An agreement between SoftBank and WeWork to bail out the latter from dire fiscal strife may be about to fall apart as SoftBank reportedly is looking for an out to parts of the deal, according to a report by CNBC.
SoftBank might be considering backing out of a $3 billion offer to buy WeWork shares, which was part of the massive bailout agreed to last fall with the office sharing company, after WeWork's initial public offering (IPO) fell to shambles and the company was in need of a lifeline.
Public relations firm Joele Frank, representing WeWork, said it would be taking whatever actions were needed to make sure the deal as agreed upon by SoftBank is completed in full.
SoftBank has said it had been honoring all its commitments in full and was still committed to $5 billion in aid to WeWork. SoftBank added that WeWork has also not fulfilled all of its requirements under the deal.
The $5 billion is to go toward syndicated debt payment. The deal would also include a $1.5 billion speeding-up of equity. The biggest single recipient in the deal is former WeWork CEO Adam Neumann, who was booted from the company when the board decided he couldn't be trusted to manage it well anymore during the company's troubles last year. Other previous employees, as well as investors, also stand to benefit.
The only hurdles for SoftBank in terms of fulfilling the deal are the struggles with its Vision Fund, which have cropped up recently as the coronavirus pandemic has dealt crucial blows to almost every sector of the economy. The agreement becomes even more convoluted given the fact that SoftBank now has 80 percent of control over WeWork and has tapped its own operating chief, Marcelo Claure, as the new executive chairman for WeWork.
Last week, Softbank sent a message to WeWork shareholders claiming that multiple regulatory probes into WeWork were being conducted by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). SoftBank said these circumstances gave it an out on the deal.