Virgin Orbit is ceasing operations “for the foreseeable future” after failing to secure a funding lifeline, CEO Dan Hart told employees during an all-hands meeting on Thursday afternoon, and will layoff about 90% of its workforce.
“Unfortunately we’ve not been able to secure the funding to provide a clear path for this company,” Hart said, according to audio of the 5 p.m. CNBC obtained audio of the ET meeting.
Hart gives daily updates to the employees of the company since Monday when Virgin Orbit delayed an all-hands meeting until Thursday. Hart informed staff Monday that late-stage deals had failed to materialize with two investors, although he said they were still having “very dynamic” discussions about investment. These investor talks continued this week with Hart declaring that leadership will share updates as quickly and transparently possible. Hart also noted that leaked emails are against company policy, according to CNBC-recorded copies Hart’s emails on Tuesday and Wednesday.
The company this week has steadily been bringing back more of its over 750 employees from the operational pause and furlough it began on Mar. 15, after initially resuming some work with a “small team” on Mar. 22. Virgin Orbit is currently taking a longer pause to complete its investigation into Virgin Orbit’s mid-flight accident and prepare for its next launch. A Virgin Orbit representative didn’t immediately reply to CNBC’s request for comment.
Virgin Orbit stock closed at 34 cents a share on Thursday, having fallen 82% since the beginning of the year.
Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. the last company mission was stalled because of a problem during launch. The rocket crashed into the ocean and did not reach orbit.
The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to fund the company further.
Virgin Orbit was spun out of Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.
The company hired bankruptcy firms to draw up contingency plans in the event it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company raised $60 million in debt from the investment arm of Virgin Group.
On Hart’s announcement that Virgin Orbit would be suspending operations, the board approved a “golden parachute” severance program for its top executives in the event of a company change.
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