I gather from your message that you care about this guy, so letting him be let go by some stranger would for me feel worse than at least having someone that cares about him do it.

I would be succinct and direct. In my experience, I have tried to find a balance of being honest and speaking from the heart while not harming the business or just throwing it at the feet of some unknown faceless entity.

What has felt closest to my personal integrity has been something like, "Look, I know this comes as a shock. It sucks. It sucks and and there is no way to sugarcoat this. I know there is nothing I can say to make this feel or seem any better than the crappy situation that it is. Please know that I really appreciate you and have enjoyed working with you. You deserve good in your life and I sincerely wish you the best."

Best of luck, my friend. Sorry you are going through this. After it's done, talk it over with someone that has your back and can appreciate how hard this was. This takes some processing.