The We Company and SoftBank Group have finally concluded and drawn up an agreement for new capital infusion. Wherein the latter will be committing $5 billion in new financing and issuing tender offer in the form of buybacks for shareholders that is worth another $3 billion. The company has also stated that it would be looking to accelerate $1.5 billion into short-term real estate rental company, as per their existing commitment.
Further, there will also be a joint venture share swap. Wherein SoftBank Vision Funds’ interests in regional joint ventures (outside Japan) will be exchanged for WeWork’s shares, priced at $11.60 per share. This will be followed by a debt facility consisting of $1.1 billion in senior secured notes, a $1.75 billion letter of credit facility post completion of the tender offer, and $2.2 billion in unsecured notes as well. Post the tender offer and closing, SoftBank will successfully own an approximate 80% of the We Company. But it will not hold a majority when it comes to voting rights at any board of directors or stockholder meetings, and that credit goes to the convoluted ownership structure of WeWork. This will eventually make SoftBank an ‘associate’ of WeWork and not a direct subsidiary.
As per the agreement, the company has also confirmed to Marcelo Claure, chief operating officer of SoftBank Group, being crowned as the executive chairman of the board of directors at WeWork. But this is done after once the company received $1.5 billion payment from SoftBank. Also, as a part of the agreement, Adam Neumann will be a board observer. Even post the agreement, the company still seems to be a struggling purveyor of temporary office spaces. That is under a pile of leases, possibly looking at a potential cash crunch, even after being offered the lifeline from SoftBank. However, according to the new leadership at WeWork and SoftBank’s executives, WeWork will continue to be recognized for what the company has always stood for and can potentially be.