Virgin Orbit missile launcher 1 on display in Times Square, New York.
CNBC | Michael Sheetz
Virgin Orbit It is scrambling to secure a financing lifeline and avoid bankruptcy, which could come as early as this week without a deal, CNBC has learned.
The rocket builder halted operations last week and relegated most of the company, CNBC first reported, as it sought a new investment or potential purchase.
Virgin Orbit CEO Dan Hart and other senior leaders held daily conversations with interested parties over the weekend, according to people familiar with the matter, who asked not to be identified in order to discuss internal matters.
During a comprehensive meeting last week, Hart told employees that the company hopes to provide an update on the situation as soon as Wednesday.
Meanwhile, top talent is already hitting the job market: many of Virgin Orbit’s 750 employees are looking for work opportunities elsewhere. This talent ranges from executives to chief engineers and their pioneers to program managers actively seeking and finding new jobs, according to a CNBC analysis.
While the door is still open to avoid bankruptcy, people close to the situation describe a sense of panic as the company struggles to close a deal. A potential buyer has rejected the proposed sale price of nearly $200 million, the person told CNBC — a price just below the company’s market value as of Friday’s close.
At the same time, one person said Virgin Orbit is preparing for a potential bankruptcy declaration as soon as this week. CNBC has learned that Virgin Orbit has hired two companies — Alvarez, Marsal and Ducera Partners — to draw up restructuring plans in the event of bankruptcy. Sky News first reported that the companies had been contracted.
A Virgin Orbit spokesperson declined to comment.
Shares of Virgin Orbit have continued to fall since it paused operations, with its stock falling to close at $0.52 a share Monday.
The company has developed a system for sending satellites into space using a modified 747, which drops a rocket from under the plane’s wing in mid-flight. Its last mission failed mid-flight, and its rocket failed to reach orbit.
Richard Branson’s Virgin Orbit, with a rocket under the wing of a modified Boeing 747, lifts off to perform a major landing test of the High Altitude Launch Satellite System from Mojave, Calif., July 10, 2019.
Mike Blake | Reuters
The company was born out of Richard Branson Virgo galaxy in 2017 and the billionaire is its largest shareholder with an ownership percentage of 75%. The UAE’s sovereign wealth fund Mubadala owns the second-largest stake in Virgin Orbit, with an 18% stake.
But the company has struggled to maintain its cash coffers. It went public in December 2021 near the end of the SPAC craze and hasn’t been able to tap the markets to raise money in the same way as sister company Virgin Galactic, which has built its cash reserves to more than $1 billion through equity and debt sales.
Virgin Orbit aims to raise $483 million with the SPAC, but large recalls mean it has raised less than half of that, resulting in $228 million in total proceeds. The money I was able to collect came from Boeing and AE Industrial Partners, among others.
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Virgin Orbit has been looking for a financial lifeline for several months now. Branson was unwilling to fund the company further, people familiar with the matter said, and instead shifted his strategy to a value salvage.
Since the fourth quarter, Virgin Orbit has raised $60 million in debt from the investment arm of the Virgin Branson Group – giving it first priority over Virgin Orbit’s assets. Around the same time, I hired Virgin Orbit Goldman Sachs And American bank To explore other financial opportunities, ranging from minority stake investment to outright sale.
People told CNBC that George Mattson, who sits on Virgin Orbit’s board, was heavily involved in the company’s sale. Mattson spent nearly two decades as a banker at Goldman Sachs, before he co-founded a SPAC called NextGen, which floated Virgin Orbit at $3.7 billion.
Virgin Orbit revealed in a filing on Monday that it has agreed to a severance plan for its senior executives, if they are terminated “following a change in control” of the company. The plan covers Hart, as well as Chief Strategy Officer Jim Simpson and Chief Operating Officer Tony Jenges, and includes a base compensation payout and annual bonuses. In the event of termination, Hart will receive cash compensation equal to 200% of his base salary, which is $511,008, according to FactSet.