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Virgin Orbit Fights To Stay Afloat As Negotiations For A Deal Continue

Virgin Orbit Fights To Stay Afloat As Negotiations For A Deal Continue
According to reports, Virgin Orbit is attempting to find a funding lifeline in order to prevent bankruptcy, which could happen as soon as this week if no agreement is reached.
As CNBC first reported, the rocket manufacturer halted operations last week and laid off the majority of its employees while it looked for new funding or a potential acquisition.
Dan Hart, the CEO of Virgin Orbit, and other senior executives met with interested parties every day through the weekend, according to people with knowledge of the situation who asked to remain anonymous in order to speak about internal issues.
Hart stated that the business hoped to provide an update on the situation as soon as Wednesday during an all-hands meeting last week.
Top talent is currently entering the job market: Many of the roughly 750 employees at Virgin Orbit are searching for work elsewhere. According to reports, this talent includes executives, senior and lead engineers, and program managers who are actively looking for and accepting new jobs.
People with direct knowledge of the situation describe a sense of panic as the company struggles to close a deal, even though there is still a chance to avoid bankruptcy. One source claimed that a proposed sale price of nearly $200 million, which was just below the company's market value as of Friday's close, was rejected by a potential buyer.
Meanwhile, according to one source, Virgin Orbit is preparing for a possible bankruptcy filing as soon as this week. According to reports, Virgin Orbit hired two companies, Alvarez & Marsal and Ducera Partners, to create restructuring plans in the event of insolvency. The hiring of the companies was first announced by Sky News.
A representative for Virgin Orbit declined to comment.
Since its operations ceased, Virgin Orbit's shares have fallen steadily; on Monday, they closed at $0.52 per share.
However, the business has had trouble maintaining its cash reserves. In contrast to its sister company Virgin Galactic, which increased its cash reserves to more than $1 billion through stock and debt, it was unable to access the markets for fundraising when it went public in December 2021, near the end of the SPAC craze.
Virgin Orbit wanted to raise $483 million through the SPAC process, but it was only able to raise $228 million, or less than half of its target, as a result of significant redemptions. It was successful in raising funds, and among the donors were Boeing and AE Industrial Partners.
Virgin Orbit has been looking for a financial lifeline for a while. People with knowledge of the situation claim that Branson changed strategies to maintain value rather than continuing to fund the company.
Virgin Orbit has acquired $60 million in debt from the Virgin Group's investment division since the fourth quarter, giving it first dibs on Virgin Orbit's assets. At about the same time, Virgin Orbit hired Goldman Sachs and Bank of America to investigate additional business opportunities, ranging from a sale to a minority investment.
According to sources, Virgin Orbit board member George Mattson has been actively involved in selling the business. Before co-founding NextGen, a SPAC that valued Virgin Orbit at $3.7 billion and brought it public, Mattson worked as a banker for nearly two decades at Goldman Sachs.
In a filing on Monday, Virgin Orbit stated that it had authorized a severance package for its top executives in the event that they were let go "following a change in control" of the business. The plan includes paying base pay and annual bonuses and covers Hart, Chief Strategy Officer Jim Simpson, and Chief Operating Officer Tony Gingiss. Hart would be compensated with cash equal to 200% of his base pay, or $511,008, in the event of termination, per FactSet.

Christopher J. Mitchell

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