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A sign marks the location of a WeWork office facility on August 14, 2019 in Chicago, Illinois.
Scott Olson | Getty Images News | Getty Images
Five months after SoftBank agreed to a massive bailout of office-sharing start-up WeWork, a big part of the deal is in jeopardy of falling apart. A special committee to WeWork’s board is now trying to ensure that SoftBank doesn’t walk away.
In an emailed statement on Sunday, public relations firm Joele Frank said, “the Special Committee of the WeWork Board of Directors remains committed to taking all necessary actions to ensure that the tender offer which SoftBank has promised to our employees and shareholders is completed.”
Last week, reports surfaced that SoftBank may be backing off a $3 billion tender offer for WeWork shares, as SoftBank’s struggles with its Vision Fund are exacerbated by recent the market downturn. That commitment was part of a larger package, along with a $1.5 billion acceleration of equity it already promised and $5 billion in syndicated debt. WeWork needs the fresh cash after the company’s IPO fell apart last year.
SoftBank still plans to extend $5 billion in debt to WeWork, people familiar with matter told CNBC last week. The special committee wants to ensure that employee shares get purchased as well.
“SoftBank has made numerous assurances to employees, and reneging on the agreement would be completely unethical, especially given the current environment,” the statement said. “The Special Committee continues to believe that completing the tender offer is fair and in the best interest of the Company, its stockholders and all WeWork shareholders, including our employees and former employees.”
It’s an awkward situation considering that the agreement gave SoftBank 80% control over WeWork and designated Marcelo Claure, SoftBank’s operating chief, as WeWork’s executive chairman.
Claure is not on the special committee, which consists of early investor Bruce Dunlevie of Benchmark and Lew Frankfort, former CEO of handbag maker Coach.
Here is the full memo sent out on Sunday:
“The Special Committee of the WeWork Board of Directors remains committed to taking all necessary actions to ensure that the tender offer which SoftBank has promised to our employees and shareholders is completed. Not only is SoftBank obligated to consummate the tender offer as detailed by the Master Transaction Agreement, but its excuses for not trying to close are inappropriate and dishonest. Further, SoftBank has made numerous assurances to employees, and reneging on the agreement would be completely unethical, especially given the current environment. The Special Committee continues to believe that completing the tender offer is fair and in the best interest of the Company, its stockholders and all WeWork shareholders, including our employees and former employees.”
— CNBC’s Alex Sherman contributed to this report
WATCH: SoftBank backs away from part of planned WeWork bailout