The troubled initial public offering (IPO) of office sharing company WeWork has taken another turn with the resignation of its founder and Chief Executive Officer Adam Neumann.
Neumann, who co-founded WeWork a decade ago and turned it into one of the world’s most valuable start-ups, stepped down as CEO late Tuesday under pressure from the company’s Board of Directors. He has taken on a a new role as "non-executive chairman" and forfeited any control over management decisions at the company.
The resignation is aimed at salvaging WeWork’s IPO, which had been delayed after investors scoffed at it and the value plummeted. A litany of apparent conflicts of interest and Neumann’s propensity to burn through capital were chief concerns of potential investors.
"In recent weeks, the scrutiny directed toward me has become a significant distraction," Neumann, 40, said in a written statement Tuesday night. "I have decided that it is in the best interest of the company to step down as chief executive."
Two senior WeWork executives, Sebastian Gunningham and Artie Minson, were appointed as co-CEOs. WeWork’s parent company, We Co., still intends to go public at some point, but said it’s unlikely to take place in the near future. The new CEOs said in a statement of their own that they will be “evaluating the optimal timing for an IPO.”
We Co. has been under a tight deadline to go public. It needed to do so by the end of the year in order to secure a $6 billion U.S. debt financing contingent on a successful stock offering. The company, which is deeply unprofitable, will need to find an alternative source of capital next year if the 2019 IPO falls through.
With timing of an IPO now up in the air, the company is in talks with Goldman Sachs Group Inc. and JPMorgan Chase & Co. about a new $3 billion U.S. loan, which -- like the earlier planned financing -- would also be contingent raising a substantial amount of new equity, people with knowledge of the matter said. A likely source of that equity infusion is SoftBank Group Corp., the company’s largest shareholder.
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