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Virgin Orbit will cease operations “for the foreseeable future” after failing to secure a lifetime funding path, CEO Dan Hart told employees during a general meeting on Thursday afternoon, and will lay off about 90% of its workforce.
“Unfortunately, we weren’t able to secure the funding to provide a clear path for this company,” Hart said, according to an audio recording of the 5:00 pm ET meeting obtained by CNBC.
Hart has been briefing employees daily on the news since Monday, when Virgin Orbit postponed a scheduled general meeting to Thursday at the last minute. Negotiations for a late-stage deal with a pair of investors fell through over the weekend, but Hart told staff on Monday that “very dynamic” investment discussions were underway.
Those discussions with investors continued this week, with Hart saying management will share any updates “as quickly and transparently as possible,” noting that the leaked emails are “against company policy,” according to copies of Hart’s Tuesday and Wednesday emails obtained by CNBC. .
This week, the company has been steadily returning more than 750 of its employees from an operational pause and leave that began on March 15, after initially resuming some “small team” work on March 22. Amid a wider pause, Virgin Orbit is working to complete the investigation into the failure of the previous mid-flight launch, as well as preparing the next rocket.
A spokesperson for Virgin Orbit did not immediately respond to a CNBC request for comment.
Shares of Virgin Orbit closed at 34 cents a share on Thursday, down 82% year-to-date.
Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the plane’s wing mid-flight. But the company’s latest mission failed mid-flight due to a problem during launch that caused the rocket to fail into orbit and crash into the ocean.
The company had been looking for new funds for several months and the majority owner, Sir Richard Branson, was unwilling to fund the company any further.
Virgin Orbit was spun off from Branson’s Virgin Galactic in 2017 and considers the billionaire its largest shareholder with a 75% stake. Mubadala, the Emirates sovereign wealth fund, holds the second largest stake in Virgin Orbit, with an 18% stake.
The company has hired bankruptcy firms to draw up contingency plans in case it can’t find a buyer or investor. Branson has priority over Virgin Orbit’s assets as the company has raised $60 million in debt from Virgin Group’s investment arm.
The same day that Hart told employees that Virgin Orbit was suspending operations, its board of directors approved a plan to lay off the “golden parachute” for top managers in case they were fired “after a change in control” of the company.
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