The parent company of WeWork is at a crossroads as it tries to keep itself afloat after its failed initial public offering and the ouster of its longtime chief executive.
Directors of the We Company are expected to meet as soon as Monday afternoon to decide on one of two financial rescue packages, according to three people briefed on the matter: one that would effectively hand control of the business to SoftBank of Japan, its biggest shareholder, and another that would raise billions of dollars of debt with the help of JPMorgan Chase.
The plans are considered competing offers, though it was not clear whether there was any chance of being able to combine them in some fashion, these people added.
Either way, WeWork faces a momentous choice as it tries to save itself after it was forced to pull its stock market debut last month. At the time, prospective investors balked at a controversial corporate governance structure as well as expectations of a sky-high valuation. The company was valued by SoftBank at $47 billion in January.
[WeWork planned a residential utopia. It hasn’t turned out that way.]
The I.P.O.’s failure quickly led to the replacement of Adam Neumann, the charismatic but unpredictable co-founder, as chief executive of the company, which leases space that it updates and rents to individuals, small firms and large corporations. WeWork has expanded so fast that it is now the largest private tenant in Manhattan and a major player in London, San Francisco and other big cities.
Since the failure of the I.P.O., WeWork executives have sought to raise billions of dollars to keep the company up and running. People with knowledge of the negotiations have said that the company was aiming to raise the money within the next week or so, given its perilous finances.
This month, the debt rating agency Fitch downgraded WeWork’s credit rating to CCC+, firmly in junk-bond territory.
Now WeWork is weighing two options. One would be led by SoftBank, which has already invested over $10.5 billion into the company over the years. The conglomerate had led the push to oust Mr. Neumann, and has been in talks to inject more money into the company.
SoftBank has more than its investment at stake: A collapse of WeWork could hurt SoftBank’s efforts to raise a second Vision Fund, a sequel to its roughly $100 billion technology investment fund.
The second option is a multibillion-dollar financing package being arranged by JPMorgan, these people said. The bank had already been leading talks with WeWork to renegotiate a $6 billion financing package that was tied to the I.P.O. It has since been working on a debt deal that could be marketed to prospective investors as soon as this week, one of the people briefed on the deal added.
A spokesman for WeWork said in a statement that the company “has retained a major Wall Street financial institution to arrange a financing.” He added, “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
News of the company’s deliberations about financing was reported earlier by The Wall Street Journal.
Peter Eavis contributed reporting.
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