The financial institution SoftBank is back in the news and this time for hurting the popular Internet company called WeWork. As per earlier reports, the company is on the verge of turning bankrupt, because of the way things have gone bad for the company. As per the latest, the company seems to have terminated the tender offer worth 3 billion USD, which SoftBank seems to be giving to WeWork. The company had planned to give away the said amount to the shareholder last year, however, with the current crisis in the company, they have withdrawn the same as they know the legal action seems to have plagued while floundering the office space company in the time of crisis.
The investment company which often invest in technology companies issued a statement seems to have given its duty to its shareholders and claimed it no longer would proceed with the dealing by citing out the civil and criminal probes as found in the startup – WeWork, which seemed to have failed to reconcile in the joint venture in China along with the impact of the ongoing crisis due to COVID 19 virus. A special committee working with WeWork board claimed that it was dismayed and now is seen considering the legal choice with the litigation.
The decision of SoftBank is going to rescind the offer soon which will hamper the company in no longer made mandatory to proceed with the further 1.1 Billion USD as debt when it comes to financing the company. At the same time, it has even dismayed the depth of the disarray at WeWork that is seen going with the drastic restructuring and carrying out the earnings at the risk as a number of nations are seen imposing the orders to remain in the lockdown at home due to the pandemic. WeWork seems to be in real trouble and the withdrawal of the company for the share purchase seems to go deep hampering the conditions materially proclaimed experts like Richard Windsor, who happens to be an independent analyst.
The company has already lost a sum of 1.25 billion in the third quarter as claimed by the investors previous week and it has around 4.4 billion USD in cash and the commitment for the investment would be able to be affected by the economic downturn. With the tender money getting shelved, the company had to face yet another jolt, which otherwise would have benefitted it in a big way along with its shareholders including the ousted one called Adam Neumann who is the co-founder of the company. Thus SoftBank’s withdrawal of the money has shelved the IPO plans of WeWork in a big way. Now investors are more concerned about the losses along with the business model which carries the long term leases along with renting out spaces on short term. Thus the company’s only hope to keep the bankruptcy seems to have gone on the bay.