Construction company Katerra Inc., one of the largest investments in SoftBank Group Corp.’s $ 100 billion Vision Fund, filed for bankruptcy in the US after attempts to shore up its finances failed.
In a statement accompanying Sunday’s filing, Katerra said its financial situation had deteriorated rapidly, in part because the company was unable to secure collateral for construction projects or secure additional capital following the “unexpected bankruptcy of the Former Katerra Lender “.
The statement did not name the lender. Katerra’s filing came three months after another SoftBank Vision Fund-backed company, lender Greensill Capital, filed for bad debt protection. Greensill had made hundreds of millions of dollars in loans to Katerra, Akacceleratorfund reported.
Katerra’s filing for bankruptcy marks the end of SoftBank’s attempts to shore up the startup’s finances, in which the Vision Fund had invested more than $ 2 billion, making it one of the fund’s largest investments.
The Japanese investor invested about $ 200 million in Katerra last May, then an additional $ 200 million infusion in December, giving the Vision Fund a majority stake, the Journal reported. At the time, Katerra’s CEO said the new investment would allow Katerra to avoid having to seek bankruptcy protection.
For SoftBank’s earnings press conference in mid-May, CEO Masayoshi Son listed Katerra, along with Greensill and American shared office firm WeWork, as an example of the kind of failed investment he regretted. Overall, Vision Fund has outperformed rising equity markets to post large returns that overshadow its losses.
Founded in 2015, Katerra had tried to shake up the construction industry by assembling building parts in factories and offering services such as plumbing and architecture under one roof.
Some of the company’s projects were plagued with delays and cost overruns, while its aggressive growth strategy and high debt load depleted its cash reserves. The Covid-19 pandemic, which delayed construction projects in some cities, added another challenge.
Katerra’s financial woes have been exacerbated by her dealings with Greensill, which specializes in a type of short-term loan designed to give companies more time to pay their bills. Katerra borrowed more than $ 400 million from Greensill, which was packaged into notes that were sold to investors in a Credit Suisse group. AG
When Katerra ran into financial difficulties last year, Greensill forgave the loan. SoftBank, in turn, invested $ 440 million in Greensill, hoping the money would go to Credit Suisse investors.
Instead, Greensill put the proceeds of SoftBank’s investment in a bank it owned in Bremen, Germany, according to a bankruptcy administrator’s report. The report said Greensill had used the money it received from SoftBank, including $ 440 million, to boost its bank’s capital position and fund Greensill’s overall operations.
Credit Suisse said in a recent notice to investors that it was trying to get money back from Katerra and a couple of other borrowers.
In its bankruptcy filing, Katerra estimated that it has liabilities between $ 1 billion and $ 10 billion and assets between $ 500 million and $ 1 billion.
Katerra said separately on Sunday that it had secured commitments for $ 35 million in financing from debtors in possession of a unit of SoftBank Group to fund operations during the Chapter 11 process. Katerra’s international operations are not affected by the bankruptcy filing. the company said.
The company said it has told stakeholders that “many of its projects in the United States will be demobilized.”
—Kosaku Narioka contributed to this article.
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