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WeWork Rescue: SoftBank Will Own Most of the Company, as Adam Neumann Receives Big Payouts

SoftBank ( SFTBF ) will channel $ 5 billion into The We and accelerate a $ 1.5 billion equity investment originally due to the company in the next year, according to a statement released by the two

SoftBank, which is now WeWork's largest investor, also proposes to buy shares worth up to $ 3 billion from existing investors and shareholders. The SoftBank Vision Fund will exchange all its interests in WeWork regional joint ventures throughout Asia, with the exception of the Japanese joint venture, for shares in WeWork.

All told, the deal will give SoftBank 80% ownership of the startup bet, a huge boost over the nearly 30% that SoftBank and its Vision Fund already own.
The rescue package is estimated to cost WeWork about $ 8 billion, according to a person familiar with the matter. This is a staggering drop from the $ 47 billion peak and an additional embarrassment for a company that has long been planning to publish. Lower rating SoftBank ( SFTBF ) would put more money into WeWork to date than the company is worth.
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SoftBank shares fell 2.5% in Tokyo after the deal was announced.

Adam Neumann, the controversial co-founder of WeWork, will also retire from the company board and become an observer on board. He has already left his role as CEO. Marcelo Claure, Chief Operating Officer of SoftBank, will become the executive chairman of the WeWork General Board. The board will receive voice control over Neumann's shares.

The message did not reveal details of Neumann's payout, but the WeWork founder could get away with nearly $ 1.7 billion. SoftBank's offer to buy Neumann's shares is limited to $ 975 million, and the package includes an additional $ 500 million loan to repay a credit line plus a $ 185 million "consulting fee" for SoftBank, a person familiar with the matter said.

Details of the payment of Neumann were first reported by The Wall Street Journal.

The deal capped a tumultuous two months for WeWork, during which Neumann observed a disastrous attempt to take over the hard-core audience. The long-awaited IPO was delayed after investors evaluated its valuation and criticized the corporate governance of the workspace provider.

But in a statement, SoftBank CEO Masayoshi Son downplayed the debate.

"It is not uncommon for the world's leading technology disruptors to experience the challenges of growth, as one that WeWork has just faced," Son said.

Claure – who already has multiple roles as CEO of SoftBank's international arm, SoftBank's Chief Executive Officer, Sprint ( S ) ) point at SoftBank Latin American Innovation Fund –

"The new capital that SoftBank provides will bring back the company momentum and I am committed to delivering profitability and positive free cash flow," Claure said in a statement.

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