WASHINGTON, April 4 (Reuters) – Richard Branson’s Virgin Orbit Holdings ( VORB.O ) filed for Chapter 11 bankruptcy on Tuesday after the satellite launch company was unable to secure the long-term funding needed to help it recover from January’s rocket failure.
The Long Beach, California-based company remained in the U.S. Bankruptcy Court for the District of Delaware seeking the sale of its assets after announcing the layoff of about 85% of its 750 employees last week.
“We believe the Chapter 11 process represents the best way to realize and complete an efficient and high-value sale,” Virgin Orbit CEO Dan Hart said in a statement.
The company had between $243 million in assets and a total debt of about $153.5 million as of Sept. 30 in filing.
Virgo Orbit 2021 has apparently gone through a blank-check deal, raising $255 million less than expected. Launched by Branson’s space tourism firm Virgin Galactic in 2017, Virgin Orbit launches satellites into orbit using a modified Boeing ( BA.N ) 747 jet.
Virgin Orbit’s plan was to allow small rockets to be launched from the 747 in flight on short notice from somewhere else.
But a shift in demand for larger launch rockets and more cost-effective common rides to space on SpaceX’s Falcon 9 rocket over the past two years has raised the competitive stakes for Virgin Orbit, analysts and industry executives said.
Virgin Orbit’s sixth mission in January with its center stage Launcher One rocket, the first rocket launched from Britain, failed to reach orbit and the US and UK partners launched intelligence satellites into the ocean.
The company scrambled to find new funding after the rocket failure, shutting down operations and laying off almost all of its employees on March 15 to save money.
VIRGIN GROUP FUNDING
Branson’s Virgin Group, which owned about 75% of the launch company, said it had invested more than $1 billion in the unit, including $60 million in loans secured 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 funding to Virgin Orbit through debtor-in-possession financing to fund operations while the buyer is in bankruptcy, the company said.
Despite the success of his travel and telecommunications businesses, billionaire Branson has also been associated with several high-profile business failures in an entrepreneurial career that dates back to the 1970s.
Reuters reported last month that Texas-based Matthew Brown was in talks to invest $200 million in the company. Those talks broke down, sources told Reuters last week.
Virgo Orbit’s market value is based on Monday’s closing price of $65 million, up from more than $3 billion in two years. Shares fell 12% in pre-market trading on Tuesday.
Virgin Orbit’s bank filings show its largest creditor, London-based Arqit Ltd, was owed nearly $10 million for services and customer deposits. Arqit declined to comment when contacted by Reuters.
In 2021, Arqit Quantum ( ARQQ.O ) and Virgo Orbita announced deals for two satellites to be launched with the aim of providing encryption services to the “Five Eyes” nations: the United States, the United Kingdom, Canada, Australia and New Zealand.
Arqit Quantum said in December that it would abandon satellite development efforts and find a way to provide secure encryption through a specified “ground infrastructure.”
Virgin Orbit was the second-largest creditor to the United States Space Force, having deposited nearly $6.8 million in future investments, 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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