On Wednesday SoftBank wired WeWork $1.5 billion, earlier than expected.
“This financing package enables the company to accelerate the path to profitability and free cash flow generation,” new Chairman Marcelo Claure said in a statement.
Adam Neumann meanwhile has been moved to a “board observer” and the board now has voting control over his shares.
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On Wednesday, SoftBank on Wednesday wired WeWork an accelerated payment of $1.5 billion, which new chairman Marcelo Claure said in a statement would “accelerate the path to profitability and free cash flow generation.”
The statement also included changes effective as of Wednesday: Claure was appointed executive chairman, while former chairman and cofounder Adam Neumann is now a “board observer,” losing control of his voting rights over shares.
“The financing package includes $5 billion in new debt financing,” WeWork said. “Softbank’s high-conviction investment comes with operational support as well as improved governance. With our expanded Board seats we anticipate appointing two additional directors in the near future.”
The $1.5 billion payment was initially scheduled for April 2020, but WeWork’s dire need for cash accelerated the payment, according to Bloomberg. The company burned through $6 billion a year and only had $2.5 billion on hand, Bloomberg said, citing an SEC filing in August.
“Several governance changes are effective immediately,” the statement said.
“The Board of WeWork has been reconstituted to include 10 members, initially consisting of:
Five directors designated by either SoftBank or SoftBank Vision Fund, including Ron Fisher, Marcelo Claure, Steven Langman, and two others to be named at a later date
Two directors designated by existing investors Benchmark Capital and Hony Capital, who are Bruce Dunlevie and John Zhao, respectively.
Two directors not affiliated with WeWork, who are Jeff Sine and Mark Schwartz; and one director from the Special Committee of the Board, Lew Frankfort.”
Billionaire Bill Ackman said on Tuesday that WeWork has a high chance of going to “zero,” speaking at a Robin Hood investing conference. “As someone who has put good money after bad, I think this looks like putting good money after bad, and SoftBank should have walked away,” Ackman said.
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Source:: Business Insider