Masayoshi Son told the executive he had put in charge of SoftBank’s ill-fated investment in WeWork to “use whatever excuse” he could find to postpone a payment of up to $3bn to shareholders of the property company, according to documents revealed in court today.
Two WeWork directors and Adam Neumann, WeWork’s co-founder and former chief executive, sued SoftBank and its Vision Fund over their decision in April to cancel the agreement to buy stock from them and other shareholders.
A filing by the plaintiffs on Wednesday with Delaware’s chancery court disclosed messages between Mr Son, SoftBank’s founder, and Marcelo Claure, the lieutenant he installed as WeWork’s executive chairman in October last year.
In one undated exchange, Mr Son wrote: “It’s great to postpone the close of tender [beyond an initial February 28 deadline]. Use whatever excuse to make senses [sic].”
Mr Claure replied: “OK. Will use antitrust. I am turning good at excuses like someone I know very well :)”
At some point after December 18, the filing claims, Mr Claure’s chief of staff wrote: “From a deal perspective [$3bn of] additional investment [is] not supported or rational.”
The filing also alleges that SoftBank and the Vision Fund failed to complete a planned deal to “roll up” WeWork’s joint venture in China into the main company because they were pursuing a rival recapitalisation plan. The roll-up was one of the conditions on which the tender offer depended but WeWork ultimately sold a controlling stake in the venture instead to Trustbridge Partners, the private equity group, in September.
In November last year, the plaintiffs allege, a SoftBank consultant texted a Vision Fund executive that there should be “[no] roll up in China for anyone”, while the same consultant suggested in January that Mr Son’s group should use about $1bn from the tender offer “and get cash for our ChinaCo stake”.
SoftBank contested the plaintiffs’ framing of the messages. “Cherry-picking quotes from documents doesn’t change the facts: under the terms of our agreement, SoftBank had no obligation to complete the tender offer in which Mr Neumann — the biggest beneficiary — sought to sell nearly $1bn in stock,” the company said.
Mr Neumann had the right to tender up to $970m of stock, while Bruce Dunlevie and Lew Frankfort, the special committee members, were also in line to collect large sums as major shareholders. WeWork employees with stock also stood to make money.
SoftBank and the Vision Fund have argued that Mr Dunlevie and Mr Frankfort are conflicted from suing on the company’s behalf because of their personal interests in the tender. The parties are awaiting a ruling from the judge on that point.
The special committee directors and Mr Neumann asked the court in Wednesday’s filing to compel SoftBank and the Vision Fund to disclose further communications between them which the defendants in the case have argued are covered by attorney-client privilege.
Representatives for WeWork, Mr Neumann and the special committee declined to comment.