Branson Virgin Orbit files for bankruptcy to look for a buyer

WASHINGTON (Reuters) – Virgin Orbit Holdings Inc. (VORB.O), founded by billionaire Richard Branson, filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company struggled to secure long-term financing after a failed launch in January.

The company spun off from space tourism firm Virgin Galactic in 2017, and has sent satellites into orbit using rockets launched from a modified Boeing 747.

But its sixth mission in January with its LauncherOne rocket, the first to be launched from Britain, failed to reach orbit, sending its payload of commercial and defense research satellites into the ocean.

The mission from the Cornwall spaceport in the UK left the company scrambling to find new funding and forced it to halt operations and furlough nearly all of its staff on March 15 to conserve funds.

The Long Beach, California-based company filed for a sale of its assets in a Delaware court days after announcing it was laying off nearly 85% of its 750 employees.

“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.

Virgin Orbit listed assets of approximately $243 million and total debt of $153.5 million as of September 30. It went public in 2021 via a blank check deal, raising $255 million less than expected.

Virgin Orbit was valued at more than $3 billion two years ago, and was valued at $65 million based on Monday’s closing price.

On Tuesday, its shares fell about 24 percent of their value.

Virgin Orbit’s business model was created to launch small rockets and deliver launches on short notice from anywhere including tactical military purposes, to meet a need most notably the conflict in Ukraine.

Analysts and industry executives said demand for larger launch rockets and more cost-effective combined payload launches aboard a SpaceX Falcon 9 rocket over the past two years has increased competitive risks.

The British Space Agency said Britain, which has two vertically launched spaceports due to debut next year, remains committed to being the main provider of commercial small-satellite launches.

The two satellite makers that lost high-tech payloads in the botched January launch, Britain’s Space Forge and Poland’s SatRev, in which Virgin Orbit owns 4%, have confirmed they have backup plans to use replacement launch vehicles as needed.

SatRev has used other launchers including SpaceX in the past.

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 is the second largest investor in Virgin Orbit with a stake of 17.9 percent.

The two companies said Virgin Investments, a unit of the Virgin Group, will provide $31.6 million in new funds to Virgin Orbit to fund operations while it searches for a buyer in bankruptcy.

Despite the success of his travel and communications business, 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 Virgin Orbit. Sources told Reuters last week that those talks had broken down.

Its bankruptcy filing showed that Virgin Orbit’s largest creditor was London-based Arqit Ltd, which owed nearly $10 million for services and customer deposits.

Arquette declined to comment.

In 2021, Arqit Quantum (ARQQ.O) and Virgin Orbit announced a deal to launch two satellites to provide encryption 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”.

The filing showed that the US Space Force, part of the US military, was Virgin Orbit’s second-largest creditor with a deposit of nearly $6.8 million for future launches.

She had no immediate comment.

(Reporting by Joe Roulet in Washington, Janavi Nedumulu in Bengaluru, Kevin Krolicki in Singapore, Joanna Plosinska in London, Tim Hever in Paris; Editing by Jamie Freed and Jason Neely

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