Virgin Orbit’s LauncherOne rocket on display in Times Square, Recent York.
CNBC | Michael Sheetz
Virgin Orbit is scrambling to secure a funding lifeline and avoid bankruptcy, which could come as early as this week with no deal, CNBC has learned.
The rocket builder paused operations last week and furloughed a lot of the company, as CNBC first reported, while it sought recent investment or a possible buyout.
Virgin Orbit CEO Dan Hart and other senior leadership held each day talks with interested parties through the weekend, based on people accustomed to the matter, who asked to stay anonymous with the intention to discuss internal matters.
During an all-hands meeting last week, Hart told employees that the corporate hoped to offer an update on the situation as soon as Wednesday.
Meanwhile top talent is already hitting the job market: Lots of Virgin Orbit’s roughly 750 employees are looking elsewhere for openings. That talent ranges from executives to senior and lead engineers to program managers who’re actively trying to find and finding recent jobs, based on a CNBC evaluation.
While a door stays open to avoiding bankruptcy, people near the situation describe a way of panic as the corporate struggles to get a deal done. One possible buyer balked at a proposed sale price of near $200 million, one person told CNBC — a price slightly below the corporate’s market value as of Friday’s close.
At the identical time, Virgin Orbit is bracing for a possible bankruptcy filing as soon as this week, one person said. Virgin Orbit hired a pair of firms — Alvarez & Marsal and Ducera Partners — to attract up restructuring plans within the event of insolvency, CNBC has learned. Sky News first reported the firms had been hired.
A Virgin Orbit spokesperson declined to comment.
Shares of Virgin Orbit have continued to fall since its pause in operations, with its stock slipping to shut at $0.52 a share on Monday.
The corporate developed a system for sending satellites into space that uses a modified 747 jet, which drops a rocket from under the aircraft’s wing midflight. Its last mission suffered a midflight failure, and its rocket failed to achieve orbit.
Richard Branson’s Virgin Orbit, with a rocket under the wing of a modified Boeing 747 jetliner, takes off for a key drop test of its high-altitude launch system for satellites from Mojave, California, July 10, 2019.
Mike Blake | Reuters
The corporate was spun out of Richard Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.
But the corporate has struggled to sustain its money coffers. It went public in December 2021 near the tail end of the SPAC craze and was unable to tap the markets for fundraising in the identical way as its sister company Virgin Galactic, which built its money reserves to greater than $1 billion through stock and debt sales.
Virgin Orbit aimed to boost $483 million through its SPAC process, but significant redemptions meant it raised lower than half of that, bringing in $228 million in gross proceeds. The funds it did manage to boost got here from Boeing and AE Industrial Partners, amongst others.
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Virgin Orbit has been searching for a financial lifeline for several months. Branson was not willing to fund the corporate further, people familiar said, and as a substitute shifted technique to salvaging value.
Because the fourth quarter, Virgin Orbit has raised $60 million in debt from the investment arm of Branson’s Virgin Group — giving it first priority over Virgin Orbit’s assets. Around the identical time, Virgin Orbit hired Goldman Sachs and Bank of America to explore other financial opportunities, starting from a minority-stake investment to a full sale.
George Mattson, who sits on Virgin Orbit’s board of directors, has been heavily involved within the strategy of selling the corporate, people told CNBC. Mattson spent nearly 20 years as a banker at Goldman Sachs, before co-founding the SPAC called NextGen, which took Virgin Orbit public at a $3.7 billion valuation.
Virgin Orbit disclosed in a filing Monday that it had approved a severance plan for top executives, in the event that they are terminated “following a change on top of things” of the corporate. The plan covers Hart, in addition to Chief Strategy Officer Jim Simpson and Chief Operating Officer Tony Gingiss, and includes paying out base compensation and annual bonuses. Within the event of termination, Hart would receive a money severance equal to 200% of his base salary, which is $511,008, based on FactSet.
