Richard Branson’s Virgin Orbit is in talks with two financial investors about a possible buyout or fundraising after the British billionaire refused to inject more money into the rocket launch company he founded in 2017.
Chief executive Dan Hart is racing to secure emergency funding to keep the company afloat until it can prove its launch system after the failed mission from the UK in January.
Virgin Orbit, 75 percent owned by Branson’s Virgin Group, announced an “operational pause” for a week on Wednesday night. The 700 employees have been put on unpaid leave.
“Virgin Orbit is entering a company-wide operational hiatus, effective March 16, 2023, and expects to provide an update on future operations in the coming weeks,” the company said in a statement.
Shares of Virgin Orbit plummeted 33 percent in early afternoon trading on Thursday in New York trading.
People close to the company said the cash crunch comes just weeks before Virgin Orbit hoped for clearance from US security authorities to launch a new mission from the Mojave Desert.
However, the company has run out of money and will soon be unable to fly that mission without a new injection.
People close to Virgin Orbit said all options were on the table in talks with financial investors, including selling the entire company, a stake or even just the horizontal launch technology.
Virgin Orbit is the world’s first company to use such a system, using a converted 747 jumbo jet to lift a rocket to an altitude of 35,000 feet, where it is released to fly satellites into orbit. It has flown four successful missions and launched 33 satellites into orbit.
It’s unclear if Branson wants to retain a stake in the company. Since the company’s inception, he has invested $1 billion in Virgin Orbit, $60 million of which has been injected since November.
Virgin Orbit, which grew out of Branson’s space tourism company Virgin Galactic, was floated to the Nasdaq in 2021 through a dedicated acquisition company with a valuation of $3.7 billion. Any sale price is probably a fraction of that valuation, one person said.
The group has been tight on cash since the spring of last year, according to the person who knows the company well. When it went to market through a Spac, it raised $220 million against expectations of $300 million – $400 million. Then the failed launch in the UK messed up plans to take the mobile launch system globally, putting further strain on corporate finances.
“It took $50 million in cash per quarter to run as it stands today,” the person said. “They started with a backlog because they didn’t raise enough money. After that it has been a series of accidents and delays that have affected them.
The crisis makes it very unlikely that Virgin Orbit will return this year for another launch attempt from the British spaceport of Cornwall. Britain, however, has other spaceports in Scotland jostling for the prize of being the first to stage a launch from British soil.
Science minister George Freeman said the government is still committed to launching satellites from the UK.
“The global market for launching small commercial satellites into low Earth orbit will grow tremendously over the next decade,” he said. “The UK’s position as an island in the upper latitudes makes us an obvious place to launch satellites into low Earth orbit.”
“Launch is a commercial market: our focus is on establishing the regulatory framework and supporting the infrastructure and licensing of the Shetlands and Sutherland spaceports, where four launches are planned for 2024,” he added.