SoftBank to control WeWork operations

WeWork is desperate to find a solution to shore up its financial status after its New York parent company, We Co. pulled back on its decision for an initial public offering (IPO) and the company’s founder, Adam Neumann decided to step down.

Amid this financial crunch, WeWork sought negotiations with its largest shareholder SoftBank. In light of those dealings, the bank has prepared a financial package that would give it control of the company while sidelining its founder Neumann in exchange for reliving the shared-office space company from its financial difficulties.

In addition, the board has also tapped JPMorgan Chase & Co. to look at ways for the company to raise billions in debt. Now, the bank is in the middle of dealings with investors to participate in a multibillion-dollar debt deal.

“WeWork has retained a major Wall Street financial institution to arrange financing,” a company spokesman said. “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.

The company valued at $47 billion in a SoftBank investment early this year, plummeted to below $20 billion in expected valuation. Further, details of the exact amount of the investment were not disclosed but executives at SoftBank say that they need a minimum of $3 billion to get through the next year.

Some of SoftBank’s cash could also be used by Mr. Neumann to repay hundreds of millions of dollars of personal bank loans, one of the people said.

SoftBank has hired lawyers from Weil, Gotshal & Manges LLP, a corporate law firm known for its financial-restructuring specialists, to help sort through We’s finances and advise on the potential investment.

WeWork is expected to run out of cash by next month if it does not secure funding.