Telecommunications and internet group SoftBank may not buy $3bn of shares in US-based workspace provider WeWork in connection with the rescue package it agreed, the Wall Street Journal reported yesterday.
WeWork was valued at $47bn in January 2019, but a failed initial public offering in September led to a slashed valuation, and SoftBank – already its largest investor – stepped in to provide $9.5bn in financing the following month to ensure the company maintained operations.
The package was meant to include a $3bn tender offer for shares held by WeWork’s other investors, which have included hotel chain Shanghai Jin Jiang International and Legend Capital, the venture capital offshoot of conglomerate Legend Holdings.
However, people familiar with the matter told WSJ a letter sent to WeWork shareholders earlier this week stated that SoftBank believes regulatory investigations into the company’s business frees it from the obligation to pay the pledged $3bn.
The share purchase agreement has not however been cancelled, and WSJ reported that SoftBank still plans to provide the $5bn in syndicated debt financing it had pledged to the company.
WeWork had raised a total of $11.5bn in debt and equity financing prior to the IPO attempt, its earlier investors including investment and financial services group Fidelity, Goldman Sachs, JP Morgan Investment Management, T. Rowe Price, Benchmark and clients of Wellington Management.
Jin Jiang International and Legend Capital joined private equity firm Hony Capital in the company’s $690 series F round in 2016, before SoftBank invested $300m at a $17bn valuation the following year.
WeWork’s valuation grew across as both SoftBank and its Vision Fund added $3bn later the same year and $1.4bn for subsidiaries in China, Japan and the Asia Pacific region, and a further $1bn in convertible note financing in August 2018. The last $2bn from SoftBank came in January 2019.
Photo courtesy of WeWork Companies Inc.
