New hope or last gasp for WeWork? (Or all CoWorking)

David Goldsmith

All Powerful Moderator
Staff member
Poof! Adam Neumann’s $185M WeWork gig disappears
Chairman says co-founder may have violated the agreement

Adam Neumann’s controversial $185 million WeWork consulting deal is no more, according to Marcelo Claure, the company’s executive chairman.
“I don’t think that consulting agreement is still in force,” Claure said at The Wall Street Journal’s Tech Live conference Monday, according to the Journal. “I think Adam may have violated some of the parts of the consulting agreement, so that’s no longer in effect.”

The deal was part of the WeWork founder’s generous exit package from the co-working company, which called for SoftBank to buy about $1 billion of stock from Neumann, refinance a $500 million debt, and pay a $185 million consulting fee. The deal is now being disputed as SoftBank and WeWork try to stem their losses.

Claure did not explain how Neumann violated the consulting agreement, citing pending litigation. Claure added that Neumann was “incredibly helpful at the beginning” in aiding SoftBank to understand WeWork, according to the Journal.
Part of the consulting deal prevented Neumann from competing with WeWork for four years, the Journal reported.
Bloomberg reported that the payment depended on a deal by which SoftBank would acquire WeWork stock from Neumann and other shareholders. That agreement is now the subject of a lawsuit.

Neumann left WeWork last year after the company’s IPO failed to happen. Bloomberg reported that Neumann recently invested $30 million in Alfred Club, Inc., a startup that provides services — such as dog-walking, maintenance requests and rent-processing — in apartment buildings. It was his first venture since leaving WeWork.
Claure said WeWork looks to be profitable in 2021. He said the company only needs to exceed 67 percent to 68 percent in occupancy to be profitable.
 

David Goldsmith

All Powerful Moderator
Staff member
The REInterview: Reeves Wiedeman on the manic rise and fall of Adam Neumann and WeWork
Wiedeman's new book "Billion Dollar Loser" is out today

Dream no small dreams, for they have no power to move the hearts of men — or venture capitalists.
Adam Neumann, the co-founder and former CEO of WeWork, certainly wasn’t guilty of small dreams. From being a broke émigré living rent-free in his sister’s apartment to building one of New York’s largest real estate companies to becoming the head of one of the country’s five most valuable startups to wanting to “elevate the world’s consciousness,” lack of ambition wasn’t his problem.

Rather, it was too much of it, coupled with frenzied spending and a slipshod approach to management, that brought the company crashing down, argues Reeves Wiedeman.

Wiedeman is a contributing editor at New York Magazine and a business journalist who’s written for the New Yorker, Rolling Stone and others. His new book “Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork,” is out today.
He sat down with The Real Deal to discuss the book, the wacky world of New York real estate and the dangers of hypergrowth fueled by VC dollars.
You have this gift for diving into these complex, insidery worlds — sports, media — and finding narratives in them. In terms of characters per capita, where does New York real estate stack up?

Pretty hot. Much higher than athletes. The thing you realize is businesses, while you think they run on models and numbers, are just filled with characters. I think New York real estate in particular has attracted these kinds of people. It’s a business built on making big bets, taking risks, and that attracts a certain type of person of whom Adam Neumann is only the latest, maybe the most extreme example.
Adam Neumann stands out for the audacity of the bets he made and his ability to spit in the face of the traditional operators. From the beginning, he said, “Fuck you guys. I’m going to do this my way.” Was there a sense that industry insiders were going along with it because it made financial sense, or was there a sense that [WeWork] could actually be something?

There was a trajectory. Early on, WeWork had trouble getting the really nice spaces that it actually wanted. A lot of people who’d been in the business for a while had seen this business before, and they knew the office middleman, flex space world — the Reguses and others before them. So I think there was an early skepticism of [Neumann]. Around 2012, WeWork got a big investment from Silicon Valley, from Benchmark Capital. They started getting more and more investment. At a certain point, if you’re a landlord and you need to fill space and you’ve got someone who’s, frankly, willing to pay above market.… Once WeWork had a bunch of money and was spending it pretty freely, it’s hard to say no to that. Just like it was sort of hard for Adam to say no to SoftBank when they show up and offer him $4 billion.

