WeWork's (WE.N) $3 billion debt for equity swap deal with its creditors marks the latest effort by top shareholder SoftBank (9984.T) to revive the troubled office-space provider and recoup some of the billions it has invested.
Japan's SoftBank Group Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, November 5, 2018. REUTERS/Kim Kyung-Hoon/File PhotoWhether the bet succeeds now depends on WeWork renegotiating the costly long-term leases it signed during the boom years and is now unable to pay, forcing it to file for
Those deals, many agreed during a period of breakneck growth under founder Adam Neumann, became a crippling burden as the post-COVID shift towards working from home led to a plunge in demand for office space. Neumann quit as CEO in 2019, bowing to pressure from some investors. But this did little to ease its cash crunch. Lease payments consumed nearly three quarters of its revenue in the second quarter of 2023, the last time it reported financial results.WeWork's dramatic fall followed lavish predictions about its prospects from SoftBank founder Masayoshi Son, despite immense losses as it grew.
Nevertheless, SoftBank's exposure to WeWork is limited, as it has written down most of its investment in the company over the years. Still, it had a credit support deal with the company worth $1.1 billion as of end-June.
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