WeWork Board Meeting Is Said to Be Unlikely to Happen Monday
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WeWork’s board is unlikely to convene Monday, even as pressure mounts to consider ousting Adam Neumann as chief executive officer, according to people familiar with the matter.
The office-sharing company’s board will likely convene later this week, although a definitive time hasn’t been scheduled yet, said the people, who asked to not be identified because the matter isn’t public. People familiar with the matter had previously said the board could meet as early as Monday, but the situation remains fluid.
SoftBank Group Corp.’s Masayoshi Son, founder of the Japanese conglomerate, is among those pushing for Neumann to resign, as the startup seeks to salvage its initial public offering, a person familiar with the matter said.
SoftBank expects Benchmark Capital, another large investor in WeWork, to be aligned with its position on Neumann, the person said. SoftBank has two representatives on WeWork’s board and Benchmark has one.
Representatives for WeWork, SoftBank and Benchmark declined to comment.
With the drama of a palace coup, Neumann has found himself at odds with SoftBank, WeWork’s largest investor. Son is among those pushing for Neumann to resign, a person familiar with the situation said, after widespread criticisms of the company’s governance and spending. Some directors are expected to raise the prospect of Neumann becoming non-executive chairman, the people said. The choice is ultimately Neumann’s, as the 40-year-old maintains effective control of management decisions.
The boardroom infighting not only imperils the IPO but also a $6 billion loan contingent on the deal. The unprofitable company must complete a successful stock offering before the end of the year to keep access to the credit facility. WeWork’s debut high-yield bond dropped three cents on the dollar after news that some directors are planning to push Neumann out.
WeWork conceded last week that its plans for going public would have to wait after talks with potential investors lowered expectations for the company’s planned IPO valuation to $15 billion or less, after a previous valuation of $47 billion. Among the concerns they voiced: Neumann’s controversial style and control of the company.
Rarely has so much gone so wrong so fast for a young company in the spotlight.
“It’s Uber-scale mess,” said Kellie McElhaney, a professor at the University of California Berkeley’s Haas School of Business, who blames both the board and Neumann for not learning from that company’s earlier mistakes. “He’s really taken a first-mover advantage that WeWork had in the space and blown it in a big way.”
Week of Uncertainty
The news of Neumann’s potential ouster comes after a whirlwind week of uncertainty for WeWork. Banks that provided a $500 million credit line to Neumann are looking to revise the terms as the company’s struggle to go public casts doubt on the value of his collateral, people briefed on the discussions said last week. It’s not clear what changes they may seek, or what right they may have to make demands.
On Friday, Wendy Silverstein, a big name in New York commercial real estate who joined WeWork last year as head of its property investment arm, left the company. She’s spending time caring for her elderly parents.
Even the president of the Federal Reserve Bank of Boston was adding to the angst. In a speech Friday in New York, Eric Rosengren warned that the proliferation of co-working spaces might pose new risks to financial stability.
“I’ve never seen a company of this size and scale generate such a consensus of negative opinion in my long, long life of following IPOs,” said Len Sherman, a Columbia Business School adjunct professor whose 30-year business career included time as a senior partner at consulting firm Accenture Plc. “There is no box that they haven’t ticked when you think of all the reasons that you might be very concerned — like blaring red lights. Like, oh my gosh, caution, danger, danger.”
— With assistance by Scott Deveau, and Michelle Davis
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