Exclusive-Virgin Orbit near deal to raise $200 million from Matthew Brown - term sheet

FILE PHOTO: A replica model of Virgin Orbit's LauncherOne rocket sits in a media area ahead of UK's First launch at Newquay Airport in Newquay, Britain, January 8, 2023. REUTERS/Henry Nicholls/File Photo

WASHINGTON (Reuters) - Billionaire Richard Branson's cash-strapped Virgin Orbit Holdings Inc is nearing a deal for a $200-million investment from Texas-based venture capital investor Matthew Brown via a private share placement, according to a term sheet seen by Reuters.

The space startup did not comment on the likely deal, but said on Wednesday it would resume operations on March 23 and prepare for its next mission by recalling some of its employees, sending its shares up 60% in premarket trading.

Matthew Brown Companies did not immediately respond to a request for comment.

A deal would be a boost of confidence for the satellite launch company that has been grappling with dwindling cash and mounting losses in recent quarters in a highly competitive market.

Virgin Orbit's market capitalization slumped to a record low of $150 million on Tuesday from more than $3 billion two years ago when it went public through a blank-check deal.

In January, its rocket LauncherOne failed a mission to deploy nine small satellites into lower Earth orbit due to an anomaly during its flight through space.

The company, which received about $35 million of capital injections from Branson's Virgin Investments in recent months, said last week it was exploring options and was in talks for fresh funding.

Virgin Orbit and Matthew Brown are aiming to close the deal on Friday, according to the term sheet, which is not binding and remains subject to final agreement.

Virgin Orbit's board agreed to move forward with the deal at a meeting held on Tuesday, according to a person with direct knowledge of the matter.

Under the deal, Matthew Brown will be entitled to convert his $200 million investment in Virgin Orbit's preferred shares into common shares at the volume weighted average price in the 30 days before the deal is signed.

The converted shares will possess the same voting rights as the common stock. Virgin Investments is currently the largest shareholder with a stake of nearly 75%.

The company booked a loss of nearly $44 million for the third quarter and had cash reserves of about $71, a sharp drop from $122 million as of June-end. It has yet to announce a date for its fourth-quarter results.

Virgin Orbit's statement on workforce confirmed an earlier Reuters report that said it plans to recall a small team from furlough for rocket upgrades. The company said more employees will be back to work on March 27.

(Reporting by Joey Roulette; Writing by Miyoung Kim; Additional reporting by Tiyashi Datta; Editing by Jamie Freed, Louise Heavens and Arun Koyyur)

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