Real Estate

Former WeWork chief to host party on sidelines as company goes public


Adam Neumann and Miguel McKelvey have invited WeWork’s earliest employees to a party to watch the office business they founded go public on Thursday, in a sign of support after two years of disputes between Neumann and SoftBank, its largest investor.

People invited to Thursday morning’s event said McKelvey had invited more than 100 of WeWork’s first employees to a 9am party he and Neumann are hosting at the Standard Hotel in New York’s Meatpacking District.

Shareholders in BowX Acquisition, a listed special purpose acquisition company, approved a merger with WeWork on Tuesday, giving the shared working space provider the public listing it had tried to secure in 2019 — but at a $9bn valuation rather than the $47bn price tag it once claimed.

The fallout from that aborted initial public offering led Neumann to resign from his role as chief executive and surrender most of his voting rights, as pressure mounted over his personal conduct and WeWork’s dwindling cash reserves forced SoftBank to inject fresh funds.

He retains a stake of about 11 per cent, however, even after an investment vehicle he controls sold $578m of WeWork shares to SoftBank. A settlement of his legal battle with the Japanese group gave him cash, stock awards and fees worth almost $450m.

Under the terms of that deal, Neumann’s “profits interests” in WeWork could be worth almost $250m if its stock trades above $10 per share. On Wednesday the BowX share price closed at $10.38.

Each of the employees invited to Thursday’s event is a shareholder and will be able to sell their WeWork stock as soon as trading starts. Neumann is prevented from selling until nine months after WeWork goes public and “is not a seller”, a person familiar with the matter said.

Neumann and McKelvey, who have not been seen in public together since Neumann’s forced resignation but have remained in contact, will be at the hotel to “celebrate” when WeWork’s current leadership ring the bell at the start of trading at the New York Stock Exchange, one of the people invited said.

“They view this as a validation” of the business model they developed, this person added, arguing that WeWork’s business of offering flexible, short-term leases would be increasingly attractive to companies wary of committing to long, fixed office leases after 18 months in which many white-collar workers have worked from home.

WeWork’s new management has emphasised its efforts to rein in the spending that led to losses ballooning when Neumann was expanding its reach around the world, encouraged by SoftBank founder Masayoshi Son, who put more than $10bn into the start-up.

However, it lost $3.2bn in 2020 and reported a $3bn loss for the first half of 2021, including a non-cash charge of more than $500m for the settlement with Neumann.

The deal with BowX, led by the software executive Vivek Ranadivé, will provide WeWork with $1.3bn, including a $150m investment from Cushman & Wakefield, the property services group.

Marcelo Claure, chair of WeWork and international chief executive of SoftBank, wrote on Twitter on Wednesday that WeWork was “writing another chapter in what will become one of the most amazing comeback stories ever”.

People familiar with the negotiations had said SoftBank saw the settlement with Neumann as a way to “put the Neumann era behind them”, but Neumann has the right to observe board meetings from next February.

Neumann also played a hand in arranging the Spac deal through which WeWork is going public, documents show, holding an initial phone call with BowX executives and their bankers at UBS last October, more than a month before UBS introduced BowX to Sandeep Mathrani, WeWork’s current chief executive.

Spokespeople for WeWork, Neumann and McKelvey declined to comment.



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