Financially troubled “shared workspace” company WeWork has found a lifeline that will save the company from running out of cash but will result in a significant hit to its valuation, according to a new report.
As part of the agreement, WeWork’s former CEO Adam Neumann is set to leave the company with an approximately $1.7 billion golden parachute.
The Wall Street Journal reported Tuesday that SoftBank, the Japanese financial and tech conglomerate headed by Masayoshi Son, will take control over WeWork in a deal that would value the company by as much as $8 billion, a major markdown from the company’s $47 billion valuation earlier this year.
SoftBank chairman Masayoshi Son has invested billions of dollars in WeWork, and beat out rival JP Morgan to take over the office-sharing company.
WeWork has faced declining fortunes in recent months and was recently forced to call off its initial public offering. Analysts had questioned the company’s valuation, pegging the firm’s value as low as $10 billion. Oracle co-founder and billionaire Larry Ellison called WeWork “almost worthless” last month.
There were also questions about CEO Neumann’s abilities, following allegations of drug use and bizarre behavior.
Neumann, who resigned as CEO last month, will leave WeWork’s board of directors as part of the arrangement, the Journal reported. He will continue to own a stake in WeWork and will serve as an adviser to the board going forward.
Earlier this week, the Journal said that WeWork postponed laying off thousands of workers because the company didn’t have enough cash to pay them severance.