Israeli-American businessman Adam Newman speaks at the Israeli American Council (IAC)'s 8th Annual National Summit on January 19, 2023 in Austin, Texas.
Shahar Azlan | Getty Images
Five years after being ousted from the office-sharing company he founded, Adam Neumann has made a preliminary offer to buy bankrupt WeWork for more than $500 million. However, it is unclear whether he has the funds and the necessary support from creditors to close the deal.
As Mr. Neumann tries to take WeWork back, he must contend with a checkered past at the company, uncertainty surrounding financing, and the difficulty of valuing a business that is in the middle of a restructuring process. CNBC spoke to several people familiar with the company and Mr. Neumann's proposal. They requested anonymity to speak freely about private matters.
Rhythm Capital, the investment firm that acquired Daniel Ock's Sculptor Capital Management in November, is one of the parties interested in financing the bid, people told CNBC. It is. One of the people said Risum's involvement is still preliminary and the vetting process is at a very early stage.
More broadly, people close to the matter said they were skeptical that Mr. Neumann provided any financing to support the proposed deal. Mr. Neumann had named other sources of funding in preliminary communications with WeWork's advisers, but those sources did not materialize, the people said.
For example, Dan Loeb's Third Point was previously listed as a loan provider in a letter from Neumann's lawyers to WeWork's bankruptcy advisers. But the hedge fund quickly denied any involvement, saying the talks were only preliminary. Third Point is not involved in any of the proposals, a person familiar with the matter told CNBC.
Baupost Group was also floated as a potential funding source several months ago, but did not participate in Mr. Neumann's latest bid, the people said. One source said Mr. Newman's conversations with Mr. Baupost were preliminary and informal. The Financial Times first reported that Baupost was not involved.
WeWork declined to comment for this story. The company said in an earlier statement that it receives “regular expressions of interest from third parties” and strives to “always act in the best long-term interests of the company.”
A spokeswoman for Mr. Neumann declined to comment. “A consortium of six financing partners, whose identities are known to WeWork and its advisors, have submitted a potential bid to the company,” the representative said in an earlier statement.
Mr. Newman is represented by Alex Spiro of the law firm Quinn Emanuel, who also serves as an advisor to Tesla CEO Elon Musk and billionaire rapper Jay-Z. But Newman, who once referred to JPMorgan Chase & Co. CEO Jamie Dimon as his “personal banker,” doesn't appear to have used bankers or financial advisors in the WeWork acquisition. said two people with direct knowledge of the matter.
Adding to the confusion is Mr. Neumann's involvement in the latest venture, Flow, which is one of the parties bidding for WeWork. After being ousted from WeWork, Mr. Neumann founded Flow, a startup that claims to be reinventing home ownership and building a sense of community among tenants.
Andreessen Horowitz reportedly invested $350 million in Flow in 2022. Marc Andreessen, co-founder of the venture, is a member of Flow's board of directors. Andreessen Horowitz did not respond to a request for comment.
Mr. Neumann's lawyers are also representing Flo in WeWork's bankruptcy proceedings. Mr. Flo and Mr. Newman share a public relations representative and approved WeWork's bid.
Israeli-American businessman Adam Newman speaks at the Israeli American Council (IAC)'s 8th Annual National Summit on January 19, 2023 in Austin, Texas.
Shahar Azlan | Getty Images
The timing of Newman's offer also raises questions about its feasibility. The bid, made two weeks ago, comes at a time when the company has yet to offer a viable path out of bankruptcy, the people said.
WeWork's advisers are not currently making a bid for the company, and are instead focused on navigating bankruptcy in New Jersey, the people said.
Additionally, there is the reputational damage Neumann suffered during his declining years at the company. Before WeWork's failed IPO in mid-2019, Mr. Neumann went on a fundraising and spending spree that public market investors deemed unsustainable. Even though WeWork's business was booming, Neumann still made a lot of money.
SoftBank, WeWork's largest investor at the time, ultimately spearheaded Neumann's ouster, but the ordeal ended in court. SoftBank is one of WeWork's creditors in bankruptcy court.
Mr. Neumann held a large stake in WeWork before it filed for bankruptcy, but his stake was wiped out along with other shareholders. If Mr. Newman's bid is successful, it would first be required to repay secured creditors who are waiting in line to be repaid. One of the people said there has been no indication that the creditors are considering Mr. Newman's bid.
clock: WeWork founder Adam Neumann is trying to buy back the company
