JP Morgan unwilling to match SoftBank's perks to WeWork CEO Adam Neumann as bank prepares to sit out financing, sources say

Key Points
  • WeWork is close to accepting a bailout plan led by SoftBank over a $5 billion syndicated debt package rounded up by J.P. Morgan.
  • Having already lost out from WeWork's scrapped IPO, J.P. Morgan now risks losing its role as a major financier.
  • J.P. Morgan refused to include a tender offer that it views as overvaluing WeWork and bailing out co-founder Adam Neumann, according to a person familiar with the matter.
Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the Bloomberg Global Business Forum in New York, on Wednesday, Sept. 25, 2019.
Tiffany Hagler-Geard | Bloomberg | Getty Images

WeWork but WeDon'tGetPaid.

That's the grim reality J.P. Morgan Chase bankers are facing now that WeWork is close to accepting a deal to sell control of the office-sharing company to SoftBank in a debt and equity package.

J.P. Morgan would have been the so-called "lead left" adviser on WeWork's IPO and lead financier on an associated $6 billion credit facility, two roles that would have brought in millions in fees. J.P. Morgan is also WeWork's third-largest external shareholder -- client money rather than bank asset capital -- behind SoftBank and Benchmark.

Instead, the bank will collect a smaller fee for raising money that WeWork won't use, according to a person familiar with the matter.

In the three weeks since WeWork withdrew its IPO filing, J.P. Morgan has been trying to secure alternative financing to save WeWork, which was set to run out of cash by mid-November CNBC reported last week. The bank has held talks with more than 100 investors to try and pull together a $5 billion debt package — an alternative to SoftBank's bailout plan.

J.P. Morgan has raised the money but won't overvalue the company by putting in more equity, according to a person familiar with the matter. The bank also refused to add in a tender offer to its bailout package that would give co-founder and ex-CEO Adam Neumann a path to sell more shares, said the person, who asked not to be named because the plan is confidential. Additionally, SoftBank is paying hundreds of millions to Neumann to leave the board of directors, give up his voting shares and support SoftBank's takeover, according to Axios — something J.P. Morgan was also unwilling to do, the person said.

CNBC's David Faber first reported earlier Monday that WeWork is planning on rejecting J.P. Morgan's financing plan in favor of SoftBank's, which combines debt and equity. SoftBank is planning on investing between $1 billion and $3 billion in a tender offer, in addition to accelerating a $1.5 billion equity infusion and $5 billion in debt financing, with other syndicates, people familiar with the matter said.

WeWork's board is likely to meet on Tuesday to finalize details about selling control of the company to SoftBank, said the people, who requested anonymity because the discussions are private.

J.P. Morgan CEO Jamie Dimon had worked personally with Neumann on trying to get the company into the public markets. Dimon has made a point of breaking up the Goldman Sachs-Morgan Stanley tech IPO duopoly and has touted his bank's recent success.

"We've made huge progress in Silicon Valley," Dimon said at a roundtable discussion in Silicon Valley last year.

WATCH: SoftBank deal for WeWork sounds pretty reasonable under circumstances: Pro

SoftBank deal for WeWork sounds pretty reasonable under circumstances: Pro