SoftBank may not complete $3b WeWork financing, report says

SoftBank may not complete its planned US$3 billion tender offer which is part of its multibillion-dollar rescue package for embattled US-based co-working startup WeWork, the Wall Street Journal reported, citing people familiar with the matter.

Photo credit: MIKI Yoshihito / Flickr

The Japanese conglomerate promised last year a US$9.5 billion bailout program for WeWork, which includes US$1.5 billion from SoftBank, US$5 billion in debt financing, and the US$3 billion tender offer.

According to the report, WeWork shareholders received a letter on Tuesday saying that SoftBank might not repurchase shares from existing investors due to regulatory probes from the Securities and Exchange Commission and the Justice Department. The notice also said that there was a delay in recapitalizing WeWork’s joint venture in China.

Regulators have so far asked SoftBank for information about WeWork’s business practices and communications to investors.

The move, however, would not affect the US$5 billion debt financing, according to the report.

As part of the tender program, Adam Neumann, WeWork’s founder who stepped down as the company’s CEO last year, could sell US$970 million of his stock to SoftBank. After the deal closes, SoftBank is expected to own 80% of WeWork. The tender offer closes April 1.

The deal to buy back shares is reportedly not cancelled, but could signify a renegotiation of terms in light of the global economic slowdown brought by the Covid-19 outbreak.