WeWork co-founder and former CEO Adam Neumann is set to receive a whopping $ 50 million discount and other benefits as part of a deal that would resolve a bitter dispute he and other investors in the early years of the provider made. common spaces they wore with SoftBank Group Corp., according to people familiar with the issue.
As reported by The Wall Street Journal earlier this week, the parties enter into an agreement under which SoftBank, the majority shareholder of WeWork, would buy shares worth about $ 1.5 billion from other investors, including nearly $ 500 million. from Mr. Neumann. This is about half of what you previously planned to buy.
But part of the previously unreported agreement differentiates Mr Neumann from other shareholders. He is asking SoftBank to give the 41-year-old the special payment of $ 50 million and to extend by five years a loan of 430 million dollars that he granted at the end of 2019, people said. SoftBank will also pay $ 50 million for Mr. Neumann’s legal fees. It is not clear how much he pays for the legal fees of the other shareholders.
The agreement between SoftBank, Mr Neumann and the other shareholders is not final, and the terms could change further, people warned. If the parties reach an agreement, possibly in the next few days, they would avoid a trial in early March.
WeWork is separately negotiating a combination with a special-purpose procurement company called BowX Acquisition Corp., which would provide the startup with a public list, people familiar with the talks said. While talks could fall apart and other options are being considered, WeWork and BowX could reach an agreement as soon as next week, some people said.
The month-long legal battle focuses on SoftBank’s commitment in October 2019 to buy $ 3 billion worth of shares from existing WeWork shareholders, including nearly $ 1 billion from Mr. Neumann. SoftBank, which saved a troubled WeWork after the planned IPO collapsed, also agreed to pay a $ 185 million four-year consultancy fee to Mr Neumann, who agreed to step down. of President and CEO. In addition, it lent them nearly $ 500 million to refinance another loan.
The extra payment to Mr Neumann could reopen old wounds with WeWork employees and investors, who were furious when the $ 185 million payment went public.
The employees to whom Mr. Neumann had long preached an “us over me” ethos were amazed by the contrast between his exit package and their personal financial situation. Most had stock options that had become virtually useless, as the value of WeWork had dropped to about $ 8 billion from $ 47 billion.
Mr. Neumann never received the full amount of the consulting contract, people said: SoftBank paid him about $ 130 million before he stopped paying amid the legal battle.
In April last year, as the coronavirus pandemic swept the United States, SoftBank refused to continue paying $ 3 billion. He cited the terms of the agreement, which he said were not finalized, including the restructuring of a subsidiary in China. WeWork shareholders, represented by the first WeWork investors on the board, and Mr Neumann have filed separate lawsuits, and the parties have filed legal motions for much of last year.
The nearly $ 500 million that Mr. Neumann will sell represents about 25% of his holdings. The price per share you get is about the same as in the previous agreement, said people familiar with the issue.
Write to Maureen Farrell at [email protected] and Eliot Brown at [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
It appeared in the February 25, 2021 print edition as “WeWork Ex-Boss to Get Windfall.”