If funding cannot be obtained, Virgin Orbit will stop operations and fire nearly all of its employees.
After failing to find a funding lifeline, Virgin Orbit will cease operations “for the foreseeable future,” CEO Dan Hart announced during an all-hands meeting on Thursday. Nearly all of the company’s employees will be let go.
According to the audio of the 5 p.m. meeting, Hart stated, “Unfortunately, we haven’t been able to get the capital to offer a clear route for this company.’
Hart, who was visibly choked up on the conversation, stated, “We have no choice but to implement immediate, substantial, and extraordinarily painful adjustments. The “probably hardest all-hands that we’ve ever done in my life,” he continued.
90% Of Staff To Go
According to Hart, the corporation will cut all but 100 roles, or nearly 90% of the staff, stating that every team and department will be affected. The company stated in a securities filing that 675 positions, or around 85%, were eliminated.
“This business, this group of people, all of you, mean the world to me. And whether you are here on the path or elsewhere, I have not stopped supporting you and I never will.
With a “direct pipeline” established with sister business Virgin Galactic, Hart stated that Virgin Orbit will “provide a severance package for every departing” employee, including a cash payment, extension of benefits, and assistance in locating a new job.
Since Monday, when Virgin Orbit abruptly postponed a planned all-hands meeting, Hart has been providing the company’s staff with quick daily updates. Hart informed colleagues on Monday that “very dynamic” investment discussions were still going on despite the fact that late-stage transaction negotiations with two investors had failed over the weekend.
According to copies of Hart’s emails from Tuesday and Wednesday that were obtained by CNBC, those investor negotiations continued this week. Hart had earlier stated that management will publish any changes “as quickly and transparently as we can,” stressing that email leaks “are against company policy.”
More staff have been gradually returning to work this week as a result of the company’s operational standstill and furlough, which it started on March 15. A week later, it first started working again with a “small team.” In the midst of the general standstill, Virgin Orbit has been working to complete both the preparations for its upcoming rocket and its study into the mid-flight failure of its last launch.
After the disclosure, shareholders sold off the company in extended trading on Thursday, with shares falling more than 40%. At the end of the regular trading session, Virgin Orbit stock had dropped 82% to settle at 34 cents per share.
Virgin Orbit created a system that launches rockets from under the wing of a modified 747 jet in midflight to launch satellites into orbit. The company’s most recent mission, however, was aborted midflight due to a launch-related problem, which prevented the rocket from reaching orbit and ultimately caused it to fall into the sea.
The business was one of just a handful of American rocket businesses to use a privately constructed launch vehicle to successfully enter orbit. Since 2020, it has launched six missions, with four being successful and two being unsuccessful.
Since majority owner Sir Richard Branson has refused to continue funding the business, it has been searching for new funding for a number of months.
Branson owns 75% of Virgin Orbit, which was created in 2017 as a spinoff of the billionaire’s Virgin Galactic company. The second-largest interest is held by Mubadala, the Emirati sovereign wealth fund, with 18% of the total.
In the past, the corporation employed bankruptcy law firms to create backup plans in case it couldn’t find a buyer or investor. The fact that Virgin Orbit borrowed $60 million from Virgin Group’s investment arm means that Branson has first preference on all of the company’s assets.
The board of directors of Virgin Orbit approved a “golden parachute” severance plan for top executives on the same day that Hart informed staff that the company was stopping operations. This was done in case these executives were fired “following a change in control” of the business.