SoftBank Reluctant to Resume Tender, WeWork Take a Legal Option
Japanese company SoftBank is reluctant to complete the US $ 3 billion tenders or around IDR 50 trillion to help WeWork’s finance condition. Regarding this issue, this co-working space startup decided to take legal options, including litigation.
In addition, WeWork hopes that there will be an agreement with SoftBank to complete the tender. Because this startup is experiencing financial problems after failing to make an initial public offering (IPO) last year.
WeWork claimed that the company is disappointed because SoftBank didn’t want to resume the financial aid. “We are disappointed,” WeWork said in an official statement, quoted by Reuters on Thursday (2/4). However, a spokesman for SoftBank declined to comment on this matter.
The tender is part of SoftBank’s efforts to provide bailout funds to WeWork worth US $ 9.5 billion. This allocation includes debt financing of US $ 5 billion, a tender offer of US $ 3 billion, and an investment of US $ 1.5 billion.
Softbank Negotiations with Three Major Japanese Banks Hampered
SoftBank will own 80% of WeWork’s shares after the deal is closed. Therefore, this investor is seeking a loan of US $ 3 billion to complete the tender. However, SoftBank’s negotiations with three major Japanese banks to get loans were hampered.
The three banks are Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. (SMFG) and Mitsubishi UFJ Financial Group Inc. (MUFG). As a result, SoftBank has difficulty providing funding to WeWork.
Not to mention, one of the startups injected with SoftBank’s capital, OneWeb, declared bankruptcy because of the corona pandemic. The UK-based company even terminated employment or employee layoffs.
In fact, SoftBank founder and CEO Masayoshi Son had said that OneWeb was one of its flagship startup portfolios. As a result, SoftBank’s share price fell 10% on Tuesday (31/3).
The company also plans to sell assets of US $ 41 billion or around Rp 671 trillion to buy banks and pay debts. However, its debt rating was actually downgraded by the international rating agency, Moody’s Corp. Moody’s rate, debt ratings have been cut twice because of SoftBank’s aggressive financial policies.
SoftBank’s debt rating has dropped from Ba1 to Ba3. Moody’s said the value of the group’s portfolio would be reduced if it sold profitable shares in e-commerce groups China, Alibaba, and Sprint amid a corona pandemic.
Softbank Stock Drops 10% Because Its Startup Goes Bankrupt
OneWeb recently raised around US $ 3.3 billion or IDR 54 trillion from SoftBank, Airbus SE, Qualcomm Inc., and other investors. However, this startup actually declared bankruptcy on Monday (30/3) local time.
The news made SoftBank’s share price plummet by 10%, after having strengthened 50%. Because the Japanese company has invested US $ 1 billion in OneWeb since December 2016. Not to mention, SoftBank plans to sell assets of US $ 41 billion or around Rp 671 trillion to buy banks and pay debts.
In addition to information on the bankruptcy of OneWeb, SoftBank has suffered a debt downgrade by the international rating agency, Moody’s Corp. Moody’s rate, debt ratings have been cut twice because of SoftBank’s aggressive financial policies.
While OneWeb has already laid off most of its employees while looking for corporate buyers. “The (investment) process is not working because of the financial impact and market turmoil associated with the spread of Covid-19,” OneWeb said in its official statement, quoted by BBC News.
During this time, OneWeb developed technology for ride-hailing applications, agricultural robotics, cancer detection to vehicle automation. The company also targets 1 billion customers by 2025.
Recently, OneWeb plans to expand the launch of the global satellite internet constellation. That way, the company will compete with a similar satellite network built by Elon Musk’s SpaceX, called Starlink.