NEW YORK (Reuters) – WeWork, owner of The Company, has formed a special board to consider proposals for a $5 billion funding lifeline from its biggest shareholder, SoftBank Group Corp (9984.The main sponsor of the JPMorgan Chase & Co (JPM.(N), four people familiar with the matter said on Wednesday.
FILE PHOTO: WeWork’s logo is displayed outside of a co-working space in New York City, New York, New York, USA on January 8, 2019. REUTERS/Brendan McDermid/File Photo
In the office areas of the business, the setting up of the commission, in an attempt to ring-fence the funding of the proceedings of SoftBank’s influence, the sources said. The Japanese technology group, is the owner of approximately one-third of WeWork, and with every new investment, it would be able to give up control.
WeWork is a rush to get the new capital after the destruction of the plans last month for an initial public offering (IPO). Sources have said that it would run out of money as early as in November, except it allows for a new form of financing.
A WeWork spokesperson declined to comment. We are a Company the directors do not immediately respond to requests for comment.
The audit committee shall be two members of the Company’s board of directors, with the responsibility of representing the interests of the investors in the company, the sources said.
Is Bruce Dunlevie, who has been a general partner at WeWork shareholder Benchmark Capital, according to sources. The other was Lew Frankfort, who is the former CEO of the luxury-handbag maker Coach, they will be added.
SoftBank does not have a representative, the sources said. It is present in We’re a Company of seven, and a member of the supervisory board by its Chairman, Ron Fisher. The former Goldman Sachs Group Inc’s (GS.(N) banker Mark Schwartz, who served as the one SoftBank executive director until earlier this year, is also on the board.
WeWork co-founder Adam Neumann, who resigned as CEO last month, but has retained his role as chairman of the board of directors, and no members of the committee, according to the sources, which, for anonymity to discuss confidential meetings.
WeWork canceled its IPO in the following investor concern over mounting losses, the business model and the way in which it was carried out. The estimated valuation dropped from $47 billion in January to a low of $10 billion in the last month.
In response, WeWork is looking for in order to slow down the expansion, a reduction in the number of new leases, taking it in and out of the lay-offs.
SoftBank has proposed a $5 billion investment in WeWork, two of the sources said. It also wants to re-negotiate an earlier promise of a $1.5 billion investment in the form of stock options that expired in April on the $47-billion valuation, the sources added. It has already invested some $10 billion in WeWork.
For its part, JPMorgan has been scouring the market to increase the funding of the liabilities of the banks and bond investors for as much as $5 billion, the sources said. It has not agreed to underwrite the debt, and the WeWork wants to see how much of the debt can be increased without causing a dilution to the existing shareholders before making a decision, the source added.
WeWork be able to pursue the combined SoftBank and JPMorgan chase proposals, in some form, according to the sources.
SoftBank declined to comment for this story. Otherwise, do not immediately respond to requests for comment.
CONFLICTS of interest
Publicly-listed companies will form a special board committees of the board to protect the interests of the minority shareholders in the consideration of the transaction, in most cases with some of the representatives are the face of a conflict of interest. It is less common for a company of their own, such as WeWork, the form of the creation of a special commission.
However, WeWork has been vulnerable to criticism of its corporate governance arrangements, because, by Construction, the prior control over the company.
Neumann’s shares have the same voting rights as the 20 We are a Company of ordinary shares before it agreed to be part to lessen its grip on the previous month and a decrease of the ratio of 3-1, in an unsuccessful attempt to make an IPO more attractive to investors.
Neumann had entered into several transactions with WeWork, which the company is a lessee in a number of his or her personal characteristics and in the charge of the rent. He has also provided a $500 million loan from the banks, with the help of the company as collateral.
When Neumann gave up the CEO role last month, under pressure from SoftBank, Benchmark Capital and other investors, and he told me that he was doing this because the research is directed towards him, it was a “major distraction”.
Artie Minson, previously, WeWork’s chief executive officer (ceo) and Sebastian Gunningham, who was the vice-president of the company, are serving as co-chief executive officers.
Reporting by Joshua Franklin and Greg Roumeliotis in New York and Anirban Sen in Bengaluru; Additional reporting by Koh Gui Qing, Mike Spector, and Cynthia Dang, in New York; Editing by Martin Howell and Lincoln’s y.