Illustration: Aïda Amer/Axios

SoftBank yesterday threatened to pull the plug on its $3 billion tender offer for shares of WeWork, which was agreed to last fall and scheduled to close on April 1.

What’s happening: The formal message sent to investors is that SoftBank believes several deal conditions may not be satisfied, including the closing of a recapitalization of its Chinese joint venture, anti-trust approvals, and the emergence of a governmental investigation into company finances.

  • The informal message is that SoftBank wants to renegotiate, as a global recession looms and WeWork's "co-working" product appears antithetical to social distancing.

Details: WeWork closed just last month on a $1.75 billion credit facility tied to SoftBank's rescue package, and that money is not affected by the new development. Also not affected is SoftBank's nearly $200 million payment to former CEO Adam Neumann, in exchange for his board voting rights.

  • WeWork has not closed its co-working sites, even in San Francisco where a shelter-in-place order is in effect. It has, however, ramped up "deep-cleaning" efforts and asked its own corporate employees to work from home, if possible.

SoftBank's tender offer was to all WeWork shareholders, including Neumann, venture capital funds, and employees.

  • Participants could tender up to one-third of their stock at $20 per share.
  • Were Neumann to take full advantage of the offer, he'd net around $970 million.
  • While all vested employees are technically eligible, many later hires came in with strike prices above $20. In other words, it's mostly of value to earlier employees.

Between the lines: SoftBank isn't letting a crisis go to waste, and certainly has fiduciary obligations to its limited partners. And it isn't the only later-stage investor currently seeking to renegotiate existing deal terms.

  • But, but, but: This move is absolutely screwing over those early employees. These are people who may have made financial decisions over the past five months based on SoftBank's signature — and who now risk having the rug pulled out from under them.

Plus, it's also worth remembering, in terms of the government investigations:

  • We have no indication that investigators have actually found any wrongdoing, or if they're just kicking procedural tires in the wake of massive value destruction.
  • SoftBank was no passive player were there actual wrongdoing. It was a very large shareholder, had two board seats, and was very involved with the IPO process.

Neither SoftBank nor WeWork are commenting on the situation.

The bottom line: The coronavirus crisis is showing some of the best of business and humanity, with strangers trying to help one another. It's also showing some of the worst.

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