WASHINGTON, April 4 (Reuters) – Richard Branson’s Virgin Orbit Holdings (VORB.O) filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company failed to secure the long-term financing needed to help it recover from a rocket failure. in january.
The Long Beach, California-based company has filed the lawsuit with the US Bankruptcy Court for the District of Delaware seeking to sell its assets after announcing the layoffs of nearly 85% of its 750 employees last week.
“We believe the Chapter 11 process represents the best path forward to identify and close an effective sale and maximize value,” Virgin Orbit CEO Dan Hart said in a statement.
The company listed assets of approximately $243 million and total debt of $153.5 million as of Sept. 30 in the filing.
Virgin Orbit went public in 2021 via a blank check deal, raising $255 million less than expected. Virgin Orbit spun off from space tourism company Virgin Galactic Branson in 2017 and is firing rockets from under a modified Boeing 747 to send satellites into orbit.
Virgin Orbit’s strategy was that firing small missiles from the 747 during flight would allow them to be launched on short notice from anywhere.
Analysts and industry executives said the shift in demand toward larger launch rockets and more cost-effective joint flights into space on SpaceX’s Falcon 9 rocket over the past two years has raised competitive risks for Virgin Orbit.
Virgin Orbit’s sixth mission in January with its LauncherOne rocket, the first to be launched from Britain, failed to reach orbit and sent its payload of US and British intelligence satellites plunging into the ocean.
The company scrambled to find new funding after the rocket failed, halting operations and furloughing nearly all of its staff on March 15 to conserve cash.
Virgin Group Finance
The Virgin Branson Group, which owns roughly 75% of the launched company, said it has invested more than $1 billion in the unit, including $60 million in secured loans since November.
Abu Dhabi’s sovereign wealth fund Mubadala was the second largest investor in Virgin Orbit with a 17.9% stake.
The two companies said Virgin Investments, a unit of the Virgin Group, will provide $31.6 million in new funds to Virgin Orbit through debtor debt financing to fund operations while it searches for a buyer in bankruptcy.
Despite the success of his travel and communications business, billionaire Branson has also been associated with a number of high-profile business failures in an entrepreneurial career dating back to the 1970s.
Reuters reported last month that Texas-based Matthew Brown was in talks to invest $200 million in the company. Sources told Reuters last week that those talks had broken down.
Virgin Orbit’s market capitalization was $65 million based on Monday’s closing price, down from more than $3 billion two years ago. Shares fell 12% in pre-market trading on Tuesday.
Virgin Orbit’s bankruptcy filing showed its largest creditor was London-based Arqit Ltd, which owed nearly $10 million for services and customer deposits. Arqit declined to comment when contacted by Reuters.
In 2021, Arqit Quantum (ARQQ.O) and Virgin Orbit announced a deal to launch a satellite with the goal of providing crypto services to the “Five Eyes” countries: the United States, the United Kingdom, Canada, Australia and New Zealand.
Arqit Quantum said in December that it would abandon its satellite development efforts and find a way to provide secure encryption through an unspecified “terrestrial infrastructure”.
Virgin Orbit’s second largest creditor was the US Space Force, which had a deposit of approximately $6.8 million for future launches, according to the filing.
The US Space Force, a branch of the US military, had no immediate comment.
(Reporting by Joey Rowlett in Washington, Janavi Nedumulu in Bengaluru and Kevin Krolicki in Singapore; Editing by Jamie Freed
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