Virgin Orbit has failed to secure financing, and will cease operations and make layoffs

Virgin Orbit CEO Virgin Orbit has suspended operations “for the foreseeable future” after failing to secure a financing lifeline, CEO Dan Hart told employees during a comprehensive meeting Thursday afternoon. The company will lay off nearly all of its workforce.

“Unfortunately, we were unable to secure funding to provide a clear path for this company,” Hart said, according to audio recordings of the 5 p.m. ET meeting obtained by CNBC.

“We have no choice but to implement immediate, dramatic and very painful changes,” Hart said, choking audibly during the call. He added that this would be “probably the hardest hands we’ve ever done in my life”.

Hart said that the company will cut all but 100 jobs, which is equivalent to about 90% of the workforce, noting that the layoffs will affect every team and every department. in Securities depositThe company said layoffs accounted for 675 jobs, or roughly 85%.

Hart said.

Hart said Virgin Orbit will “provide a severance package for every departing employee”, with a cash payment, benefits extension and support in finding a new job – with a “direct pipeline” established with sister company Virgin Galactic staffing.

Hart has given company staff brief daily updates since Monday, when Virgin Orbit last-minute delayed a scheduled all-hands meeting. Late-stage deal talks with two investors fell through over the weekend, but Hart told staff Monday that “very dynamic” investment discussions are continuing.

Those discussions with investors continued this week — with Hart earlier saying leadership would share any updates “as quickly and transparently as possible,” noting that leaking emails “contradicts company policy,” according to transcripts of Hart’s emails from Yumi. Tuesday and Wednesday obtained by CNBC. .

This week the company has been continually bringing back more of its employees from operational hiatus and furlough that began March 15th. She initially resumed some work with a “small team” on 22 March. She is working to finish her investigation into the mid-flight failure of her previous launch, as well as finish preparations for her next rocket.

Shareholders sold out of shares in extended trading Thursday, with shares selling more than 40% after the announcement. Virgin Orbit stock closed at 34 cents a share at the end of the regular session, after falling 82% since the start of the year.

A Virgin Orbit representative did not immediately respond to CNBC’s request for comment.

Virgin Orbit has developed a system that uses a modified 747 to send satellites into space by dropping a rocket from under the plane’s wing mid-flight. But the company’s latest mission suffered a mid-flight failure, with a problem during launch causing the rocket to fail to reach orbit and crash into the ocean.

The company was among the few US rocket companies to successfully reach orbit with a specially developed launch vehicle. It has launched six missions since 2020, with four successes and two failures.

It had been looking for new money for several months, with majority owner Sir Richard Branson unwilling to fund the company further.

Virgin Orbit was launched from Branson’s Virgin Galactic in 2017 and is its billionaire largest shareholder, with a 75% ownership interest. The UAE’s sovereign wealth fund Mubadala owns the second-largest stake in Virgin Orbit, with an 18% stake.

The company has previously hired bankruptcy firms to create contingency plans in the event that it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company has raised $60 million in debt from Virgin Group’s investment arm.

On the same day that Hart informed employees that Virgin Orbit was pausing operations, its board of directors approved a “golden parachute” termination plan for its top executives, should they be terminated “following a change in control” of the company.