- The off-site construction company Katerra, which has raised more than $ 2 billion of sponsors such as the Japanese mega-investor SoftBank, has told employees it is closing, The information was first reported.
- According to the report, California-based firm Menlo Park, founded in 2015, will lay off thousands of employees and leave several construction projects. The layoffs have already begun in Seattle, as the company laid off 117 employees there, the The Seattle Times reported.
- “Following a thorough review of strategic business alternatives, Katerra has determined that it should liquidate most of its business operations in the United States, with immediate effect,” Katerra told employees in an email Tuesday afternoon. “Unfortunately, most of our American employees will stop working for Katerra in the near future.”
According to several news reports, an executive told workers on Tuesday in a video call that Katerra did not have the capital to pay the compensation packages or the unused paid time. In the email shared with employees, the company said it was exploring the suspension of operations, sale of assets and restructuring.
The email also said it could not guarantee debt for construction projects after Greensill, a former lender, went bankrupt in March. The COVID-19 the pandemic probably also contributed to the problems of the company. The Securities and Exchange Commission had also initiated an investigation into its accounting practices.
Katerra’s support came largely from SoftBank’s Vision Fund, which also supported Greensill. SoftBank took a majority stake in Katerra in January, injecting $ 200 million to save the company from bankruptcy at the time.
The company explored the Chapter 11 filing last year to deal with debt and the board voted last spring to remove Michael Marks, CEO and founder. Marks ’successor, Paal Kibsgaard, left the post last month and the company is now run by consulting firm Alvarez & Marsal, according to The Information.
According to its website, the projects in which Katerra currently participates include:
During a presentation last month, SoftBank The general manager Masayoshi Son was called Katerra and Greensill as some of SoftBank’s biggest failures, along with WeWork. Representatives of Katerra did not return calls for this story at the time of publication.
Katerra is not the first off-site construction company to fold during the pandemic. In October, Skender Manufacturing, a subsidiary of Skender Construction in Chicago, announced this closure due to coronavirus challenges. A large part of Skender’s market was the hospitality industry, which was very successful during the pandemic, and will probably take a long time to recover. Skender Construction remained in business.
Todd Andrlik, vice president of marketing for Skender Construction, told Construction Dive that the company still believes in the modular model of some jobs.
“The modular building has a place in the industry and provides a solution for certain types of projects,” Andrlik said.