Global prefabricated construction giant Katerra is shutting down as it struggles with pandemic-related cost overruns and delays.
Katerra told employees via internal communications that it was ending operations, according to US-based technology publication The Information, which broke the news.
Katerra was founded in 2015 and rose rapidly, sourcing funds from investors including SoftBank, Foxconn and DFJ.
The company aimed to “take the risk out of construction” creating efficient factories that handled everything from the architectural design of the building to the construction of walls and the installation of appliances.
The Information reported that Katerra’s collapse was a direct result of the closure of construction sites due to the pandemic, combined with rising material and labor costs.
The company also faced an investigation into its accounting practices by the Securities and Exchange Commission and by its board of directors.
Katerra told employees in an email it was exploring “suspended operations, asset sales and divestitures, in- or out-of-court restructuring alternatives and other possible actions”.
“The impact has been severe—with cash reserves reduced to the point where the current business model can no longer be sustained,” the company said.
In February of 2020, Katerra said it had 8500 employees across the globe. That number was subjected to several rounds of layoffs throughout the pandemic, with the company slashing its workforce to 2400 employees.
Katerra’s founder Michael Marks departed the company in mid-2020 with Paal Kibsgaard, the company’s former chief operations officer and most recent chief executive, exiting the company last month.
Katerra’s collapse marks a bitter blow for investor SoftBank, which had also poured money into co-working giant WeWork.
SoftBank committed a further US$200 million towards Katerra in early-2021, giving it a majority stake in the company. SoftBank had previously invested more than US$1 billion in the company.
WeWork saw its once-lofty valuation crater in 2019 as its attempt at an initial public offering fell apart.
The co-working giant remains in operation, however has seen its value shrink from US$47 billion in early 2019 to around US$8 billion, excluding debt.
In March, Greensill Capital, another company backed by SoftBank, declared bankruptcy and collapsed.