WeWork is expected to see its cash run dry by November, but SoftBank, its biggest outside shareholder, is hard at work to save the shared workspace startup. JP Morgan is also joining the efforts to save what's left of the embattled company.
According to CNBC, people with knowledge of the matter revealed that JP Morgan, the banking giant that was supposed to lead WeWork's now-defunct initial public offering (IPO), is working with SoftBank to create a financing package as soon as possible.
The sources, who spoke on condition of anonymity due to the confidential background of the matter, further revealed that the two banks have been working on an emergency solution that will see JP Morgan handling debt, while SoftBank will offer an equity option.
Before WeWork's supposed stellar IPO was pulled out, the startup already received criticism for its operational system, the executive power of then CEO Adam Neumann, and the true valuation of the company.
SoftBank tried to get investors to bend through the CEO post exit of Neumann. However, it wasn't enough to regain momentum as new issues popped out leading to the reported emergency discussion between the Japanese bank and JP Morgan.
Aside from issues revolving around the former CEO, there have been reports of formaldehyde in some WeWork phone booths. Layoffs are also reportedly underway, with thousands of jobs at risk.
Multiple outlets reported that the layoffs will take place within the next few weeks, as part of the efforts to save the company from completely drying up by mid-November. According to The Guardian, the formerly robust startup is expected to cut around 2,000 workers.
The outlet noted that all was well, with WeWork having a whopping $47 billion valuation at one point until some concerned investors questioned the company's business model as well as Neumann's authority.
At the moment, new co-CEOs Artie Minson and Sebastian Gunningham are hard at work to pursue cost-cutting, including the stoppage of new projects and the unfortunate layoffs that are expected to continue until WeWork stops burning up cash.
As if the piling up issues weren't enough, Goldman Sachs dropped the bomb on Tuesday. The financial leader revealed that it had to absorb $80 million in write-down after the startup pulled out of its IPO.
Business Insider reported that despite the loss, the figures are still much lower than initial projections of $264 million in losses as predicted by Morgan Stanley analysts. The news came alongside the fall of Goldman Sachs shares, with stocks shedding as much as 3.5 percent.
It remains to be seen if the SoftBank-JP Morgan financing package is carried out in peace. If the salvaging method works well, WeWork could rise from the ashes, some analysts said.
