WeWork Secures $450M in Financing to Exit Bankruptcy, Sans Adam Neumann

Deal would give Yardi Systems a 60 percent ownership stake in the coworking giant

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WeWork (WE) got a new bit of financing to get out of bankruptcy, all without the help of its co-founder Adam Neumann.

The coworking giant announced Monday that it secured about $450 million in new funding that it said will help it exit Chapter 11 by the end of next month. The money comes with a restructuring deal that WeWork said would allow it to drop its $4 billion of debt obligations.

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“Over the past six months, we have worked extremely hard to develop a plan for a reorganized WeWork that is better capitalized, more operationally efficient, and positioned for continued investment in our products and services and a return to long-term growth,” WeWork CEO David Tolley said in a statement.

As part of the proposal, which still needs to be approved by WeWork’s creditors, real estate tech company Yardi Systems, under an LLC called Cuper Grimmond, will pony up $337 million to WeWork, Bloomberg reported. Another group of bondholders will provide $112 million in financing. 

Cuper Grimmond will then get a 60 percent equity stake in WeWork while an ad hoc group of lenders and several secured lenders, which includes WeWork lender SoftBank Group, will each get a 20 percent ownership a piece, a spokesperson for WeWork said.

However, the new deal leaves out Neumann, who has been fighting in court to regain control of the company he helped start after he made an offer to acquire WeWork for between $600 million to $900 million.

But Neumann, who made the offer through his new venture Flow, isn’t going down without a fight and has previously asked the court to block the financing plan.

“After misleading the court for weeks, WeWork finally admitted it is trying to sell the company to a group led by Yardi for far less than we are continuing to propose, so we anticipate there will be robust objections to confirming this plan,” Susheel Kirpalani, a lawyer for Flow, said in a statement.

In court filings, Neumann — who drove the aggressive expansion model that put WeWork on the hook for pricey leases across the world — has called the new plan “unsustainable” and said it would make WeWork “cash-flow negative by 2025 and would fully deplete [its] cash by 2027,” Bisnow reported.

A New Jersey bankruptcy court approved WeWork’s new financing and restructuring plan on Monday. Its creditors will vote on it May 30. 

WeWork filed for bankruptcy in November, after years of teetering on the edge, and has since been moving to get out or restructure those long-term leases signed under Neumann’s tutelage. It previously said it locked down about $8 billion in savings during the Chapter 11 proceedings and would re-emerge from bankruptcy with more than 20 million square feet of locations. That savings presumably includes the closure of its more than 300,000-square-foot headquarters at Tower 49 in Midtown, which Bisnow first reported. 

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.