Virgin Orbit will cease operations “for theforeseeable future” after it failed to secure funding. CEO Dan Hart informed employees at an all-hands meeting Thursday afternoon that about 90% of its workforce would be laid off.
Hart stated that “Unfortunately, we have not been able secure the financing to provide a clear pathway for this company,” according to audio from the 5 p.m. meeting. CNBC obtained audio of the ET meeting.
Hart has been updating the company’s employees daily since Monday, after Virgin Orbit delayed its scheduled all-hands meeting for Thursday. Hart informed staff that late-stage talks with two investors had failed over the weekend but that they were still continuing to discuss investment opportunities.
These investor talks continued this week, with Hart stating that leadership would share any updates “as fast and transparently as possible,” noting the fact that leaking emails is against company policy. According to CNBC’s copies of Hart’s emails from Tuesday through Wednesday, Hart was quoted in an interview.
This week, the company has been steadily bringing back more than 750 employees from its operational pause and furlough that began on March 15. After initially restarting some work with a “small group” on February 22, Virgin Orbit is working on finishing its investigation into the midflight failure of its previous launch and preparing for its next one.
CNBC reached out to Virgin Orbit for comment but a representative of Virgin Orbit did not respond immediately.
Virgin Orbit stock closed Thursday at 34c/share, down 82% since the start of the year.
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Virgin Orbit created a system using a modified 747 jet. The rocket is dropped from the underside of the aircraft’s wings mid-flight to launch satellites into space. The company’s previous mission was halted by an issue in the launch, which caused the rocket not to reach orbit and crashed into the ocean.
The company is looking for new funds for several months . However, the majority owner Sir Richard Branson is unable to finance the company further.
Virgin Orbit, which was created from Branson’s Virgin Galactic in 2017, is the largest stakeholder. It has 75% ownership. The Emirati sovereign wealth funds Mubadala and Mubadala hold the second-largest stakes in Virgin Orbit at 18%.
In the event that it fails to find an investor or buyer, the company employed bankruptcy firms to prepare contingency plans. Virgin Orbit’s assets are in the hands of Branson, who has priority over Virgin Orbit. Virgin Group raised $60 million through its investment arm.
Hart informed employees that Virgin Orbit had halted operations on Monday. The board of directors also approved a “golden parachut” severance program for top executives in the event that they were fired “following a change of control” at the company.
