SoftBank Throws Final Cash Infusion to Bankrupt Startup Katerra

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After pouring more than $2.1 billion into now-busted Katerra Inc., SoftBank Group Corp. is giving the construction startup one final cash infusion.

SoftBank is offering Katerra a $35 million loan to fund its operations in bankruptcy. In exchange for the so-called debtor-in-possession loan -- also called DIP financing -- Katerra will try to sell its assets in the next 60 days.

SoftBank is the majority owner of Katerra, which was founded in 2015. Stockholders usually see no recovery in U.S. bankruptcy because all creditors rank ahead of equity in the repayment line.

“We are very much a reluctant DIP lender here,” Alfredo Perez of Weil Gotshal & Manges said on behalf of SoftBank in a court hearing Monday. “It’s not the position that we wanted to find ourselves in.”

Katerra filed for bankruptcy in the wake of “overly ambitious” acquisitions, cost-control issues and project completion delays, Josh Sussberg of Kirkland & Ellis said on behalf of the company. Katerra never turned a profit and had less than $5 million of unrestricted cash on hand as of Sunday.

U.S. Bankruptcy Judge David R. Jones said he would approve the loan on an interim basis, giving Katerra access to $15 million. It is sorely needed.

“If we don’t get this $15 million today, we’re dead,” Matthew Niemann of Houlihan Lokey, Katerra’s investment banker, testified during the hearing. “We have a business we’re holding together, but if we don’t get that $15 million, we don’t have anything.”

The case is Katerra Inc., 21-31861, U.S. Bankruptcy Court for the Southern District of Texas (Houston).

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