By the time I started reporting on the company [in March 2019], there was a level of fear. While people couldn’t quite understand how Adam was making it work, how the numbers made sense, he kept being successful, and there was a feeling from people of, “Maybe he has cracked some kind of code.” There was a very real kind of fear. The stories that came out about Adam much later, they were around, and everyone had them. But when Adam and when WeWork were on the rise, people were pretty loath to actually share.
Most of the senior executives at WeWork were pulled in from everywhere — lots of friends and family — but he did make some hires that were hard-core industry insiders, like Wendy Silverstein, who ran ARK, or Sean Black, who was a top broker at JLL. Why would someone who understood the real estate business still go in on this?

For people who are in real estate, what WeWork offered was a chance to take part in the startup boom of the 2010s and the venture capital boom of this era. This also went for a lot of architects, designers, people in kind of related fields. You’re in the middle of your career. You’re a little bit bored. Then suddenly, there’s this company where it’s pretty fun to work. They throw fun parties. They claim to be really changing things. For a lot of mid-career people, it was a little bit of a risk, but it was an exciting one.
Then, of course, there was the potential for really significant financial reward. In real estate, stock options are not a thing, exactly, in the way that they are at a startup.

Was changing the world always part of Adam’s narrative, or did that really emerge post-SoftBank?
It was Adam from the beginning. I think Masa and SoftBank, what they did was enable it. And there was this interesting point in the company’s history around 2016, when it could have gone public. It was running out of money. There didn’t seem to be that many more places to go. Right at that moment, Masa showed up, and I think just kind of enabled Adam to really go for it.
WeWork had been growing, obviously, incredibly fast. Its revenue doubled year-over-year for 10 years — pretty remarkable. There was always this hope from the sort of tech investors who were getting into the company that WeWork was going to figure it out. Ultimately, that’s what they were never quite able to do.

When I read the book, I thought of Vice Media a lot — the glamour, the arrogance, the ability to attract big-name investors. Do you think there are similarities?
A few things: One, they were brands. They are brands. And that was the thing they sold as much as anything else: this feeling. Where I think both companies went off the rails was they both did a thing pretty well. With Vice, they made cool documentaries, but then suddenly they wanted to be the new CNN. And that’s a really hard thing to pull off. And it wasn’t really clear that they were most qualified to do that. I think a lot of the problems stemmed from this ambition to be something they weren’t.

At WeWork, where you got into trouble was the pace of growth. Adam himself bragged openly — and I think probably accurately — that this was the fastest physical expansion that any company had ever made. He joked that he wasn’t sure about Roman times, but at least since then.
And also the expansion of the mission from, “we make really nice flexible office spaces” to “we are elevating the world’s consciousness.”
From WeWork to We.
That transition really hurt the company. And the $47 billion valuation put a target on the company’s back.

Do you think there is an element of schadenfreude on the media’s part with the collapse of WeWork?
Absolutely. I’ll compliment you all; people who knew the industry were calling it as it looked, which is, “On the one hand, it keeps growing so we have to take it seriously. But there’s also a lot that doesn’t make sense to us.”
But some places are about glorifying the startup entrepreneur. And I think WeWork was, in many ways, this perfect story. So you would always have these sort of glowing articles with a paragraph or two about potential problems.

There’s been a real caricature that’s emerged of Adam and of the company, [that] it was all crazy to begin with. The thing was real. This was not Theranos. It wasn’t like the machine just didn’t exist. The offices were there, they worked.
You make a brief mention of the Rajneeshis, the spiritual cult founded by Osho, featured in “Wild Wild Country.” Neumann also had this cult of personality. Did you get drawn to that magnetism?
I think he’s a charismatic person. He gets into a room and he knows how to not only dominate a room, he knows how to read a room. He knew how to go in and figure out that whoever he was talking to, whether it was an investor, a landlord, [or] his employees, he had different messages for them. And he knew what buttons to press. It can get a little old, calling everything a cult, but I think in this case, it’s really true.

