WeWork’s ousted founder Adam Neumann will land a $1.7bn (£1.3bn) pay day as part of a rescue deal from investor SoftBank – while thousands of the company’s ordinary staff face an uncertain future.
The business decided on Tuesday to accept funding from SoftBank in a move that cut its valuation to just $8bn and removed Mr Neumann as chairman. The firm had previously hoped to float for as much as $47bn.
As part of the deal, he relinquished his voting shares in the firm along with his board seat.
Mr Neumann will be given a $185m consulting fee and will also sell $1bn of stock to SoftBank, and will also get $500m in credit so he can pay off existing loans, The Wall Street Journal reported.
So, he gets to pay off the loans he’d taken out back by the value of that now collapsed stock. Phew for him, eh?
Because if he didn’t there would be bankers calling to ask for their money back. This also explains this:
A rival debt package offered by JPMorgan was rejected by WeWork’s board. JPMorgan’s proposal was seen as more risky because it had not underwritten the debt and was seeking banks and other investors to back the deal.
Getting the refinancing deal requires Neumann’s consent as the major (or a?) shareholder. A deal that didn’t get him off the hook for those loans isn’t going to be attractive now, is it?
Of course, this is merely suspicion but my bet is that JPM’s offer didn’t buy him out and therefore was rejected.