SoftBank Group Corp is intending pumping additional $1 billion or more into WeWork by renegotiating a warrant agreement, reported the Financial Times last week when the U.S. office sharing startup was considering delaying its IPO which was planned in this month but the company eventually decided to scrap that decision on Monday because of poor response from the investors.
The plan would came increasing the Japanese firm’s previous commitment of investing $1.5 billion in WeWork as part of the new agreement, according to which the U.S. company will be entitled to receive the sum in April next year against the issuance of Class A common stock to SoftBank.
SoftBank and its Vision Fund are biggest backers of WeWork and have already made direct investment of $7.5 billion, excluding the $1.5 billion to poured in next year and $1.6 billion of separate investment went to overseas subsidiaries of WeWork in its units in China and Japan.
We Company had cash and cash equivalents of nearly $2.5 billion as of June 30, 2019, according to its IPO filing in early last month, however the company’s revenue doubled in 2018 to reach $1.8 billion but its losses also jumped more than double to $1.9 billion in the same period.
SoftBank’s potential new investment could also open the doors for WeWork to explore more financing options, which agreed with a consortium of banks for a $3 billion to $4 billion loan but that was subject to the completion of the IPO.
For SoftBank, the new deal would reduce the per share price of WeWork’s stock, giving it a larger stake in the property group which is still an unprofitable firm, and it was also not clear that how the renegotiation would be impacting the Japanese group to valuate its investment in the U.S. firm, FT said.