Let me ask you a dumb question. You talk a lot about height in the book; if Adam were six inches shorter, do you think he would have had the same success?
I think it’s fair; there are all the stats about how tall our presidents have been over the years. And I think there’s a real truth to it. It would be too simple to say all of Adam’s successes are because he’s tall, but it’s a part of who he is. It’s a part of what makes him an inspiring leader.
You talk a lot about Benchmark Capital, the first major venture capital firm to invest in WeWork. Did the elite of Silicon Valley not really understand the industry that they were investing in, and that’s part of why it went this way?

There’s truth to that. That goes for Benchmark, that goes for SoftBank. I’d talk to someone at Fidelity, and the real estate investors there were very skeptical and didn’t see the benefit in investing. And they passed and later came back and decided to invest because they bought into the story. It’s also probably too simple to say that, “Oh, these tech investors just didn’t get it.” I think they got it. But the flip side of that is that unlike a lot of the companies that they typically invest in, WeWork was making a bunch of money. Many tech companies, it’s years before they’re bringing in any revenue at all.

The venture capital world is predicated on these big bets. If you make 10 bets and nine of them don’t work out, but one of them is the next Uber [or] Airbnb, that’s fine.
I want to go back to one of the earliest investors in WeWork, Joel Schreiber, who is a bit of a mythical character in New York real estate.
His involvement was the original sin of WeWork’s overvaluation. The way that happened was, WeWork didn’t have a space yet. Looking for a space, they just happened upon Joel, who was happy and interested to invest in the company. And his fateful, “I’ll give you $15 million for a third of a company,” that is now suddenly worth $45 million, out of nowhere.

They pulled that number out of their asses, right?
Adam and Miguel didn’t want an investor. They weren’t looking for someone. And so part of their game was, “Well if this guy wants in, let’s throw out something crazy, partly so he just walks away.”
What were some of the biggest fears for WeWork about being seen as a real estate company? Was that purely because of the earnings multiplier of real estate or was there more to it?
That’s more or less it. There are limits to the real estate business and how much money you can make. It’s a very good business, but it’s set and there are models and this is how it works. Tech over the last 10 years has just broken out. Suddenly, you can make these truly insane amounts of money.

Adam would tell tech investors, “We’re a real estate company. Look at how much money we bring in. And look how big the market is.” And then he would tell people in the real estate world, “We’re bringing this tech part to what you’re doing.” He was able to play both sides a little bit.
This interview has been condensed and edited for clarity.
 

David Goldsmith

All Powerful Moderator
Staff member
WeWork bonds, already junk, downgraded by Fitch
Agency says office-space provider will need additional liquidity if pandemic drains demand

WeWork’s credit rating, already rated as junk, has been downgraded on concerns that the pandemic could seriously weaken demand for office space.
Ratings agency Fitch dropped WeWork’s long-term issuer default rating Thursday one notch from CCC+ to CCC. Both scales are non-investment grades, otherwise known as junk or high-yield status, representing a real possibility that the company will default on its credit obligations.

“The downgrade reflects Fitch’s concern over the viability of WeWork’s business model in light of a potential lasting shift by companies to a hybrid office model that leads to permanently lower office space demand,” the ratings agency wrote.

“While WeWork has made material progress to reduce its cash burn rate, in a scenario where demand is structurally lower, Fitch sees WeWork as potentially requiring additional liquidity sources inclusive of and beyond the full $3.3 billion SoftBank financing commitment,” the agency continued.

Fitch and other ratings agencies dropped WeWork’s rating from investment grade to junk bond status in October of last year after the company’s aborted IPO. The next rating two notches down on Fitch’s scale — CC — would mean that the ratings agency believes that a default seems probable.

WeWork’s bonds that mature in 2025 were most recently trading at about 63 cents on the dollar, according to Trace data cited by Bloomberg News.
Fitch noted that WeWork has taken some steps toward strengthening its balance sheet this year, including improving its cash-burn rate, exiting obligations to build out new locations and trimming overhead through staff reductions.
SoftBank earlier this summer committed another $1.1 billion to the office-space provider.
But that may not be enough if the office market does not recover from the pandemic. In Manhattan, only 10 percent of workers have returned to their offices; even in cities with less restrictive lockdown policies, like Houston, that number is still below 50 percent.
 

