Virgin Orbit extends unpaid hiatus as deal collapses, talks resume
NEWQUAY, ENGLAND – JANUARY 9TH: A general view of Cosmic Girl, a Boeing 747-400 aircraft carrying the LauncherOne missile under its left wing while last at Cornwall Airport Newquay on January 9th, 2023 in Newquay, UK preparations are made. Virgin Orbit launches its LauncherOne rocket from the Cornwall Spaceport, marking the first-ever orbital launch from the UK. The mission was named “Start Me Up” after the Rolling Stones hit song. (Photo by Matthew Horwood/Getty Images)
Matthew Horwood | News from Getty Images | Getty Images
Virgo Orbit is again extending its unpaid pause in operations to continue investing a lifeline, CEO Dan Hart told employees in a company-wide email.
Some of the company’s late-stage deal talks, including with private investor Matthew Brown, fell through over the weekend, people familiar with the matter told CNBC.
According to an email sent to employees Sunday night, Hart previously planned to update employees on the company’s operational status at an all-employee meeting Monday afternoon at 4:30 p.m. ET. At the last minute, that meeting was rescheduled “no later than Thursday,” Hart said in the staff memo Monday.
“Our investment talks have been very dynamic over the past few days, they are ongoing and are not yet at a stage where we can provide a comprehensive update,” Hart wrote in the email to employees, which was seen by CNBC.
Brown told CNBC’s Worldwide Exchange last week he was in final talks to invest in the company. A person familiar with the terms told CNBC the investment was $200 million and gave Brown a controlling interest. But talks between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a source told CNBC. As of Saturday, those talks ended, the person said.
Separately, another person said talks with another potential buyer ended Sunday night.
The individuals asked to remain anonymous to discuss private negotiations. A Virgin Orbit representative declined to comment.
Hart promised “daily” updates to Virgin Orbit’s 750+ employees this week. Most employees remain on unpaid leave, which Hart announced on March 15. Last week, a “small” team of Virgin Orbit employees returned to work in what Hart described as the “first step” in a “gradual resumption of operations.” ” with the intention of preparing a rocket for the next launch of the company.
Virgin Orbit shares closed at 54 cents a share Monday after falling below $1 a share following the company’s pause in operations.
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Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a missile under the plane’s wing mid-flight. But the company’s latest mission suffered an in-flight failure, with a problem during launch causing the rocket to fail to reach orbit and crash into the ocean.
The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to continue funding the company.
Virgin Orbit was spun off from Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest shareholder with a 75% stake. Mubadala, the Emirates’ sovereign wealth fund, holds the second largest stake in Virgin Orbit at 18%.
The company hired bankruptcy firms to draw up contingency plans in case it couldn’t find a buyer or investor. Branson is top priority over Virgin Orbit’s assets as the company has raised $60 million in debt from Virgin Group’s investment arm.
The same day Hart announced to employees that Virgin Orbit was ceasing operations, the board approved a “golden parachute” severance plan for top executives if they are terminated “following a change of control” of the company.