Sir Richard Branson’s satellite launch group Virgin Orbit preparing insolvency plans,
Satellite launch company Virgin Orbit is working on contingency plans to file for insolvency should it fail to raise new funding, according to reports.
Sky News reported that restructuring firms Alvarez & Marsal and Ducera are working with Virgin Orbit on contingency arrangements in the event it fails to raise the necessary capital.
Virgin Orbit paused all operations last Thursday as the cash-strapped firm attempted to shore up its finances in the wake of a disastrous failed launch attempt from Cornwall two months ago.
Sir Richard Branson’s Virgin Group, the holder of a 75 per cent stake, has ploughed approximately $1billion (£818billion) into the business since it was founded, including £49million since November.
Emirati sovereign wealth fund Mubadala is the other major shareholder in Virgin Orbit.
But the combined investments have not been enough to prevent major liquidity problems from arising.
The details of the proposed insolvency are being thrashed out in the US, and Boeing, which had also previously invested in the firm, was not part of any talks, according to Sky.
Virgin Orbit announced last Thursday that it had halted operations and furloughed virtually all staff members while it searched for a cash lifeline, causing a 30 per cent slump in its share price.
Founded as a spin-off from Virgin Galactic in 2017, its finances have suffered since it underwent a special acquisition vehicle merger with NextGen Acquisition Corporation in late December 2021.
Virgin Orbit had predicted the SPAC would raise up to $383million, but only raised $228million in total.
Valued at around $3.7billion at the time of the SPAC, the California-headquartered business now has a market capitalisation of just $217.1million.
Problems were then heightened in January following the failure of its LauncherOne rocket to gain orbit after taking off from Spaceport Cornwall, thereby disrupting plans to expand its mobile launch system on a more global basis.
The company blamed the disaster on a fuel filter dislodging, resulting in the rocket’s engine overheating and other components malfunctioning.
Chief executive Dan Hart said the next launch would happen at the Mojave Air and Space Port in California, where Virgin Orbit had conducted previous launches.
It was from the Mojave site in January 2021 that a Boeing 747 aircraft called Cosmic Girl took off while carrying LauncherOne on the way to the rocket becoming the firm’s first vehicle to successfully reach orbit.
The rocket carried ten CubeSats – miniature satellites – as part of the US National Aeronautics and Space Administration’s Educational Launch of Nanosatellites mission.
Virgin Orbit shares had dived 22.2 per cent to $0.50 on the Nasdaq Stock Exchange at around 4:30pm GMT on Monday, meaning they have lost over 90 per cent of their value this year.
