Adam Neumann sues SoftBank for moving away from the $ 3 billion WeWork stock buyout

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The lawsuit, filed Monday at the Delaware Court of Chancery and shared with CNN Business by a Neumann representative, accuses SoftBank and its SoftBank Vision fund of “taking secret action to undermine” the share purchase agreement before withdrawing the April 1st.
According to the lawsuit, the public offering was part of a bailout package agreed late last year, when WeWork’s failed IPO left the office-sharing startup on the verge of insolvency – until SoftBank intervened with the bailout, worth about $ 10 billion a time.

Neumann resigned as WeWork CEO and resigned from the company’s board of directors last year after overseeing a disastrous attempt to make the public public. The long-awaited IPO of the shared workspace provider was shelved after investors opposed its assessment and criticized its corporate governance.

WeWork’s valuation, which had risen to $ 47 billion at one point, plummeted to around $ 8 billion when the SoftBank bailout was agreed in October.

SoftBank (SFTBF) he moved away from that deal in early April, saying that the purchase of shares was subject to certain conditions that had not been met. The Japanese firm listed in a statement at the time several ways in which WeWork was unable to meet these conditions, including the existence of ongoing criminal and civil investigations in the company, global restrictions related to coronavirus that are affecting WeWork’s operations. and the failure to restructure a joint venture in China. WeWork declined to comment at the time, but a special committee of the company’s board of directors said they were “surprised and disappointed” by SoftBank’s decision, adding that it would evaluate all legal options. The committee filed a lawsuit against SoftBank last month.

Neumann’s lawsuit accuses SoftBank and Vision Fund of “weakening” the joint venture in China by putting pressure on its investors not to waive certain rights that would have allowed the restructuring.

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“SoftBank will vigorously defend itself against these deserving claims,” ​​said Rob Townsend, Chief Legal Officer of the Japanese conglomerate. “Under the terms of our deal, which Adam Neumann signed, SoftBank was under no obligation to complete the public offering in which Mr. Neumann – the main beneficiary – sought to sell nearly $ 1 billion in shares”, he added.

SoftBank warns of even greater losses as it suffers a hit of $ 6.6 billion on WeWork
Neumann’s suit follows the one filed last month by the special board of the WeWork board of directors, who said that SoftBank and its CEO, Masayoshi Son, suffered from “buyer’s remorse”. SoftBank called the lawsuit “a desperate and misleading attempt” to rewrite last year’s agreement, stressing again that the purchase of shares was subject to certain conditions.

Neumann asks that the two causes be combined. WeWork declined to comment on Neumann’s lawsuit.

Lawsuits come when SoftBank suffers huge losses on some of its biggest bets, including WeWork, and collides with the economic consequences of the coronavirus pandemic. Last week the Japanese company expanded its forecast for a net loss for the year ended March to $ 8.4 billion, saying it plans to lose $ 6.6 billion from its investment in WeWork alone.

– Sherisse Pham and Sara O’Brien of CNN contributed to this report

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