Bloomberg – The leadership of U.S. rocket maker Virgin Orbit is trying to find investors to keep the company going, according to people familiar with the matter. But if an investment deal can’t be reached in the near term, the company could file for bankruptcy as early as this week.
Earlier reports said Virgin Orbit had suspended operations last week and asked most of its employees to take a temporary leave of absence while it looked for new investors or potential acquirers. Virgin Orbit CEO Dan Hart and other executives have been meeting daily with interested investors, according to people familiar with the matter.
At last week’s all-staff meeting, Hart said the company hopes to announce an update as soon as Wednesday. Meanwhile, top talent has begun to leave. Many of Virgin Orbit’s roughly 750 employees are looking for other job openings. Those include executives, senior engineers and project managers who are reportedly actively seeking new jobs.
Although Virgin Orbit may still avoid bankruptcy, people familiar with the matter said employees are beginning to panic as the company struggles to reach investment or takeover deals. One potential buyer is hesitant to pay a proposed sale price of close to $200 million, which is slightly below the company’s market value as of Friday’s close, a person familiar with the matter said.
Meanwhile, Virgin Orbit could file for bankruptcy as early as this week, people familiar with the matter said. The company has hired two firms, Alvarez & Marsal and Ducera Partners, to help draft a plan for restructuring in the event of insolvency. A spokesman for Virgin Orbit declined to comment.
Virgin Orbit develops systems to send satellites into space using a modified Boeing 747 jet as the mother plane, which then carries a rocket under the wing for launch in the air. The company’s last mission failed in flight when the rocket failed to reach its final orbit.
Virgin Orbit was spun off in 2017 from Richard Branson’s Virgin Galactic, in which Branson is the largest shareholder with a 75 percent stake. Mubadala, the UAE’s sovereign wealth fund, holds an 18% stake in Virgin Orbit, making it the second largest shareholder.
Virgin Orbit’s cash reserves are consistently low. The company went public in December 2021, near the end of the SPAC (Special Purpose Acquisition Company) boom, and failed to raise as much money in the market as its sister company Virgin Galactic. Through the sale of stock and bonds, Virgin Galactic has more than $1 billion in cash reserves.
Virgin Orbit’s goal was to raise $483 million through its SPAC process, but a large number of redemptions meant it raised less than half of its expected goal, just $228 million. The company raised funds primarily from companies such as Boeing and AE Industrial Partners.
For months, Virgin Orbit has been looking for investment. Branson was reluctant to provide further funding for the company, people familiar with the matter said. Since the fourth quarter, Virgin Orbit has received $60 million from Branson’s Virgin Group investment arm through debt financing. Around the same time, Virgin Orbit hired Goldman Sachs and Bank of America to explore other financial opportunities, ranging from a minority stake sale to an overall sale.
Virgin Orbit board member George Mattson was deeply involved in the company’s sale, according to people familiar with the matter. Mattson spent nearly 20 years at Goldman Sachs before co-founding the SPAC called NextGen, which helped take Virgin Orbit public at a $3.7 billion valuation.
Virgin Orbit’s latest regulatory filing shows that the company has approved a severance plan for executives. The plan will take effect if they are fired following a change in control of the company. Under the plan, Hart, Chief Strategy Officer Jim Simpson and Chief Operating Officer Tony Gingiss would receive base pay and annual bonuses. If fired, Hart would receive a cash severance package equal to 200% of his base salary, or $511,008, according to FactSet.
Virgin Orbit’s shares have continued to fall since the suspension, closing at $0.52 per share on Monday.
