Virgin Orbit files for Chapter 11 protection in a last ditch effort to find a buyer
Eleventh-hour talks with a Texas investor broke down last monthBy Cal Jeffrey
Ouch! Struggling rocket firm Virgin Orbit is all but finished. Its parent company hasn't yet stuck a fork in it yet as it seeks an out under Chapter 11 protection. However, buyers are staying away from the failing company. Richard Branson says even he doesn't want the Virgin Galactic spinoff anymore. The only certainty is that if it does survive bankruptcy, it will be under different ownership.
Virgin Orbit's insolvency woes solidified as it filed for Chapter 11 bankruptcy protection this week. The move comes after financial struggles culminating in an expensive failed launch that lost nine satellites. The aborted mission resulted in the company halting operations and furloughing most of its staff last month.
Virgin's space spinoff struggled practically from its inception in 2015. Virgin Orbit launched its first successful mission in 2021 after several years of slow development. Since then, it has only had four other commercial flights---three successful and one aborted. Even without the failed launch, The company was not launching enough commercial missions to hit its breakeven point.
Virgin Orbit to Continue Sale Process Under Chapter 11 Protection. Read more: https://t.co/MhsPTxqUQF pic.twitter.com/xOMMXEC0oK--- Virgin Orbit (@VirginOrbit) April 4, 2023
Hemorrhaging money, the company attempted to raise $438 million through a SPAC (special purpose acquisition company) merger. However, that venture only resulted in $228 million. Since its 2021 initial public offering, its market value has tumbled from $3.1 billion to just over $200 million. Financial Times analysts expect the company to report only around $33.1 million in revenue, with a $191 million figure in the loss column for the fiscal year 2022.
According to CNBC, Sir Richard Branson wants nothing to do with the company anymore, and parent company Virgin Group is desperately trying to find a buyer. Since shuttering operations last month, the company has scrambled to find investors to bail it out. At one point, it was in talks with Texas investor Matthew Brown to take a majority stake in the company for $200 million, but the talks broke down, and Brown backed out.
Chapter 11 protection puts creditors on hold while the company continues to operate and plans a reorganization or seeks additional funding. Virgin Group can still offload the company if it can find a buyer. Otherwise, the firm will shutter for good. Its prospects do not look good, considering that Brown would not buy the company even at a $27 million discount.