Sir Richard Branson’s Virgin Orbit has collapsed 15 months after the rocket launch company went public with a valuation of $3.7bn.
The group, which debuted on Nasdaq in December 2021 after merging with a so-called blank cheque company, filed for Chapter 11 bankruptcy protection in the US state of Delaware on Tuesday morning.
Weeks of crisis talks with potential investors had failed to secure new funding for Virgin Orbit, which has been burning close to $50mn a quarter in its race to snare a share of the rapidly growing launch market.
Last week, some 85 per cent of the group’s staff were laid off as chief executive Dan Hart admitted that the business had “ceased operations for the foreseeable future”.
Virgin Orbit shares have tumbled since the beginning of the year, from $1.79 to close at $0.19 in New York on Monday, valuing the company at just $65mn.
Now the process of finding a buyer for its horizontal satellite launch system, based on a converted 747 superjumbo aircraft, will continue under the protection of the court. If none is found the business will be wound down.
Virgin Orbit said in a statement it would receive $31.6mn in debtor-in-possession financing from Branson’s Virgin Investments to provide it with the necessary liquidity to continue operating as it tried to sell the company.
“The Chapter 11 process represents the best path forward to identify and finalise an efficient and value-maximising sale,” said Hart.
“We believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers.”
The filing comes after a five-year effort to tap into the space launch market. Orbit was spun off in 2017 from Branson’s space tourism business Virgin Galactic and brought in other investors including Boeing and the Emirati sovereign wealth fund Mubadala.
Investors had been enticed by predictions of a multibillion-dollar opportunity in space launch. Euroconsult, the space data analysts, expect some 1,700 satellites to be launched every year to 2030, with growth particularly strong in smaller satellites flying in low earth orbit. This region of space is increasingly key to communications, earth observation and security.
Elon Musk has revolutionised access to space with SpaceX’s reusable Falcon rocket, which offers satellite operators cut price access to space, often through ride shares with spacecraft being sent into orbit for his own Starlink constellation.
Virgin Orbit had hoped to differentiate itself by offering highly flexible and dedicated launch services from anywhere in the world with a suitable runway. The air launch system used a converted 747 superjumbo, acquired from Virgin Atlantic, to carry its LauncherOne rocket to an altitude of 35,000ft above the earth. There the rocket is released to carry satellites into space. Potential customers included government and military, as well as commercial customers. The company last year declared a backlog of contracts valued at $143.1mn,
However, Virgin struggled to increase the pace of launches quickly enough to generate sustainable revenues, analysts have said.
The company had been cash-strapped for a year, having raised roughly half of what it had planned in its flotation via a special purpose acquisition vehicle in 2021.
The failure of a planned launch from the UK in January exacerbated the cash crunch. It forced planned launches elsewhere to be delayed as an investigation was carried out. A faulty $100 filter was eventually identified as the cause. But just weeks before US authorities were due to certify Orbit’s rocket to fly again, Virgin announced it would suspend operations for a week to conserve cash.
The collapse comes after the group flew six missions, four of which successfully placed satellites into orbit. Branson has invested more than $1bn in equity and debt in the company, including $60mn since November.
In a regulatory filing on Monday night, explaining the late filing of its 2022 annual report, Virgin Orbit said it had not generated enough cash to finance its operations and may not be able to raise sufficient capital to do so. It said it expected to report roughly $33.1mn in revenue and a net loss of about $191mn.
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