valuation below $10 billion, the Journal added. The company last valued WeWork at $47 billion in a January investment round.
SoftBank’s money could also be used in part to help Neumann repay his hundreds of millions in personal bank loans.
WeWork is also looking at a potential bailout package with JPMorgan
SoftBank isn’t WeWork’s only option for a bailout. The company has been working with major lender JPMorgan to work out a debt package that could be in the billions.
A source told Business Insider 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. “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.”
The Wall Street Journal also reported that SoftBank CEO Masayoshi Son picked Marcelo Claure, the company’s chief operating officer, to help WeWork’s 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.
A representative for SoftBank declined to comment to Business Insider.
WeWork has 528 locations in 111 cities.