Payout comes as US office-sharing company weighs up sacking about 2,000 people
WeWorks co-founder Adam Neumann has reportedly signed a $1.7bn deal to step back from the troubled office rentals company he founded.
The move comes as the board of WeWork meets to consider a rescue plan worth almost $10bn (7.7bn) from its biggest investor, Japans SoftBank.
According to The Wall Street Journal, SoftBank will give Neumann almost $1.7bn as part of the deal $1bn from the sale of his shares plus a $185m consultancy fee and a $500m line of credit.
The emergency refinancing proposals come only two months after Neumann prepared to float the company.
Earlier this year some bankers had predicted WeWork could be worth as much as $65bn, valuing Neumanns stake at $14bn. However, after the publication of the share sale prospectus investors began to question WeWorks business model, its huge losses and Neumanns sometimes eccentric behaviour.
Neumann holds special voting shares that enable him to dismiss dissident directors, which prompted concern among investors when the company was preparing for its flotation. His voting rights, which initially gave him 20 times the voting power of other shareholders, were cut to three times those of ordinary shares when he stepped down as chief executive last month.
Neumann has also previously taken $700m out of the company through personal loans and stock sales.
The initial public offering (IPO) was pulled in September after WeWorks valuation was slashed by more than half. The companys valuation will be cut to about $8bn under the refinancing plan.
Under the terms of the rescue deal, Marcelo Claure, SoftBanks chief operating officer, would become chairman. The Japanese conglomerate would end up owning 60% to 80% of WeWork under the proposal, which includes $5bn of new debt, as well as injecting $1.5bn in equity and an offer to buy up to $3bn of existing shares.
There is a rival funding package also on the table, from JP Morgan Chase, worth $5bn. That deal includes $2bn of unsecured debt. The board will decide on Tuesday which one to accept.
Without an injection of new funds, the company risks running out of cash by the end of November.