SoftBank’s $3B payout to WeWork’s investors is delayed

The tender offer is part of SoftBank’s $9.5B rescue package

TRD NATIONAL /
Nov.November 14, 2019 12:17 PM
Softbank CEO Masayoshi Son (Credit: Getty Images)

Softbank CEO Masayoshi Son (Credit: Getty Images)

After everything that’s happened at WeWork, shareholders now have a new worry.

SoftBank is delaying a $3 billion tender offer for WeWork shareholders. In a letter WeWork sent to shareholders Nov. 8, and obtained by The Real Deal, the Japanese conglomerate’s offer would commence “within five business days of the completion” a $1.5 billion investment in the struggling office startup.

That $1.5 billion payment was released to the company Oct. 30, which would have made the deadline for the tender offer Wednesday, Nov. 6. But no offer was extended, sources said.

The delay is the latest pang of uncertainty for WeWork investors, many of whom are employees whose compensation packages include company stock.

A person close to SoftBank said the tender “is going to happen soon,” but would not provide a timeframe.

“It’s just taking a little more time than expected due to the time needed to get all the technicalities in order,” the individual said, without providing specifics.

Following publication of this story Nov. 14, WeWork’s junk bond price dropped and its risk premium jumped to an all-time high as investors reacted to the news, Reuters reported.

The completion of the tender offer is contingent on “the receipt of required regulatory approvals” and the absence of litigation, bankruptcy proceedings and defaults on any debt owed, according to the letter.

Representatives for SoftBank and WeWork declined to comment.

After WeWork abandoned IPO plans because of an icy reception from public investors, SoftBank pushed out co-founder Adam Neumann and took a majority stake in WeWork. The $9.5 billion rescue package — a $5 billion debt facility, the $3 billion tender offer and a $1.5 billion commitment — staved off a potential bankruptcy this month.

The saga led to WeWork’s valuation dropping from $47 billion — a figure set by SoftBank in January — to $8 billion. Many investors who bought stock in recent years are now underwater.

WeWork reported to shareholders Wednesday that it lost $1.25 billion in the third quarter as rising expenses outpaced growth.


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