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Startups

SoftBank readies $9.5bn WeWork rescue package

Former Sprint CEO Marcelo Claure to take over as chairman

The WeWork logo above the entrance to one of its office spaces in the SoHo neighborhood of New York.   © AP

NEW YORK -- SoftBank Group has offered $5 billion in debt financing to WeWork as well as a tender offer of up to $3 billion to buy out existing shareholders in the co-working startup, according to a person familiar with the matter.

The Japanese conglomerate would also accelerate a $1.5 billion equity investment in the company -- scheduled for next year -- and SoftBank Chief Operating Officer Marcelo Claure will take over as chairman of the startup, the person said.

The financing deal would also make SoftBank a majority shareholder.

WeWork, which declined to comment, is expected to hold a board meeting Tuesday to weigh the matter.

Claure, one of SoftBank chief Masayoshi Son's key lieutenants, previously served as CEO of U.S. carrier Sprint and oversees SoftBank's Latin America fund.

SoftBank's bailout offer comes as WeWork prepares to lay off thousands to curb cash bleeding after an aborted attempt by parent We Co. to hold an initial public offering this fall.

The proposal, which could pump almost $10 billion into WeWork, would give SoftBank a chance to overhaul the struggling startup's governance and operations. But it would also make WeWork an even larger portfolio risk to SoftBank, which is still working to launch its second Vision Fund.

An IPO filing by We Co. revealed that WeWork, which had a high-flying valuation of $47 billion following a $2 billion funding round by SoftBank announced in January, had a net loss of $1.9 billion last year.

As investor skepticism grew over the viability of its business model, WeWork last month pulled its listing, and co-founder Adam Neumann has stepped down as CEO amid controversy over his control of the company.

Nikkei last week reported that SoftBank was planning to pump $5 billion into WeWork.

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