On Thursday, Virgin Orbit Holdings, a company that manufactures rockets, announced that it will be letting go of roughly 85% of its employees due to the inability to secure new investments.
Following the announcement, the company’s shares, which are owned by Richard Branson’s Virgin Group, plummeted by 38% in after-hours trading.
As stated in a regulatory filing, Virgin Orbit estimates that approximately 675 employees will be impacted by the layoffs, resulting in charges of around $15 million.
The decision to downsize was a consequence of “the company’s failure to secure substantial funding.”
Virgin Orbit went public in 2021 via a blank-check merger and raised $255 million, which was less than the anticipated amount. The company faced additional challenges following a rocket launch failure in January, which added to the mounting pressure.
According to two individuals familiar with the matter who requested anonymity, discussions between Virgin Orbit and Matthew Brown from Texas regarding a $200 million investment broke down last Monday.
After Matthew Brown’s appearance on CNBC, Virgin Orbit released a statement acknowledging his remarks and stated that it was in talks with potential investors.
According to filings with securities regulators, Branson’s Virgin Group has provided $50 million in financing to the satellite launch company since November. This financing is secured against the company’s equipment and other assets to safeguard against bankruptcy.
In an effort to secure a financial lifeline and concentrate on enhancing its rocket design, Virgin Orbit furloughed almost all of its 750 employees on March 15. A representative referred to this as an “operational pause.” However, a small team of workers resumed work on March 23, as per an email sent to the staff, to concentrate on rocket engine development.
