Virgin Orbit is on the brink of collapse after the ailing rocket launch company said it would lay off 85 per cent of its employees and cessation of operations.
Sir Richard Branson was forced to inject $11 million into the satellite launch company after the company was unable to raise funds from other sources.
The cash injection will fund the layoffs of 675 employees and the remaining employees will work to run the business.
Sir Richard’s loan gives the billionaire the rights to the company’s Boeing 747 aircraft and other assets if it goes bankrupt.
Chief Executive Dan Hart told employees the company had “no choice but to make changes that were immediate, dramatic and extremely painful,” CNBC reported.
Financing negotiations with a potential buyer, Matthew Brown, broke down last weekend.
Mr. Hart is making final efforts to secure a bailout deal, according to the Financial Times.
It marks a quick breakup for the company, which made a high-profile – albeit ultimately unsuccessful – start from Cornwall in January. The failure caused the company’s share price to plummet.
Virgo Orbit Temporarily suspended operations earlier this month while seeking additional capital.
Shares in US-listed Virgin Orbit, once worth $3 billion, plunged 44 percent in US aftermarket trading to trade at less than $100 million.
Virgin Orbit officially began as a spin-off of Virgin Galactic in 2017 before going public in 2021 through a combination with a blank check company.
It aimed to launch small satellites into orbit, unlike Virgin Galactic’s focus on sending humans to the edge of space and back.
But two of Orbit’s six missions, mostly from the Mojave Desert in the US, failed.
His last attempt from the UK ended in disaster after the rocket suffered an anomaly and its satellites fell into the sea.
The company — part of Branson’s empire that also includes airline Virgin Atlantic and space company Virgin Galactic — has not turned a profit as a public company.
With Virgin Orbit on the brink of collapse, Britain’s space ambitions have been thrown into question. The space company had planned up to 17 launches from the UK from a missile port in Cornwall over the next decade.
The company had received around £9.5million in tax money from the British Space Agency for the failed mission in January.
The Long Beach, California-based company is one of several space-related startups whose shares have plummeted as investors balk at untested business models and loss-making deals.
Astra Space reported Thursday that its cash and cash equivalent reserves fell 32 percent in the final quarter of last year.
Rocket Lab USA announced last month that its quarterly loss will be three times what analysts were estimating.
Source : finance.yahoo.com