David Goldsmith

All Powerful Moderator
Staff member

Co-working startup Breather has laid off the majority of its staff and plans to shutter all of its more than 400 locations around the world as it switches to an online-only platform, Globe & Mail first reported. The company started insolvency processes in the United States, where it has 315 locations.
  • Damning admission from Breather CEO Bryan Murphy: “The decision I’ve made is that Breather, in its current form as an operator, doesn’t make sense, and, to be frank, I’m not sure it ever made sense.”
  • No valuable assets after $122 million in venture funding: Breather hired investment bank Moelis & Company to explore a potential sale, but there was no interest because of its hefty lease commitments, CO noted.
  • Industrious still living in pre-WeWork IPO debacle world: The co-working company hired attorney Clem Turner from Chiesa Shahinian & Giantomasi PC, in a newly created role as its top lawyer, Bloomberg reported. His appointment follows that of CFO Greg Barber, an ex-PepsiCo executive as the company eyes a potential public listing in 2021. []
 

David Goldsmith

All Powerful Moderator
Staff member

WeWork battles Chetrit Group over Midtown lease​

Flex-office giant says landlord is violating lease agreement by threatening to draw down on letter of credit

WeWork claims the Chetrit Group is threatening to illegally draw down on a multimillion-dollar letter of credit at its Midtown Manhattan location.
In a complaint filed in NewYork State Supreme Court, the flexible-office provider claims that its lease at 404 Fifth Avenue requires the landlord to first provide WeWork with a notice of default. Even if those conditions were met, the state’s eviction moratorium precludes the default notice from being served, WeWork claims.

And it wouldn’t be the first time: WeWork also alleges Chetrit wrongfully drew down a letter of credit for another lease at 428 Broadway, also known as “The Suspenders Building,” last month.

WeWork signed a 13-year lease for the third through seventh floors of the office building at 404 Fifth Avenue in 2015. WeWork spent about $10.2 million to build out the space, the court filing states. In a separate allegation, the company claims Chetrit owes WeWork $697,000 for its contribution to the build-out that it never paid.

Though Chetrit has not formally sought to draw down on the letter of credit, the suit claims the landlord threatened to do so in a telephone conversation on Dec. 16. According to the complaint, WeWork provided the landlord with a $2.4 million letter of credit on Aug. 14, issued by Goldman Sachs International Bank, in addition to a personal guarantee.

WeWork also says in its complaint that Chetrit is “likely to resort to self-help” with regards the draw-down.
WeWork declined to comment on the lawsuit. Lucas Ferrara of Newman Ferrara who is representing WeWork’s affiliate, 404 Fifth Tenant LLC, declined to comment.
The Chetrit Group did not immediately return a request to comment.

WeWork has experienced some hardships since the pandemic, as have many of its competitors. Demand for office space has tanked as workers have been slow to return and more companies are embracing working from home permanently. In August, SoftBank poured $1.1 billion into WeWork after membership plummeted. In the second quarter, the company’s membership reportedly fell 12 percent from the first quarter to 612,000.

The office giant had become Manhattan’s biggest occupier of office space, but since the pandemic has said it may exit one in five leases as it looks to cut costs and achieve profitability.
 

John Walkup

Talking Manhattan on UrbanDigs.com
True, but the seachange in workplace consciousness these firms brought around is only just beginning. It's gonna be a rocky few years, but I'd bet office (and even retail) space 5 years from now will be awesome and in-demand.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
True, but the seachange in workplace consciousness these firms brought around is only just beginning. It's gonna be a rocky few years, but I'd bet office (and even retail) space 5 years from now will be awesome and in-demand.
100% agree with this, and likely less than 5 yrs
 

David Goldsmith

All Powerful Moderator
Staff member

WeWork in talks to go public via SPAC​

Co-working giant had a flameout en route to an IPO in 2019​


Now We’ve seen everything.
WeWork is in talks to combine with a special-purpose acquisition company to go public, according to the Wall Street Journal. The co-working giant attempted an initial public offering in late 2019 but had a spectacular flameout during the IPO process, after scrutiny of its financials and governance.

WeWork CEO Sandeep Mathrani and the company’s board have been in discussions with a SPAC affiliated with BOW Capital Management and at least one more SPAC, the Journal reported.
WeWork may also consider an additional private investment round. If it goes that route, the company will remain private.
“Our significant progress combined with the increased market demand for flexible space shows positive signs for our business,” a spokesperson for the firm told the publication. “We will continue to explore opportunities that help us move closer towards our goals.”

