SoftBank’s ambitious internet-via-satellite investment falls to Earth
OneWeb has filed for Chapter 11 bankruptcy protection.
As SoftBank seeks to sell some $41 billion in assets to weather through doubters, yet another portfolio company is coming down to earth.
London-based OneWeb raised $3.4 billion from the likes of SoftBank, Airbus, and Qualcomm with an ambitious goal of delivering cheaper internet to the world through satellites. On Friday, it filed for Chapter 11 bankruptcy protection.
“Our current situation is a consequence of the economic impact of the COVID-19 crisis,” Adrian Steckel, CEO of OneWeb said in a statement. OneWeb says it cut 90% of its workforce from 531 to 74 and halted all nonessential operations in filings.
That comes following reports that OneWeb had been in talks with SoftBank to raise as much as $2 billion in funding before the coronavirus outbreak, according to the Financial Times citing sources (which appear to match at least timing wise, in court papers).
According to court filings, OneWeb had been seeking funding as early as 2019. As the coronavirus continued to spread, existing investors told the company on March 12 that they would not commit to a “long-term solution” that could solve OneWeb’s cash crunch. Days later, an attempt to pull together bridge financing also fell through.
According to documents, Softbank is its largest creditor and shareholder, owed $913 million and owning 37.4% of the company.
The spread of coronavirus has been unlucky timing for SoftBank, which is already under intense scrutiny from investors following the unravelling of some major bets last year. Even an activist investor has thrown itself into the fray.
And as many of SoftBank’s other bets suffer (Didi, Uber, WeWork, Oyo, Ola), they will come asking for cash. Which ones SoftBank chooses to back will be defining for its strategy to come.
A double OneWeb burn: CocaCola (yes, that giant soft drink maker) invested in OneWeb in 2015.
At the time, CocaCola spun it as a sustainability play, helping the company reach customers in “some of the world’s remote areas.”
But then roughly a year ago, OneWeb, which had also been touting itself as a way to beam cheap internet to small businesses and schools in developing regions, said it would largely defer that strategy in favor of providing internet access to those that could pay higher fees for such a costly system, at least in the near term: chief among them airlines and cruise operators, per the Wall Street Journal. And we all know how those businesses have fared in the coronavirus times.
Coca Cola’s equity in OneWeb comes up to roughly 1.29%, per the filing.
Strike three and you’re out: A network of thousands of Instacart workers say they plan to strike, frustrated that the company has not provided stronger protection against the outbreak. They say that management has repeatedly ignored their demands, which include company-provided personal safety gear, $5 hazard pay for each order, and access to sick pay for at-risk workers and those who have coronavirus symptoms.
Meanwhile, Amazon employees at a New York fulfillment center plan to strike at noon.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com