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By Joshua Franklin, Greg Roumeliotis and Anirban Sen
NEW YORK (Reuters) - WeWork owner, The We Company, has formed a special board committee to consider proposals for a $5 billion financing lifeline from its largest shareholder SoftBank Group Corp <9984.T> and its main lender JPMorgan Chase & Co <JPM.N>, four people familiar with the matter said on Wednesday.
The office-space sharing company is establishing the committee in an effort to ring-fence its financing deliberations from SoftBank's influence, the sources said. The Japanese technology conglomerate owns about a third of WeWork, and any new equity investment could potentially give it control.
WeWork is rushing to raise new capital after scrapping plans last month for an initial public offering (IPO). Sources have said it could run out of cash as early as November unless it secures new financing.
A WeWork spokeswoman declined to comment. We Company directors did not immediately respond to requests for comment.
The committee will only have two members - both We Company board directors with the task of representing the interests of all investors in the company, the sources said.
One is Bruce Dunlevie, who is a general partner at WeWork shareholder Benchmark Capital, according to the sources. The other is Lew Frankfort, who is the former CEO of luxury handbag maker Coach, they added.
SoftBank will not have a representative, the sources said. It is represented on We Company's seven-member board by its President Ron Fisher. Former Goldman Sachs Group Inc <GS.N> investment banker Mark Schwartz, who served as a SoftBank director until earlier this year, also sits on the board.
WeWork co-founder Adam Neumann, who resigned as CEO last month but retained his role as chairman of the board, does not have a seat on the committee either, according to the sources, who requested anonymity in discussing the confidential arrangements.
WeWork canceled its IPO following investor concerns about mounting losses, its business model and the way the company was being run. Its estimated valuation dropped from $47 billion in January to as low as $10 billion last month.
In response, WeWork is seeking to slow down its expansion, reducing the number of new property leases it is taking on and considering layoffs.
SoftBank has proposed up to a $5 billion investment in WeWork two of the sources said. It also wants to renegotiate a previous commitment for a $1.5 billion investment in the form of warrants that are due in April at the $47 billion valuation, the sources added. It has already invested some $10 billion in WeWork.