A SPAC deal could value WeWork at $10 billion, according to the Journal. It’s a far cry from WeWork’s $47 billion valuation in 2019, before its bungled IPO and the ouster of co-founder Adam Neumann drove that figure down to $4.9 billion.
To stave off insolvency, SoftBank offered a $9.5 billion bailout and tapped real estate veteran Sandeep Mathrani as CEO to right the ship. Under his leadership, WeWork has shed one-third of its workforce, yielding $1 billion in annual savings. It is also closing underperforming locations.
But in November 2020, the company said it burned through $1.7 billion since the beginning of the year, and that revenue dropped 8 percent in the third quarter.

Though the pandemic dealt the office sector a huge blow, some expect flexible-office firms to play a role in return-to-work plans, which could benefit WeWork.
In recent months, Mathrani has hinted publicly that WeWork could take another stab at an IPO. He said in October the company was on track to be profitable in 2021 and would then consider a public offering. “I’m a big believer in one step at a time so let’s hit profitable growth first,” he told Bloomberg News.
Over the past year, SPAC activity has exploded thanks to well-known sponsors like Chamath Palihapitiya, Bill Ackman and even SoftBank. So far this year, 83 SPACs have gone public, raising $23.2 billion. In 2020, 248 SPACs went public, raising $83 billion.

More than a dozen SPACs are hunting for proptech deals. A Tishman Speyer-backed SPAC said this week that it would take smart-lock maker Latch public in a $1.56 billion deal. Palihapitiya’s Social Capital merged with Opendoor, which began trading last year. And a Cantor Fitzgerald-backed SPAC is planning to acquire View, a SoftBank-backed smart glass maker.
 
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Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member

WeWork in talks to go public via SPAC​

Co-working giant had a flameout en route to an IPO in 2019​


Now We’ve seen everything.
WeWork is in talks to combine with a special-purpose acquisition company to go public, according to the Wall Street Journal. The co-working giant attempted an initial public offering in late 2019 but had a spectacular flameout during the IPO process, after scrutiny of its financials and governance.

WeWork CEO Sandeep Mathrani and the company’s board have been in discussions with a SPAC affiliated with BOW Capital Management and at least one more SPAC, the Journal reported.
WeWork may also consider an additional private investment round. If it goes that route, the company will remain private.
“Our significant progress combined with the increased market demand for flexible space shows positive signs for our business,” a spokesperson for the firm told the publication. “We will continue to explore opportunities that help us move closer towards our goals.”

A SPAC deal could value WeWork at $10 billion, according to the Journal. It’s a far cry from WeWork’s $47 billion valuation in 2019, before its bungled IPO and the ouster of co-founder Adam Neumann drove that figure down to $4.9 billion.
To stave off insolvency, SoftBank offered a $9.5 billion bailout and tapped real estate veteran Sandeep Mathrani as CEO to right the ship. Under his leadership, WeWork has shed one-third of its workforce, yielding $1 billion in annual savings. It is also closing underperforming locations.
But in November 2020, the company said it burned through $1.7 billion since the beginning of the year, and that revenue dropped 8 percent in the third quarter.

Though the pandemic dealt the office sector a huge blow, some expect flexible-office firms to play a role in return-to-work plans, which could benefit WeWork.
In recent months, Mathrani has hinted publicly that WeWork could take another stab at an IPO. He said in October the company was on track to be profitable in 2021 and would then consider a public offering. “I’m a big believer in one step at a time so let’s hit profitable growth first,” he told Bloomberg News.
Over the past year, SPAC activity has exploded thanks to well-known sponsors like Chamath Palihapitiya, Bill Ackman and even SoftBank. So far this year, 83 SPACs have gone public, raising $23.2 billion. In 2020, 248 SPACs went public, raising $83 billion.

