NEW YORK (Reuters) – SoftBank Group Corp (9984.(T), it is an attempt to get to be the majority owner of WeWork, without the expensive lease of the obligations of the united states office space sharing company, according to people familiar with the matter.
FILE PHOTO: A WeWork’s logo is seen outside its offices in San Francisco, California, USA, September 30, 2019. REUTERS/Kate Munsch/File Photo
SoftBank is offering $5 billion for the financing of lifeline that We have with the Company, the parent company of the New York-based WeWork, the assessment for a proposal from JPMorgan Chase & Co (JPM.(N) for a debt package of a similar size, the banks and institutional investors.
WeWork would have run out of money and in the beginning of the next month, a new financing, the sources said, after the company withdrew plans in September for an initial public offering (IPO). To the left of the IPO, when investors questioned its significant losses, the viability of the business model and the way WeWork, was carried out by the co-founder and former CEO Adam Neumann, who now serves as chairman and ceo.
Over the weekend, and a special board committee formed by The Company’s board of directors will evaluate the funding proposals, ring-fenced from the impact of the SoftBank and Construction, was working around the clock with his advisers to reach an agreement, the sources said. In the negotiations, it would spill out in the next week or so, one of the sources warned.
They turned, and a $100 billion Vision to Fund about one-third of the WeWork because of previous investments by a total of $10.6 billion.
SoftBank’s new offer values WeWork is less than $10 billion, according to two sources, a small fraction of the $47 billion allocated to it in January, from a previous fundraising round.
As for the split in SoftBank, the contribution of own funds, and the debt is still being negotiated, are the investment of the majority owner of WeWork. These were to be translated into a formal vote, to control for SoftBank, it would be able to force it to consolidate the loss-making company on the balance sheet, the sources said.
This, in turn, can result in they turned on the assumption of WeWork, the obligations of which are long-term leases for office space, which it refurbishes and rents under short-term contracts, according to sources. WeWork was $18 billion in long-term liabilities as of the end of June, according to the most recent public financial disclosure. It also had $1.3 billion in net debt.
SoftBank doesn’t want to be a burden to its balance sheet any further, given that the net financial debt of about 5 trillion yen ($46 billion) as of the end of June, more than one-half of the 9-trillion-yen market capitalization, according to the Japanese technology conglomerate’s most recent quarterly profit-and-loss account.
As a way for SoftBank to ensure that the basis of a formal audit by WeWork that could lead to the consolidation of the financial statements in order to accept, in a non-voting shares for an initial investment. However, it is not clear as to how they turned the plans for the structure of the deal.
SoftBank wants to re-negotiate with WeWork, a prior commitment of a $1.5 billion investment in the form of stock options that expired in April on the $47 billion valuation, according to sources.
The sources asked not to be identified because the talks are confidential.
A WeWork spokesperson declined to comment.
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Faced with a cash crunch, WeWork is looking for in order to slow down the expansion, a reduction in the number of new rental agreements has been of the to use.
The board has also approved a cost-saving plan that includes layoffs, two of the sources said, without further details. The cuts will take place in the next few weeks, the sources added.
Job losses in the United States of america should be able to get through the first week of November, a source said. There are also expected to be job losses in other parts of the world, the source added.
The Company’s seven-member board of directors, and two directors are charged with representing the interests of the investors in the company by sitting on the special committee, having regard to the funding of the company’s plans, Reuters reported earlier this week.
Is Bruce Dunlevie, who has been a general partner at WeWork shareholder Benchmark Capital. The other was Lew Frankfort, who is the former CEO of the luxury handbag-maker Coach.
The board of directors, and the advisors are the investment bank, Perella Weinberg ners LP and the law firms Skadden, arps, Slate, Meagher & Flom LLP and Wilson Sonsini Goodrich & Rosati, one of the sources said.
Representatives of Perella Weinberg, Skadden, and Wilson Sonsini, do not immediately respond to requests for comment.
JPMorgan chase has agreed to underwrite the debt package, and WeWork have to wait and see how much capital the bank will not be able to get from other lenders, and credit investors. The debt package is divided between € 1 billion of senior secured debt, up to $2 billion in unsecured debt and $1.5 billion to $2 billion in letters of credit, two of the sources said.
A JPMorgan chase spokesman, declined to comment.
WeWork be able to pursue the combination of SoftBank and JPMorgan chase funding packages that, in a certain form, and after the latter has completed its debt financing activities, the sources said.
Reporting by Joshua Franklin, Greg Roumeliotis and Mike Spector, in New York; Additional reporting by Anirban Sen in Bengaluru; Editing by Martin Howell and Matthew Lewis)