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SoftBank Contemplating Increasing Its Pledged $1.5bn Investment In WeWork

SoftBank Contemplating Increasing Its Pledged $1.5bn Investment In WeWork
Talks about infusion of an increased investment of $1.5bn are ongoing between the Japanese investment conglomerate SoftBank and the United States based office leasing company WeWork. The Japanese firm has earlier agreed to invest $1.5bn in the American company sometime next year, claimed reports quoting sources with knowledge of the matter.
Reports suggested that a pledge of making investment of an additional $1bn or more in WeWork is being contemplated by SoftBank so that the terms of a warrant agreement it had with the American company can be changed. This agreement was made between the two companies prior to the scuttling of the plans of WeWork to launch an initial public offering in the US because of a significant lowering of its market valuation and subdued interest from investors.
A rehashed deal between the companies means that SoftBank would make a total investment of at least $2.5 billion in WeWork but would also reduce the price per share of the American company at which SoftBank would be purchasing shares of the office space renting company. That would ultimately also increase the stake of SoftBank in WeWork because of the reduced price per share, said the reports.
This change and rehashing of investment by SoftBank is one of the many options being debated even as the Japanese investment firm is contemplating increasing the value of one of its largest investments. The reports also however quoted the sources as saying that the negotiations and considerations are still in their initial phases and SoftBank could also chose not to invest completely in WeWork. 
Reports also claimed that WeWork is aiming to negotiate debts of between $3bn and $4bn from a consortium of banks while it could also open up modes for generating additional funds by an equity investment from SoftBank in the company. However the conditions of the loan package which is being headed by JPMorgan Chase and Goldman Sachs, mandates that WeWork first raise the additional capital before the banks give out the loan.
There were no comments available from WeWork and SoftBank on the issue or the reports.
After WeWork scuttled its hotly anticipated IPO, the company was pushed into turmoil. Institutional investors did not respond well to the IPO proposal as they brought up a range of complaints against the company which included concerns about the increasing losses of the company, it corporate structure and corporate governance as well as the leadership of the chief executive of the company Adam Neumann.
Earlier this week, Neumann was forced to resign as chief executive while also giving up his majority control over the startup. And the board of the company is contemplating talking severe measures to keep the parent company WeWork, the We Company, from further financial distress.
The latest investment by SoftBank in WeWork had valued the company at $47bn. However even one third of that value is not being accorded to the company by public market investors. WeWork had expected to sell $3bn of shares in the IPO and SoftBank had agreed to buy $1bn of them. Further reports also claimed that both the companies have agreed to bring in changes to the terms of the $1.5 billion investment by the Japanese company to reflect the IPO price. But since the public listing was scuttled, that deal also fell through.

Christopher J. Mitchell

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