More than a dozen SPACs are hunting for proptech deals. A Tishman Speyer-backed SPAC said this week that it would take smart-lock maker Latch public in a $1.56 billion deal. Palihapitiya’s Social Capital merged with Opendoor, which began trading last year. And a Cantor Fitzgerald-backed SPAC is planning to acquire View, a SoftBank-backed smart glass maker.
Hmm, crazy to think we would get to this end game for WeWork, but at the end of the day, when so much liquidity and inflationary stimulus in our future, hard to see commercial sector not rebound from depths of hell its at now. So money is looking ahead here and it likely will pay off
 

David Goldsmith

All Powerful Moderator
Staff member

WeWork and SoftBank settle lawsuit​

Newman’s financial windfall will be bigger than first reported​

The battle between WeWork and SoftBank is over.
The beleaguered co-working giant and its co-founder and former CEO, Adam Neumann, have reached a legal settlement with SoftBank Group, Bloomberg News reported, heading off a trial that was set to begin on March 4. The agreement will firm up the Japanese conglomerate’s control over WeWork, while giving Neumann a financial windfall on his way out.

SoftBank COO Marcelo Claure, who also serves as WeWork’s executive chairman, said in a statement to the publication that this settlement shows all parties “doing what is best for the future of WeWork.”
“With this litigation behind us, we are fully focused on our mission to reimagine the workplace and continue to meet the growing demand for flexible space around the world,” he said.
The settlement allows Neumann to cash out about $480 million in stock to SoftBank, while requiring him to stay away from his role on the WeWork board for a year. SoftBank will also pay Neumann $50 million to cover legal fees and additional $50 million as part of a promised non-compete fee. Neumann also gets a five-year extension on a $430 million loan from SoftBank.

The lawsuit, filed in the Delaware Court of Chancery by WeWork and Neumann against SoftBank, was heading to a trial, where Judge Travis Laster was slated to hear evidence about how the WeWork stock deal collapsed.
Shortly after WeWork’s spectacular failure of going public in 2019, SoftBank had agreed to buy $3 billion in stock from WeWork investors, including about $1 billion from Neumann. But in April 2020, the company, led by Masayoshi Son, declined to complete the transaction.

The lawsuit alleged SoftBank withdrew the offer because of “buyer remorse” due to the pandemic. SoftBank objected, saying the deal was pulled because WeWork was unable to meet part of the deal’s conditions.
 

David Goldsmith

All Powerful Moderator
Staff member

Hulu unveils trailer for new WeWork documentary​

“When you tell a 30-something male he’s Jesus Christ, he’s inclined to believe you”​

“When you tell a 30-something male he’s Jesus Christ, he’s inclined to believe you.”
That’s a line from the trailer for Hulu’s new crime-thrilleresque documentary on WeWork, set to hit the streaming service April 2.

The two-and-a-half minute preview for “WeWork: Or The Making And Breaking Of A $47 Billion Unicorn” released Wednesday gives a glimpse into the highly anticipated treatment of the biggest boom-to-near-bust real estate story in recent memory.
“For God’s sake, they’re renting f***ing desks,” chimes in one of the on-screen personalities, as the fast-paced trailer outlines WeWork’s rise and fall, set to a THX-thumping soundtrack and archival footage of WeWork co-founder Adam Neumann.
The documentary, however, may disappoint those who have closely followed WeWork’s ups and downs. IndieWire reported that the film narrates the story with a broad brush and fails to dive into details or expand on those uncovered by previous reporting.

There are several other treatments of WeWork’s wild ride, including a book by Wall Street Journal reporters Eliot Brown and Maureen Farrell coming out this spring, a feature film from “The Big Short” screenwriter Charles Randolph and an AppleTV series starring Jared Leto and Anne Hathaway as Adam and Rebecca Neumann.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
cant miss this...at the end of the day, thoughts on WeWork long term? i wouldnt be surprised to see all offices turn into weworks if wfh and a new style work week emerges in the years to come. this city and its offices are going to go through major change
 

David Goldsmith

All Powerful Moderator
Staff member

WeWork discloses $3.2 billion loss in 2020 as it seeks SPAC deal - source​

WeWork lost $3.2 billion last year, the office-sharing startup disclosed in a presentation shown to prospective investors as part of a pitch for $1 billion in investment and a stock market listing, a person familiar with the matter told Reuters.

