WeWork is going through a tough phase and to lighten its burden in these turbulence times, the company decided to lay off thousands of employees. However, reports are emerging that the decision has been delayed by the shared-workspace startup as it has only a few weeks of money left and can’t afford to pay severance to affected workers. It has been widely reported that the company will run out of cash within four to five weeks if it doesn’t get a fresh investment. Employees of the company have very little to no work as most of the new projects have been put on hold. The embattled startup is trying to stay afloat for as long as possible with painful cost-cutting measures. WeWork representatives have not responded to these reports.
The delay could be short term as there are reports that the SoftBank, led by Japanese billionaire Masayoshi Son, is planning to give USD 5 billion bailout package to the company. WeWork has some funding offer from JPMorgan as well. The company’s board meeting is expected to meet soon to consider on both the offers. If WeWork accepts the bailout package of SoftBank, it would give the investor around 70 percent control of the startup at a valuation of USD 8 billion. This is a sharp decline in the company’s prior claim to be worth USD 46 billion. SoftBank and its USD 100 billion Vision Fund already own about a third of WeWork through previous investments totalling USD 10.6 billion.
Out of this bailout package, around USD 200 million will be for WeWork co-founder Adam Neumann. This is an exit package designed to wrest control of his voting shares and chairmanship. Neumann stepped down as CEO amid financial crisis and claims of bizarre behaviour. Once this bailout package is accepted by the WeWork’s board, Neumann – who once dominated voting rights – will be left with less than 10 percent of the voting rights and shares. Neumann had co-founded WeWork in 2010.