By Liz Hoffman and Eliot Brown
SoftBank Group Corp. is backing away from part of its planned bailout of WeWork, people familiar with the matter said, privately citing several regulatory investigations of the office-sharing company.
A notice sent to WeWork shareholders Tuesday said that SoftBank /zigman2/quotes/207303954/delayed JP:9984 +0.74% believes regulatory probes into the startup’s business, including from the Securities and Exchange Commission and Justice Department, give it an out under the deal struck last fall to purchase $3 billion of WeWork shares from existing investors.
That will include Adam Neumann, former chief executive of WeWork parent We Co., who had the right to sell up to $970 million in stock as part of the October deal that led to his ouster from the company’s board.
The development won’t affect the $5 billion lifeline SoftBank agreed to give WeWork directly — cash the startup badly needed then as it ran out of runway, and which it is likely to continue to need as the worsening coronavirus outbreak empties out its desks. Some of that money, including $1.5 billion in fresh equity, already has been invested.
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