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Adam Neumann, co-founder of WeWork and former CEO, set to raise an additional $ 50 million and other benefits in a deal that would settle a bitter dispute he and other early investors in the shared office space provider conducted with SoftBank Group Corp., according to people familiar with the matter.
As The Wall Street Journal reported earlier this week, the parties are reaching a deal in which SoftBank, WeWork’s majority shareholder, would buy about $ 1.5 billion in shares from other investors, including nearly $ 1.5 billion. $ 500 million to Mr. Neumann. That’s about half of what he planned to buy.
But a part of the previously unreported transaction sets Mr. Neumann apart from other shareholders. He’s asking SoftBank to give the 41-year-old the $ 50 million special payment and extend a $ 430 million loan it made to him at the end of 2019 for five years, people said. . SoftBank is also expected to pay $ 50 million for Mr. Neumann’s legal fees. It is not known how much he pays for the legal fees of other shareholders.
The settlement between SoftBank, Mr. Neumann and the other shareholders is not final and conditions could still change, people have warned. If the parties reach an agreement, potentially in the next few days, it will avoid a trial in early March.
WeWork is separately negotiating a combination with a special purpose acquisition company called BowX Acquisition Corp. who would provide the startup with a public list, people familiar with the discussions said. While the talks could still collapse and other options are being considered, WeWork and BowX could reach a deal as early as next week, some people said.
Month-long legal skirmish revolves around a pledge made by SoftBank in October 2019 to buy $ 3 billion in stock from existing WeWork shareholders, including nearly $ 1 billion from Mr. Neumann . SoftBank, which was bailing out a faltering WeWork after its slated IPO collapsed, also agreed to pay consulting fees of $ 185 million over four years to Mr. Neumann, who agreed to step down as chairman. -General manager. In addition, he loaned her nearly $ 500 million to refinance another loan.
The additional payment to Mr Neumann could reopen old injuries to WeWork employees and investors, who were furious when the $ 185 million payment became public.
Employees to whom Mr. Neumann had long preached an “us over me” philosophy were stunned by the contrast between his exit plan and their personal financial situation. Most had stock options that had become virtually worthless as WeWork’s value fell to around $ 8 billion from $ 47 billion.
Mr Neumann never received the full amount of the consulting contract, people said: SoftBank paid him around $ 130 million before stopping the payment amid the legal battle.
Last April, as the coronavirus pandemic swept across the United States, SoftBank refused to make the $ 3 billion payment. He cited the terms of the deal that he said had not been concluded, including the restructuring of a subsidiary in China. WeWork shareholders, represented by WeWork’s original investors on the board of directors, and Mr. Neumann have filed separate lawsuits, and the parties have exchanged lawsuits for much of the past year.
The roughly $ 500 million in shares that Mr. Neumann is about to sell represents about 25% of his holdings. The price per share it gets is about the same as the previous deal, people familiar with the matter said.
Write to Maureen Farrell at [email protected] and Eliot Brown at [email protected]
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Appeared in the February 25, 2021 print edition as “ WeWork Ex-Boss to Get Windfall. ”
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