The company's losses narrowed from $3.5 billion in 2019 and it plans to go public at a valuation of $9 billion including debt through a merger with a special purpose acquisition company (SPAC), according to a person directly briefed on the presentation that was sent out to existing and potential new investors.

A SPAC is a shell company that raises funds in an IPO with the aim of acquiring a private company, which then becomes public as result of the merger.

Reuters reported in January that WeWork was in talks to go public through a merger with a SPAC and was exploring raising funds from private investors.


The company's plans for a high-profile initial public offering imploded in October 2019 due to widespread criticism over its business model and its founder Adam Neumann's management style. SoftBank Group Corp later bailed out the startup.


WeWork is now in talks with BowX Acquisition Corp, a blank-check company that raised $420 million in August, according to the Financial Times, which first reported the news.


WeWork declined to comment on the report.


The report said that WeWork forecast occupancy to rebound to 90% by the end of 2022, from 47% at the end of last year when the COVID-19 pandemic shut its co-working spaces around the world.


The company expects adjusted earnings before interest, taxes, depreciation and amortization of $485 million next year, the report added.
 

David Goldsmith

All Powerful Moderator
Staff member
SoftBank-backed office-sharing startup WeWork on Thursday reported a first-quarter net loss of $2.06 billion, as it was hit by restructuring charges while it prepares to go public through a merger with a blank-check firm.
WeWork said its business was recovering as more people returned to offices due to easing of COVID-19 curbs, after work-from-home arrangements last year weighed heavily on the company by reducing occupancy and increasing operating costs.
Total occupancy ticked up to 50% in the first quarter compared to 47% in the fourth quarter, the company said.
WeWork in March agreed to go public through a merger with BowX Acquisition Corp (BOWX.O), a special purpose acquisition company, in a deal that valued it at $9 billion. SoftBank Group Corp (9984.T) said it would retain a majority stake in the company after the merger. read more

The company, whose attempt at an initial public offering in 2019 spectacularly imploded due to investor concerns over its business model and co-founder Adam Neumann's management style, said first-quarter revenue nearly halved to $598 million from a year ago.
WeWork said it had 490,000 members in the first quarter, compared to 693,000 in March 2020.
The company said it incurred restructuring costs of $494 million, driven by non-cash SoftBank stock purchases and a settlement with Neumann. It posted an impairment charge of $299 million partly due to an exit out of some real estate.
SoftBank and Neumann, WeWork's former chief executive officer reached a settlement in February ending a legal battle that started in 2019 when SoftBank agreed to buy around $3 billion in WeWork stock belonging to Neumann and other employees, but later contested its obligation to purchase the shares.
Close
 

David Goldsmith

All Powerful Moderator
Staff member

Adam Neumann’s WeWork golden parachute even bigger than previously reported​

WeWork co-founder received an enhanced stock award worth $245M​

Adam Neumann’s golden parachute is the gift that keeps on giving.
As part of his exit package from the flex-office company, Neumann received an approximately $245 million stock award in February, a benefit that other early shareholders didn’t receive, Wall Street Journal reported.

That benefit was a part of a renegotiation of Neumann’s 2019 deal to leave the company he co-founded. In addition to the stock, Neumann received $200 million in cash, as well as the refinancing of a $432 million loan. The new terms were intended to settle an ongoing dispute between Neumann and SoftBank, one of WeWork’s biggest financial backers, sources familiar with the matter told the publication.

The renegotiated terms were made public in SEC filings as part of WeWork’s merger with the special-purpose acquisition company BowX Acquisition Corp. The company is planning to go public via the SPAC merger later this year, following an aborted attempt to do so in 2019.

After Neumann’s departure, WeWork sold several companies that the company acquired under his leadership, which led to big losses: The company purchased 10 investments for $759 million in cash and WeWork stock, but only garnered $164 million, the publication reported.
More than 90 percent of WeWork’s staff held stock options when SoftBank bailed out the company in 2019, the publication reported. The company downsized and thousands of employees that were laid off had to forgo all of their options.

So how did Neumann get away with such a hefty stock award? He controlled the company while holding stock with 10 times the votes of a normal share, an expert told the publication. Thus, SoftBank was paying him to give up that control.
 

David Goldsmith

All Powerful Moderator
Staff member
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