Virgin Orbit extends unpaid hiatus as deal falls through, negotiations continue

NEWKEY, ENGLAND – JANUARY 09: General view of Cosmic Girl, a Boeing 747-400 aircraft with a LauncherOne missile under its left wing, during final preparations at Cornwall Newquay Airport on January 09, 2023 in Newquay, UK. Virgin Orbit launches its LauncherOne rocket from Cornwall, marking the first ever orbital launch from the UK. The mission was named Start Me Up after the Rolling Stones hit. (Photo by Matthew Horwood/Getty Images)

Matthew Horwood | News Getty Images | Getty Images

virgin orbit is once again extending its unpaid hiatus to continue making vital investments, CEO Dan Hart told employees in a company-wide email.

Some of the company’s late-stage 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 brief employees on the company’s operating status at a general meeting at 4:30 pm ET on Monday afternoon. At the last minute, that meeting was rescheduled “no later than Thursday,” Hart said in a staff memo on Monday.

“Our investment discussions have been very dynamic over the past few days, they are ongoing and have not yet reached the stage where we can provide full details,” Hart wrote in an email to employees, which was viewed by CNBC.

Brown told CNBC’s World Exchange last week that he was in final talks to invest in the company. A person familiar with the terms told CNBC that the investment would have been $200 million and gave Brown a majority stake. But talks between Virgin Orbit and the Texas investor stalled and broke down late last week, an acquaintance told CNBC. Those discussions had ended as of Saturday, the source said.

Separately, another person said that talks with another potential buyer broke off on Sunday evening.

People asked to remain anonymous in order to discuss private negotiations. A spokesman for Virgin Orbit declined to comment.

Hart promised that more than 750 Virgin Orbit employees would receive “daily” updates this week. Most employees remain on unpaid leave, which Hart announced on March 15. Last week, a “small” group of Virgin Orbit employees returned to work in what Hart called “the first step” in a “gradual resumption of operations.” with the intention of getting the rocket ready for the company’s next launch.

Shares of Virgin Orbit closed at 54 cents a share on Monday, falling below $1 a share after the company was suspended.

Subscribe here to receive weekly editions of the CNBC Investing in Space newsletter..

Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing in mid-flight. But the company’s latest mission failed mid-flight, due to a problem during launch that caused the rocket to fail into orbit and crash into the ocean.

The company had been looking for new funds for several months, and the majority owner, Sir Richard Branson, was unwilling to finance the company further.

Virgin Orbit was spun off from Branson’s Virgin Galactic in 2017 and considers the billionaire its largest shareholder with a 75% stake. Mubadala, the Emirates sovereign wealth fund, owns the second largest stake in Virgin Orbit, at 18%.

The company has hired bankruptcy firms to draw up contingency plans in case it can’t find a buyer or investor. Branson has priority over Virgin Orbit’s assets as the company has raised $60 million in debt from Virgin Group’s investment arm.

The same day that Hart told employees that Virgin Orbit was suspending operations, its board of directors approved a plan to lay off the “golden parachute” for top managers in case they were fired “due to a change in control” of the company.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button