Japan's SoftBank Group offered close to US$10 billion (S$13.6 billion) to WeWork owner The We Company, its employees and its investors on Monday under a plan to keep the struggling US office space sharing start-up afloat.
The deal would also lead to the exit of its co-founder and chairman Adam Neumann, said people familiar with the matter.
WeWork could run out of cash as early as next month without new financing, sources have said, after the company last month pulled plans for an initial public offering (IPO).
It abandoned the IPO when investors questioned its large losses, the sustainability of its business model and the way WeWork was being run by Mr Neumann, who gave up his chief executive title last month and now serves as board chairman.
The We Company board is meeting to evaluate SoftBank's offer against an alternative financing proposal from JPMorgan Chase, the sources said.
JPMorgan faces challenges in putting together a debt package for WeWork, because it has not underwritten it and is trying to find banks and institutional investors to back it, the sources added.
SoftBank has offered US$5 billion in new money to WeWork in the form of debt, the sources said. It is also proposing to accelerate a previous US$1.5 billion equity commitment to WeWork in the form of warrants that are due in April, the sources added.
This commitment was made in January at a US$47 billion valuation, but SoftBank is now seeking to renegotiate it at a valuation of about US$8 billion, the sources said.
SoftBank is also proposing to launch a tender offer for up to US$3 billion to acquire WeWork shares from existing investors and insiders, including Mr Neumann, the sources said. Based on the outcome of the tender offer, SoftBank could own between 60 per cent and 80 per cent of WeWork but will seek to avoid consolidating the company on its books, one of the sources added.
SoftBank and its US$100 billion Vision Fund already own about a third of WeWork through previous investments of about US$10.6 billion.
Mr Neumann could step down from The We Company board as part of the deal with SoftBank and become an adviser, the sources said. SoftBank chief operating officer Marcelo Claure would succeed Mr Neumann as chairman, the sources added.
WeWork, SoftBank and JPMorgan declined to comment, and a spokesman for Mr Neumann also declined to comment.
SoftBank has lined up Mizuho Financial Group as part of its syndication of the US$5 billion debt package, one of the sources said. The package comprises letters of credit for more than US$1 billion, as well as senior secured and subordinated bonds, the source added. Mizuho did not comment by press time.
Facing a cash crunch, WeWork is seeking to slow down its expansion, reducing the number of new property leases it is taking on.
The We Company board has also agreed on a cost-cutting plan that includes layoffs, Reuters reported last week.
The cuts will take place over the coming weeks, the sources added.