Richard Branson’s Virgin Orbit files for bankruptcy to seek a buyer

WASHINGTON, April 4 (Reuters) – Richard Branson’s Virgin Orbit Holdings ( VORB.O ) filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company failed to secure the long-term financing needed to help it recover from a rocket failure in January.

The Long Beach, Calif.-based company filed the filing with the US Bankruptcy Court for the District of Delaware calling for the sale of its assets after announcing layoffs of about 85% of its 750 employees last week.

“We believe the Chapter 11 process represents the best path forward to identify and complete an efficient and value-maximizing sale,” Virgin Orbit CEO Dan Hart said in a statement.

The company listed assets of about $243 million and total debt of $153.5 million as of Sept. 30 in the filing.

Virgin Orbit went public in 2021 through a blank check deal, raising $255 million less than expected. Spinned out of Branson’s space tourism company Virgin Galactic in 2017, Virgin Orbit launches rockets from under a modified Boeing ( BA.N ) 747 aircraft to send satellites into orbit.

Virgin Orbit’s strategy has been that launching small rockets from a 747 in flight would allow short-notice launches from anywhere.

But a shift in demand toward larger launch vehicles and more cost-effective shared trips to space on SpaceX’s Falcon 9 rocket over the past two years raised the competitive stakes for Virgin Orbit, analysts and industry executives have said.

Virgin Orbit’s sixth mission in January with its centerpiece LauncherOne rocket, the first rocket launch out of the UK, failed to reach orbit and sent its payload of US and UK intelligence satellites into the ocean.

The company struggled to find new funding after the rocket failure, halted operations and laid off nearly all of its employees on March 15 to save money.

VIRGIN GROUP FINANCING

Branson’s Virgin Group, which owned about 75% of the launch company, said it had invested more than $1 billion in the entity, including $60 million in secured loans since November.

Abu Dhabi’s sovereign wealth fund Mubadala was the second largest investor in Virgin Orbit with a 17.9% stake.

Virgin Investments, a unit of Virgin Group, will provide $31.6 million in new money to Virgin Orbit through debtor-in-possession financing to fund its operations while it looks for a buyer in bankruptcy, the companies said.

Despite the success of his travel and telecommunications businesses, billionaire 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 had been in talks to invest $200 million in the company. Those talks collapsed, sources told Reuters last week.

Virgin Orbit had a market value of $65 million based on Monday’s closing price, down from more than $3 billion two years ago. Shares fell 12% in pre-market trading on Tuesday.

Virgin Orbit’s bankruptcy filing listed its largest creditor as London-based Arqit Ltd, which was owed nearly $10 million for services and in customer deposits. Arqit declined to comment when contacted by Reuters.

In 2021, Arqit Quantum ( ARQQ.O ) and Virgin Orbit announced a deal for two satellite launches intended to provide encryption services to the “Five Eyes” nations: the United States, Britain, Canada, Australia and New Zealand.

Arqit Quantum said in December that it would abandon its satellite development efforts and had found a way to provide secure encryption through an unspecified “ground infrastructure.”

Virgin Orbit’s second largest creditor was the United States Space Force, which had a deposit of nearly $6.8 million for future launches, according to the filing.

The US Space Force, a branch of the US military, had no immediate comment.

Reporting by Joey Roulette in Washington, Jahnavi Nidumolu in Bengaluru and Kevin Krolicki in Singapore; Editing by Jamie Freed

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