In a stunning turn of events in what is already tech’s biggest soap opera, SoftBank Group Corp. has terminated an offer to acquire $3 billion in WeWork shares as part of its $8 billion bailout of the troubled workspace provider announced in October.

SoftBank had agreed to buy the shares from former Chief Executive Officer Adam Neumann, Benchmark Capital and others but has pulled the offer, saying that it had “no choice” but to scrap the deal as WeWork had failed to meet several conditions. Those conditions included the release of financial and operational information from U.S. criminal and civil investigations into Neumann.

SoftBank also noted that antitrust approvals had not been obtained and that restrictions on WeWork’s business because of the global coronavirus pandemic were also considerations. With lockdowns and other restrictions, WeWork has been hit particularly hard by the pandemic as companies switch to employees working from home during the crisis.

The decision to pull the share offer does not affect SoftBank’s commitment of $5 billion for the company as part of its original bailout. “SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October,” SoftBank Chief Legal Officer Rob Townsend said in a statement.

The board of We.co, the parent company of WeWork, responded to the news saying that they were “surprised and disappointed” and that they would “evaluate all of its legal options, including litigation.”

The biggest loser from SoftBank’s decision is Neumann who was set to receive $970 million from the sale of his shares in the company he co-founded with his wife Rebekah Neumann. The erratic behavior of Neumann, who is claimed to have an issue with drugs along with delusions of grandeur such as wanting to become the “President of the World,” was cited as one of the main reasons behind WeWork’s troubles in 2019.

With COVID-19 continuing to spread, the future does not look bright for WeWork. The withdrawal of the share purchase also means that SoftBank is no longer obliged to provide WeWork with $1.1 billion in debt financing, leaving the company with a potential cash shortage going forward.

WeWork told investors last week that it had $4.4 billion in cash and cash commitments and would be able to weather the economic downturn but that figure just became lower given the loss of SoftBank’s debt financing. WeWork is already trying to reduce costs with Bloomberg reporting that new Chief Executive Officer Sandeep Mathrani has been contacting landlords asking to help it cut its rent bill by up to 30% with solutions, including revenue-sharing agreements.

A 30% cut might not be enough to save it, however. According to Real Estate Daily Beat, WeWork has lease liabilities of $47 billion. The leases themselves are held by special vehicles that could be reneged at some locations without affecting WeWork directly but it would also damage WeWork’s ability to lease new space in the future.

Photo: Duncan Riley