SoftBank Balks At $3B Purchase Of WeWork Shares

SoftBank Group, long a major investor in WeWork, reportedly wants out of part of its bailout deal with the coworking company.

SoftBank stepped in last fall to prop up a money-burning WeWork after its non-starter IPO.  Now, the Japanese conglomerate is balking at buying $3B of WeWork shares from existing shareholders, The Wall Street Journal reports, citing anonymous sources familiar with the matter. That includes as much as $970M in stock that SoftBank previously agreed to buy from ousted WeWork founder Adam Neumann.

SoftBank said in a letter to WeWork investors that potential probes by the Securities and Exchange Commission and the Justice Department would be one factor allowing it to get out of the deal.

The investor is not, however, abandoning WeWork all together. The other part of SoftBank's bailout was a pledge of $5B in financing that the coworking specialist needed to keep the lights on, about $1.5B of which has already been invested.

Since the bailout, WeWork has been hiring new executives, laying off staff, selling non-core businesses that previous management had acquired, sometimes at a serious loss, and said it was pursuing a turnaround plan.

The bailout might be moot in any case, depending on the impact of the coronavirus outbreak on WeWork, and the coworking model in general, which encourages workers to share space.

Last week, WeWork closed a Midtown Manhattan location after a worker there tested positive for the virus. WeWork also closed a location in Seattle, but later reopened it. So WeWork has kept most of its locations open, even as other coworking companies close.

Another problem for WeWork might be lenders who are nervous that the coworking company might not be able to repay all of $675M in debt it contacted in 2018, CBS News reports. The price of bonds associated with that debt has dropped about 20% in about a month.

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