Virgin Orbit ceased operations after failing to find funding

(Bloomberg) – Virgin Orbit Holdings Inc., the satellite launch company tied to British billionaire Richard Branson, is shutting down indefinitely, succumbing to the growing cash crunch pressures that have crippled businesses startups in many emerging technologies.

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The company said in a filing Thursday that it has cut 675 jobs, or about 85% of its workforce, “in order to reduce costs caused by the company’s inability to secure meaningful funding.” means.” A Virgin Orbit spokesperson said the remaining 15% of employees will work to close the business.

The move ends a rapid decline following the failure of its high-profile launch in January and its share price slump. Virgin Orbit temporarily suspended operations earlier this month while seeking more capital. The company, which is part of Branson’s empire, includes airline Virgin Atlantic and aerospace company Virgin Galactic Holdings Inc. – was not profitable as a public company.

Shares of Virgin Orbit were down 45% in extended New York trading as of 7:20 p.m., trading just 19 cents per share. Stock was worth more than $7 a year ago. The fees will amount to approximately $15 million, consisting primarily of $8.8 million in severance and employee benefits, and $6.5 million in other expenses such as services outsourced, Virgin Orbit said in the filing.

Just two weeks ago, the company approved a severance plan for top executives, with CEO Daniel Hart standing to receive a payout of double his base salary, a cash payment. face equivalent of a prorated annual target bonus, as well as much more. like six months of health insurance.

Branson injected $10.9 million by buying a convertible bond through Virgin Investments Ltd. part, allowing the failed company to fund severance pay and other expenses, Virgin Orbit said in the filing.

Selling business

The Long Beach, California-based company is one of a number of space-related startups that once had sky-high valuations that have seen their shares plunge as investors avoid untested business models and loss-making activities. Astra Space Inc. reported Thursday that its cash and cash equivalents reserves fell 32% in the quarter ended December 31, and Rocket Lab USA said last month it expected quarterly losses to more than three times larger than analysts’ estimates.

Virgin Orbit is still looking to sell all or part of its business, according to a person familiar with the matter. Discussions of a possible transaction do not include Matthew Brown, a little-known Texas venture capitalist who has said he is interested in a deal earlier this month, who requested anonymity. Names reveal private chats said.

Brown touted himself as the possible savior of a billion-dollar business just a year ago. But his financing deal fell apart over the weekend, CNBC reported March 27.

The company’s official launch began in 2017 as an offshoot of Virgin Galactic before going public in 2021 through a combination with a blank testing company. Virgin Orbit’s business focuses on launching small satellites into orbit, as opposed to Virgin Galactic’s focus on sending humans to the edge of space and back.

first mission

Unlike some competitors that launch rockets from the ground, Virgin Orbit uses a technique known as aerial launch, in which their LauncherOne rocket is deployed at high altitude from beneath the wing of a rover. fly Boeing Co. 747 has been modified. The company started rocket development at Virgin Galactic, years before the satellite launch business was officially established.

Virgin Orbit successfully carried out its first mission to orbit in January 2021 and completed four successful flights through 2022.

The company had planned to increase the frequency of launches this year but had to reevaluate after the failed January mission, which was expected to be the first orbital launch from British soil. Its vehicle never reached orbit after having problems with its fuel filter during flight, resulting in the loss of nine small satellites.

(Update on Virgin Investment’s severance pay)

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