SoftBank has decided to pull the plug on WeWork’s bailout deal, after the latter announced on Thursday that SoftBank won’t be buying $3 Bn WeWork shares from its existing shareholders.
The news comes as a major setback for WeWork’s existing shareholders including former CEO Adam Neumann, since they were hoping to earn handsome compensation from this deal.
“The Special Committee of the Board of Directors of WeWork has been advised by SoftBank, the controlling shareholder of WeWork, that it will not consummate the tender offer which it agreed to in October of 2019,” a statement issued by the WeWork said.
The U.S based co-working giant said that it will evaluate all the legal option, including filing litigation against SoftBank, and is fully devoted to resolving the matter.
SoftBank has so far not commented on the matter.
Last year, Masayoshi Son’s company had reportedly made an offer to buy back shares from the existing investors of the troubled company. The decision was part of the bailout package as it would infuse much-needed capital in the beleaguered company.
Clouds of uncertainty began to loom large on WeWork following the botched up IPO last year, after investors raised the red flag over co-working company’s sustainability and profitability in the long run.
Even SoftBank’s decision to significantly reduce WeWork’s valuation was not able to convince the panicked investors and one of the highly anticipated IPOs of 2019 was eventually called off.
In the present circumstances when half of the US is under lockdown in the aftermath of Coronavirus pandemic, WeWork’s future is looking even more bleak; with most of its co-working officies across US and other countries are now running empty.
Industry experts claim that company’s cash flow will be even more severely impacted due the lockdown and this can give rise to fresh concerns about company’s continuity.
