Satellite launch company Virgin Orbit has confirmed it will cease operations "for the foreseeable future" due to a lack of funding. The company will cut about 85% of its workforce following the failure of its most recent launch in January.
Virgin Orbit confirms layoffs
The writing was on the wall for Virgin Orbit after news broke earlier this month that it had paused operations and furloughed staff after funds dried up. As reported by CNBC, CEO Dan Hart confirmed to employees during a town hall meeting on Thursday that the company will cease operations and cut most of its staff after failing to attract last-minute investment.
In a securities filing, the company revealed it was axing around 675 jobs, constituting approximately 85% of its staff in every department, with a bare-bones team of 100 employees remaining. CEO Dan Hart said during the meeting,
"Unfortunately, we’ve not been able to secure the funding to provide a clear path for this company. We have no choice but to implement immediate, dramatic and extremely painful changes. This company, this team — all of you — mean a hell of a lot to me. And I have not, and will not, stop supporting you, whether you’re here on the journey or if you’re elsewhere."
Last-minute deal collapse
The company had an all-hands meeting planned for this Monday but canceled it at the last minute as it pursued further discussions. Before this, one of the frontrunners for investment was Texas-based venture capitalist Matthew Brown, who entered negotiations over a $200 million deal and a controlling stake in the business. These talks and discussions with another unnamed investor had broken down by Sunday.
Virgin Orbit stock closed at $0.34 on Thursday, an 82% drop since the beginning of the year and down from $1.32 in early March. The company has been seeking funding for several months after Virgin Group founder Richard Branson made it clear he was unwilling to invest additional capital after pumping upwards of $55 million into covering its debts.
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What will become of Cosmic Girl?
Virgin Orbit used a former Virgin Atlantic Boeing 747-400 - named 'Cosmic Girl' - to launch rockets into space from altitude. The carrier aircraft would take off and climb to a height of 35,000ft before releasing a LauncherOne rocket containing a payload of satellites.
As it turns out, Richard Branson has priority on Virgin Orbit assets as a 75% stakeholder, so the decision will be his if the company officially folds. The second-largest stakeholder in the company is Emirati sovereign wealth fund Mubadala, which holds an 18% stake.
Branson's Virgin Group will have to foot an estimated $15 million in severance payments and other costs and has already injected $10.9 million to make immediate payments. Departing employees will be taken care of with cash payments, extensions of benefits, and support in finding new jobs, including a "direct pipeline" with Virgin Galactic.
Do you think Virgin Orbit will ever resume operations? Where do you see 'Cosmic Girl' ending up? Let us know in the comments.
Source: CNBC