WASHINGTON, April 4 (Reuters) – Virgin Orbit Holdings Inc ( VORB.O ), founded by billionaire Richard Branson, filed for Chapter 11 bankruptcy protection on Tuesday after the satellite launch business struggled to secure long-term financing following a failed launch in January. .
The filing comes two years after Virgin Orbit went public at a valuation of about $3 billion. But the crash in January forced the company to scramble for fresh funding and halt operations.
“We believe the Chapter 11 process represents the best path to identify and finalize an efficient and value-maximizing sale,” Virgin Orbit Chief Executive Dan Hart said in a statement.
The company, spun off from space tourism firm Virgin Galactic ( SPCE.N ) in 2017, sends satellites into orbit using rockets launched from modified Boeing ( BA.N ) 747 aircraft.
The Long Beach, California-based company filed to sell its assets in a Delaware court days after announcing it would lay off about 85% of its 750 employees.
Virgin Orbit listed assets of about $243 million and total debt of $153.5 million as of Sept. 30. The company went public in a blank-check merger in December 2021, raising $255 million less than expected.
The company was valued at $65 million at the close of trading on Monday. On Tuesday, its shares fell 23% to close at just 15 cents each.
The company’s sixth mission in January using its core LauncherOne rocket, the first rocket launched from Britain, failed to reach orbit, plunging commercial and defense-related research satellites into the ocean.
An accident involving England’s Cornwall Spaceport forced the company to halt operations and put all of its employees on bail in March.
Tony Kingis, Virgin Orbit’s chief operating officer until Monday, apologized in an email to employees, saying company leadership should have had more time to run the company.
“We apologize for not acting sooner and to avoid surprising you,” he wrote. “I regret that I was unable to convince our chairman and board to take a different route to give us more time to figure things out.”
Business model Virgin Orbit is set up to launch small rockets and provide short-notice launches from anywhere, including for tactical military purposes, to address a need highlighted by the conflict in Ukraine.
[1/5] Richard Branson, founder of the Virgin Group, poses for a photo on board the new cruise ship Scarlet Lady at Dover Harbor in Dover, Britain on February 21, 2020. REUTERS/Simon Dawson
But over the past two years, demand for larger launch vehicles and more cost-effective shared payload space launches on SpaceX’s Falcon 9 rocket have raised the competitive stakes.
Venture capital investments in space startups are set to decline 50% year-on-year to $21.9 billion in 2022 as capital spending rises alongside global interest rate hikes.
“The volatile capital markets and high interest rate environment made it difficult to obtain new capital,” Hart said in a court filing. He said the company was “experiencing heavy pricing pressure from well-capitalized competitors in the commercial publishing market.”
The two satellite makers that lost high-tech payloads in failed January launches, Britain’s Space Forge and Poland’s SatRev, which owns 4% of Virgin Orbit, said they had backup plans for replacement launches as needed.
Virgin Group Finance
Branson’s Virgin Group, which owns roughly 75% of the publishing company, said it has invested more than $1 billion in the unit since November, including $60 million in secured loans.
Abu Dhabi’s sovereign wealth fund Mubadala is the second largest investor with a 17.9% stake.
Virgin Investments, a unit of Virgin Group, will pay $31.6 million for Virgin Orbit while it looks for a buyer, the companies said. According to a regulatory filing, the company is retaining about 100 employees to allow it to resume operations if a rescuer is found.
Despite the success of his travel and telecommunications businesses, Branson was associated with several high-profile business failures during his career in the 1970s.
Reuters reported last month that Texas-based Matthew Brown was in talks to invest $200 million in Virgin Orbit. Those talks collapsed, sources told Reuters last week.
Virgin Orbit’s biggest creditor is London-based Arkit Ltd., which owes it almost $10 million in services and customer deposits.
Arkith declined to comment.
The U.S. Space Force, part of the U.S. military, was Virgin Orbit’s second largest creditor, depositing nearly $6.8 million for future launches. There was no immediate comment.
Reporting by Joey Rowlett in Washington, Jahnavi Nidumolu in Bangalore, Kevin Krolicki in Singapore, Crystal Hu in New York, Joanna Plusinska in London and Tim Heber in Paris Editing by Jonathan Otis and Matthew Lewis.
Our Standards: Thomson Reuters Trust Principles.
