SoftBank’s $1.5B bailout package arrives just in time for WeWork

RESEARCH TRIANGLE PARK – WeWork is officially under new ownership after SoftBank Group wired over $1.5 billion in funding today to keep the embattled co-working company afloat.

With this infusion, SoftBank now has a majority stake with 80% ownership of the company and is already making sweeping changes, replacing co-founder Adam Neumann as chairman and adding five board seats.

“The $1.5 billion in funding that WeWork received today from SoftBank positions the Company for the future and underlines Softbank’s steadfast belief in the business,” said Marcelo Claure, the board’s new executive chairman.

SoftBank initially announced its investment in January, which was scheduled for release in April 2020. However, after the firm’s failed IPO in August and mounting financial woes, the bank offered a bailout package that includes $5 billion in new debt financing. It’s also offering to buy up to $3 billion worth of stock from existing investors and shareholders.

“This package enables the company to accelerate the path to profitability and free cash flow generation,” Claure said.

WeWork has a large presence in the Triangle area and an operation in Charlotte, offering shared working spaces and related services.

Business Insider, citing a report from the Wall Street Journal, said “thousands of people are slated to lose jobs but that the decision had been delayed because WeWork has only ‘weeks’ of money left and can’t afford to pay severance.”

The Financial Times, meanwhile, reported that WeWork plans to cut 4,000 jobs.

A spokesperson for WeWork declined to comment on the reports of layoffs.

WeWork’s value ontinues to fall.

Reuters reported Fidelity Investments cut the value of Contrafund’s stake in WeWork Companies Inc by 35% in September.Fidelity disclosed on Wednesday that Contrafund held $193.1 million in Series E WeWork shares at the end of September, down from $295.1 million the previous month.

The valuation cut assumes no shares were bought, sold or transferred between the two periods, the report said.