Ousted WeWork Co-Founder Adam Neumann Set To Get $50 Million Settlement

We have covered the Weighorns’ former CEO Adam Newman’s Shinnigans during his time co-founding the company. He is, for lack of a better word, a colorful character with a unique management style. Unfortunately for him, that management style made his company run a lot of ground, requiring Softbank to intervene and invest in WeWork in an effort to get it back on track. When we last reported on Newman, as he canceled his $ 185 million consultation deal with WeWork after he allegedly breached the agreement. Now, it looks like Newman will get a good penny. Reportedly, Softbank and Newman are trying to settle the bitter dispute. As of this writing, SoftBank is set to purchase $ 1.5 billion in stock from initial investors in the shared office space company. As part of this proposed deal, approximately $ 500 million of that stock will be purchased from Newman. This is basically half of what Softbank plans to buy.

The deal also calls for Newman to pay $ 50 million as well as extend the $ 430 million loan made for five years at the end of 2019. As part of the deal, SoftBank will also pay Newman’s $ 50 million legal fees. It is not known how much Softbank will pay the legal fees of the other shareholders. If this agreement is reached, it will allow the parties to avoid a lawsuit to be held in early March. In 2019 WeWork planned to go public and disbanded when questions about the odd style of leadership were revealed. Additionally, the company was not only profitable, but suffered heavy losses. During that time, Newman stepped in as CEO and resigned from the board.

Theo Wargo / Getty Images for iHeartMedia

WeWork has been hit by a coronovirus-induced recession as have many other businesses. However, SoftBank believes the company will be profitable by the end of 2021. The hope is that in 2020 and 2021 all companies working from home will realize that they do not need such large offices. Flexible workspaces, such as the space wework provides, will become trend, or so SoftBank and WeWork would hope. When WeWork was poised to make its IPO in September 2019, the company was seeking a valuation of $ 47 billion. A few months later, the valuation was only $ 8 billion. To be profitable, WeWork requires 67–68% occupancy. Prior to the epidemic, WeWork was somewhere between 80 and 85% occupancy. WeWork is also negotiating a separate deal with a SPAC company called BowX Acquisition Corporation, which will give the company an IPO. The agreement is expected to be settled as early as next week.

The legal drama with WeWork and SoftBank has been going on for months. This all stems from the October 2019 deal, in which SoftBank bought $ 3 billion in shares from WeWork shareholders, including Newman’s $ 1 billion. SoftBank stepped in to bail out WeWork after it canceled its planned IPO.

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