Katerra Commences U.S. Court-Supervised Process to Implement Financial Restructuring

Katerra, a technology-enabled construction company, announced today that the company and certain of its U.S. and Cayman Island entities have voluntarily filed for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, as the company takes steps to conduct a marketing and sale process to maximize value for its stakeholders.

Katerra has also secured commitments for $35 million in Debtor-in-Possession (“DIP”) financing from SB Investment Advisers (“UK”) Limited to fund operations during the Chapter 11 process.

The company’s international operations are not affected by this filing.

“While a number of negative factors have led to Katerra’s current challenges, we are implementing initiatives on multiple fronts to maximize value and provide the best path forward for Katerra and its many stakeholders,” said Chief Transformation Officer Marc Liebman. “Our multi-step action plan has rapidly evolved and includes consolidating U.S. activities, continuing our international businesses, advancing key asset sales, securing DIP financing, and commencing an in-court restructuring process. We are grateful to the extraordinary ongoing work and support of the Katerra team and other core constituencies through this extremely difficult time.”

Following a thorough review of its strategic alternatives, the company is currently proceeding with certain active projects in a number of states. The company has also entered into commitments for the sale of the Renovations and Lord Aeck Sargent architecture business lines to private buyers, subject to Bankruptcy Court approval.

Katerra recently notified its key stakeholders that many of its U.S. projects will be demobilizing. In keeping with Katerra’s ongoing commitment to the safety of the site and the general public, the company is working to ensure a safe transition.

The rapid deterioration of the company’s financial position is the result of the macroeconomic effects of the COVID-19 pandemic on the construction industry, inability to procure bonding for construction projects following the unexpected insolvency proceedings of Katerra’s former lender, and unsuccessful attempts to secure additional capital and business.

The company intends to file customary motions with the Bankruptcy Court requesting authorization to continue paying remaining employees, vendors, and others in the ordinary course of business moving forward.

Katerra has hired Kirkland and Ellis as legal advisor, Houlihan Lokey as investment banker, and Alvarez & Marsal as financial advisor to work with the management team to conduct a marketing and sale process for its assets to maximize value for Katerra’s stakeholders and otherwise facilitate the orderly wind down of its business. Members of the financial advisor firm have assumed officer roles at the company and are working with regional business unit leadership to manage day-to-day operations.

For Court documents or filings, along with additional information about the case, please visit http://cases.primeclerk.com/Katerra or call (877) 329-1824 (toll-free in the U.S.) or (347) 532-7909 (from outside the U.S.).

Source: Katerra, Inc.