WeWork is still waiting for a big chunk of the $9.5 billion bailout it agreed to with SoftBank, according to The Real Deal, fueling fresh concerns about the troubled coworking startup and the Japanese conglomerate set to take control of it.
SoftBank has postponed a $3 billion tender offer scheduled to begin more than a week ago, the real-estate news outlet reported, citing unnamed sources.
The tender offer, which would allow WeWork’s investors to sell up to $3 billion worth of shares to SoftBank, “is going to happen soon,” a person close to SoftBank told The Real Deal. “It’s just taking a little more time than expected due to the time needed to get all the technicalities in order.”
Investors bid down the price of WeWork’s junk bonds on the news, driving their yield to a record 15.02% and widening their spread — an indicator of the perceived risk of holding them versus US government debt — to a new high of 13.4 percentage points, Reuters said.
The delay comes days after both SoftBank and WeWork recorded disappointing third-quarter earnings. SoftBank suffered its first quarterly loss in 14 years after WeWork’s troubles translated into an $8.9 billion decline at its $100 billion Vision Fund I. WeWork’s net loss more than doubled to $1.25 billion, and its available cash shrank by about 40% in three months to about $1.3 billion.
The rescue deal, which is set to give SoftBank about 78% ownership of WeWork, was agreed to after the startup scrapped its plans to go public in September. WeWork made the call after investors railed against its heavy losses, business model, governance, and the controversial behavior of its cofounder and then-CEO, Adam Neumann. The failed initial public offering led SoftBank to value WeWork below $5 billion at the end of September — a fraction of its private valuation of $47 billion in January.
WeWork declined to comment to Business Insider, while SoftBank didn’t immediately respond to a request for comment.