A startup that had hoped to rehabilitate the construction sector with a vertically integrative manner, according to the Wall Street Journal report.
Katerra’s shareholders officially announced the national funding on Wednesday, with SoftBank’s new support system on top of the approximately $2 billion that the Japanese automotive conglomerate had already pledged to the venture.
Rescue funds, which would save Katerra from bankruptcy, will come from the Vision Fund 1 of SoftBank, the Journal quoted Katerra Chief Executive Paal Kibsgaard as informing the interests of shareholders in a letter.
As part of the financing, Greensill Capital, a SoftBank-funded financial services firm, is canceling about $435 million in debt in return for a 5% stake in the venture, according to the Journal’s report.
In reality, this latest bailout marks the second time SoftBank has stepped in to spend $200 million on Katerra alone this year.
In May, when Kibsgaard, the former chairman of oil services company Schlumberger, was brought in to repair the company’s finances, SoftBank poured $200 million into the company so that Kibsgaard could fix the ship there, as per the Journal’s article.
Since its launch in 2015, Katerra has raised several hundred million dollar rounds from the Japanese technology conglomerate. Back in 2018, when the business folded $865 million in funding, Katerra claimed $1.3 billion in bookings for residential and business ventures, spanning from tourism to student housing. That’s a huge sum, just a fraction of the $1 trillion spent on building alone in November 2018, according to data from the U.S. Office of the Census.
Katerra has been plagued by cost and time overruns in some programs, while the COVID-19 pandemic has affected others. And the anomalies found by the company in accounting procedures were also exacerbated by nausea, according to the Journal.
Despite its mistakes, Katerra is on pace to achieve significant money this year, with sales between $1.5 billion and $2 billion, according to Kibsgaard’s data.