The filing comes less than two years after Virgin Orbit went public at a valuation of roughly US$3bil (RM13.2bil). — Bloomberg
WASHINGTON: Virgin Orbit Holdings Inc, founded by billionaire Richard Branson, filed for Chapter 11 bankruptcy protection on Tuesday after the satellite-launching business struggled to secure long-term funding following a failed launch in January.
The filing comes less than two years after Virgin Orbit went public at a valuation of roughly US$3bil (RM13.2bil). But the January mishap left the company scrambling for new funding and forced it to halt operations.
“We believe that the Chapter 11 process represents the best path forward to identify and finalise an efficient and value-maximising sale,” Virgin Orbit chief executive Dan Hart said in a statement.
The company, which was spun off from space tourism firm Virgin Galactic in 2017, sends satellites into orbit using rockets launched from a modified Boeing 747 plane.
The Long Beach, California-based company lodged the filing seeking the sale of its assets in a Delaware court days after announcing the laying off of roughly 85% of its 750 employees.
Virgin Orbit listed assets of about US$243mil (RM1.07bil) and total debt of US$153.5mil (RM674.8mil) as of Sept 30. The company went public in December 2021 through a blank cheque merger, raising US$255mil (RM1.12bil) less than expected.
The company was valued at US$65mil (RM285.7mil) at the close of trading on Monday. On Tuesday, its shares shed 23% to close at a mere 15 US cents (65.94 sen) each.
The company’s sixth mission in January using its centrepiece LauncherOne rocket, the first rocket launch out of the United Kingdom, failed to reach orbit, sending its payload of commercial and defence-related research satellites plunging into the ocean.
The mishap involving the UK’s Cornwall Spaceport forced the company to halt operations and furlough nearly all of its employees in March to conserve cash.
Tony Gingiss, who until Monday was Virgin Orbit’s chief operating officer, apologised in an email to employees and said the company’s leadership should have had more time to keep the company running.
“I’m sorry we didn’t act sooner and avoid surprising you,” he wrote. “I’m sorry that I was not able to convince our leader and board to take a different path to give us more time to figure things out.”
Virgin Orbit was set up to launch small rockets and offer short-notice launches from anywhere, including for tactical military purposes, addressing a need highlighted by the conflict in Ukraine.
But demand for larger launch rockets and more cost-effective shared payload launches into space on SpaceX’s Falcon 9 rocket over the past two years raised the competitive stakes.
Venture investments in space startups have dropped 50% year-on-year in 2022 to US$21.9bil (RM96.3bil), according to Space Capital, as the cost of capital has increased with global interest rate hikes.
“The changing capital markets and higher interest rate environment made obtaining new capital difficult,” Hart said in a court declaration.
He said the company is also experiencing “heavy pricing pressure from well-capitalised competitors in the commercial launch market”.
Two satellite makers that lost high-tech payloads in the failed January launch, the United Kingdom’s Space Forge and Poland’s SatRev, in which Virgin Orbit owns 4%, said they had backup plans for alternative launch vehicles as needed.
Branson’s Virgin Group, which owns roughly 75% of the launch company, said it had invested over US$1bil (RM4.4bil) in the unit, including US$60mil (RM263.8mil) in secured loans since November.
Abu Dhabi’s sovereign wealth fund, Mubadala, is the second-biggest investor with a 17.9% stake.
Virgin Investments, a unit of Virgin Group, will provide US$31.6mil (RM138.9mil) to Virgin Orbit while it looks for a buyer, the companies said.
According to a regulatory filing, the company is retaining about 100 employees to allow operations to resume if it finds a rescuer, according to a regulatory filing. — Reuters
