- Commercial real estate company WeWork is suing SoftBank for canceling on the $3 billion rescue plan
Commercial real estate company WeWork is suing SoftBank for canceling on the $3 billion rescue plan. SoftBank is known for being one of WeWork’s largest investors.
WeWork is claiming that SoftBank is breaching its fiduciary and contractual responsibility to WeWork’s minority shareholders after the company withdrew from its tender offer last week. The $3 billion rescue plan was signed in December and it included $1.1 billion in debt financing for WeWork.
SoftBank said that the termination of the tender offer will not have an impact on WeWork’s operations, customers, five-year business and strategic plan, or the majority of WeWork’s current employees largely due to the “tremendous” operational progress made over the past 6 months. SoftBank also noted that it committed over $14.25 billion to WeWork to date, including $5.45 billion since October 2019.
“SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team,” said Rob Townsend, Senior Vice President and Chief Legal Officer of SoftBank. “The tender offer was an offer to buy shares directly from other major stockholders and its termination has no impact on WeWork’s operations or customers. The tender offer closing was conditioned on the satisfaction of certain closing conditions the parties agreed to in October of last year for SoftBank’s protection. Several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer.”
What were the alleged unfulfilled closing conditions? SoftBank said that WeWork, the Special Committee, Adam Neumann, SoftBank, and SoftBank Vision Fund include the failure to obtain the necessary antitrust approvals by April 1, the failure to sight and close the roll up of the China joint venture by April 1, the failure to close the roll up of the Asia (ex-China and ex-Japan) joint venture by April 1, the existence of multiple and new significant pending criminal and civil investigations, and the existence of multiple new actions by governments around the world related to COVID-19 (imposing restrictions against WeWork and its operations).
In countering those claims, WeWork said that SoftBank had full knowledge of all investigations at the time that the $3 billion tender offer was signed.
“Adam Neumann, his family, and certain large institutional stockholders, such as Benchmark Capital, were the parties who stood to benefit most from the tender offer. Together, Mr. Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10 percent of the total,” added SoftBank in its statement.
