A failed IPO: SoftBank takes control of WeWork and plans to invest $5 billion in new financing package

Autor: Financial Market
Timp de citit: 3 minute

WeWork, the company that provides shared workspaces for technology startups and SoftBank announced an agreement under which SoftBank will fund to the Company with $5 billion in new financing and the launching of a tender offer by SoftBank of up to $3 billion for existing shareholders. Additionally, SoftBank will be accelerating an existing commitment to fund $1.5 billion, according to a press release issued by company.

After closing, and following the tender offer, SoftBank’s fully diluted economic ownership of WeWork will be approximately 80 percent.

In connection with the agreement, WeWork’s Board will appoint Marcelo Claure, Chief Operating Officer of SoftBank Group Corp., to the position of Executive Chairman of the Board of Directors of WeWork, effective upon closing of the accelerated $1.5 billion payment commitment. Adam Neumann, the founder of the Company, will become a Board observer. The size of the Board will be expanded and it will receive voting control over Mr. Neumann’s shares.

SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution. It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced. Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, its employees, its member customers and landlords,” said Masayoshi Son, Chairman & CEO of SoftBank Group Corp.

WeWork is redefining the nature of work by creating meaningful experiences through integrating design, technology and community. The new capital SoftBank is providing will restore momentum to the company and I am committed to delivering profitability and positive free cash flow.

As important as the financial implications, this investment demonstrates our confidence in WeWork and its ability to continue to lead in disrupting the commercial real estate market by delivering flexible, collaborative and productive work environments to our customers. I look forward to helping WeWork realize its vision for the benefit of WeWork employees, members, landlords and communities worldwide,” said Marcelo Claure.

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The finance package includes:

Existing Payment Obligation: Acceleration of SoftBank’s April 2020 $1.5 billion payment obligation at $11.60 per share, expected to be completed 7 days post-signing, subject to WeWork shareholder approval;

Tender Offer: The launch of a tender offer worth up to $3 billion to all non-SoftBank shareholders at a price of $19.19 per share, expected to commence in the fourth quarter of 2019, with closing subject to regulatory approvals and other customary closing conditions;

New Debt: Consisting of $1.1 billion in Senior Secured Notes, $2.2 billion in Unsecured Notes, and a $1.75 billion Letter of Credit Facility. This funding is expected to occur after the completion of the tender offer; and

Joint Venture Share Swap: All of SoftBank Vision Fund’s interests in regional JVs outside of the Japan JV will be exchanged for shares in WeWork at $11.60 per share.

Artie Minson and Sebastian Gunningham, co-CEOs of WeWork, said, “This financing provides WeWork with the capital to fully realize its objective of being the partner of choice to our members and landlords, while at the same time providing a platform for growth and capital returns for shareholders and employees.

We will have the flexibility to continue streamlining our assets and stabilizing the business without sacrificing our global brand and exceptional products. Narrowing our strategic focus to our core WeWork desk business will ensure we continue to provide our members with a great day at work, every day. We are fortunate to have a deep bench of experienced colleagues around the world who will help us lead in the market going forward.