While WeWork employees now face the prospect of thousands of layoffs, Neumann has secured a US$685 million side deal with SoftBank to step down from the board of WeWork's owner, The We Company, the sources said.
This marks a stunning reversal of fortunes for WeWork, which has lost almost $39bn of its valuation over the past five weeks, during which it scrapped its hotly anticipated public debut, removed cofounder Adam Neumann as CEO and launched a cost-cutting plan after starting to run out of cash.
SoftBank CEO Masayoshi Son had picked Claure, the company's chief operating officer, to help WeWork's new co-CEOs.
SoftBank's Vision Fund was expected to move up a $1.5 billion investment in WeWork that it had been scheduled to make next year.
That commitment was made in January at a $47bn valuation, but SoftBank's latest rescue package is at a valuation of about $8bn, according to the unnamed sources.
WeWork said in a statement that Japanese tech conglomerate SoftBank will infuse the We Company with more than $5 billion in urgently needed capital.
Japan's SoftBank Group will reportedly take over embattled work space company WeWork.
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SoftBank's $500 million loan to Mr. Neumann was a critical part of the negotiations, as he had a line of credit that was tied to his stock in WeWork at a previous, much higher valuation.
"We have never seen a so-called unicorn restructure in bankruptcy, primarily because no such company other than this would see any real benefit in doing so, inasmuch as they don't have the type of liabilities that WeWork has", Alpert said. That's a steep fall from the $68 billion the company was valued at during the start of the year.
USA media say the deal will send WeWork's market valuation down to about 8 billion dollars from its peak of 47 billion dollars at the beginning of this year.
Neumann, who will remain a "board observer", will also walk away with nearly $1 billion in cashed-out stock that he can sell into the tender offer, plus, according to multiple reports, a $500 million credit line from SoftBank to repay a credit facility led by JP Morgan, and a roughly $185 million consulting fee.
Mr Novak declined to say how big his firm's stake in WeWork is.
The company, which is thought to be in danger of running out of cash by next month without new funding, was planning on cutting jobs to save money. Most of its leases don't have provisions to let the company end them early, and the average initial term of its U.S. leases is 15 years. Still, the bid was more attractive to The We Company's board of directors than a competing offer from JPMorgan Chase, according to the Journal's reporting. In the first six months of this year, WeWork pulled in $1.5 billion in revenue but posted a net loss of $690 million, according to the filings.