WeWork directors seek to preserve right to sue SoftBank over a $3 bn tender

This comes after lawyers for SoftBank last month wrote to WeWork's board to request that it confirm the special committee is not authorized to act on behalf of WeWork.

A special committee of WeWork board members filed a motion in Delaware on Monday to prevent it from being disbanded, as it pursues legal action against majority owner SoftBank Group Corp over an abandoned $3 billion tender offer for the office space-sharing start-up.

It is the latest salvo in a heated legal dispute between the two sides. WeWork's special committee, which represents minority shareholders in the company including its co-founder Adam Neumann, is contesting SoftBank's decision to walk away from the tender offer agreed last year.

In the motion, WeWork's special committee filed a "status quo order" which would preserve the committee's authority pending the outcome of the legal case between WeWork and SoftBank. A judge in Delaware court last month set the trial date for the case for early January.

According to the special committee's motion, the board of the We Company, WeWork's parent, held a meeting on April 29 at which the company's counsel recommended the appointment of two temporary board members who would form a new committee to adjudicate the existing special committee's authority.

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The WeWork board voted six to two to approve retaining a search firm to identify independent directors, according to the filing.

This comes after lawyers for SoftBank last month wrote to WeWork's board to request that it confirm the special committee is not authorized to act on behalf of WeWork.

Representatives for SoftBank and WeWork declined to comment on the motion.

SoftBank takes control of WeWork as part of bailout, Neumann to leave board

The deal would value WeWork's parent company at about $8 bn.

SoftBank Group Corp is taking control of beleaguered WeWork, part of a rescue financing plan that will see former CEO Adam Neuman sever most of his remaining ties with the company he co-founded, according to people familiar with the matter.

The eleventh-hour deal throws a lifeline to WeWork parent We Co, which was on the verge of running out of cash after a failed public offering in September. By salvaging one of its biggest investments, SoftBank will give a second chance to WeWork to start over under new ownership. It also tosses a buoy to Neumann, who will give up his board seat and walk away with as much as $1.2 billion as well as a $500 million credit line from SoftBank, after it pushed him out as chief executive officer last month.

Neumann is allowed to sell slightly less than $1 billion of stock to the Japanese conglomerate as part of the deal, said the people, who asked to remain anonymous because the agreement hasn’t been announced. He’ll remain as a board observer and can assign two board seats, one of the people said. Neumann will also get a roughly $185 million consulting fee. His net worth would still be at least $1 billion, according to calculations by the Bloomberg Billionaires Index.

WeWork chose the offer from SoftBank, which already owns about one-third of the company, over a competing proposal from JPMorgan Chase & Co. The deal, which values the office-sharing startup at about $8 billion before any new capital from SoftBank, marks a shocking fall from grace for a business emblematic of the latest tech boom that had been valued as recently as January at $47 billion. As part of SoftBank’s plan, one of its executives, Marcelo Claure, will take over as chairman of WeWork’s board, one of the people said. WeWork appointed Artie Minson and Sebastian Gunningham as co-CEOs last month after investors pushed back against the IPO.

SoftBank and JPMorgan declined to comment. WeWork couldn’t immediately be reached. Dow Jones earlier reported details of the deal.

Business Standard