SoftBank execs said to mull trimming WeWork offer, Neumann payout

Photo by Eloise Ambursley on Unsplash

Executives at SoftBank are looking for a way to reduce the size of a $3 billion offer for WeWork stock as part of its rescue package, as the office-sharing behemoth makes wide-ranging cuts to staff.

The discussions at SoftBank center around shrinking a $3 billion tender offer for WeWork shares owned by founders, employees and investors, according to people with knowledge of the talks. Such a move would be designed, at least in part, to limit the amount paid to co-founder Adam Neumann, said the people, who requested anonymity because the matter is private.

It’s unclear how SoftBank could renege on its agreement with WeWork investors and crucially, with Neumann. Any effort to re-draw terms could result in a legal battle, one person said. As part of the deal, Neumann has the ability to sell $970 million worth of WeWork stock to SoftBank.

In recent internal discussions at SoftBank, some executives have said the payout to Neumann is too generous, the people with knowledge of the talks said. It may be a case of buyer’s remorse after WeWork employees expressed outrage over the favorable deal given to Neumann while the business was in turmoil. Representatives for Neumann, SoftBank and WeWork declined to comment.

Last month, the struggling WeWork parent company We Co. secured a $9.5 billion rescue package from SoftBank, an agreement that would hand about 80% of the company to the Japanese conglomerate. The deal includes $5 billion in new financing, the acceleration of a $1.5 billion existing commitment and the tender offer of as much as $3 billion.

Neumann left the company’s board as part of the rescue package and was replaced by SoftBank executive and newly appointed Chairman Marcelo Claure. The size of Neumann’s payout, which also included millions in consulting fees, has incensed some WeWork employees, who are facing job cuts this week.

To be sure, no decision has been made and SoftBank may choose to fulfill the $3 billion tender offer in its entirety. The Japanese conglomerate is in talks to receive as much as 300 billion yen ($2.8 billion) from Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., people familiar with the matter said this week. The Nikkei newspaper, which earlier reported on SoftBank’s financing talks with Japanese institutions, said the company was raising money to pay for the WeWork tender offer.

At a recent briefing in Tokyo, SoftBank billionaire founder Masayoshi Son acknowledged that this month’s financial results were “a mess” and that overvaluing WeWork was a judgment error. Son said that he had consulted with lawyers to see if he could back out of a $1.5 billion warrant SoftBank had pledged to WeWork, but they said he couldn’t. Instead, Son decided to buy even more shares at a discounted price, lowering the average cost of SoftBank’s equity in the business.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.