© Reuters. FILE PHOTO: A replica of Virgin Orbit’s LauncherOne rocket stands in a press area ahead of Britain’s first launch at Newquay Airport in Newquay, Britain, January 8, 2023. REUTERS/Henry Nicholls
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By Joey Roulette and Kevin Krolicki
(Reuters) – As Richard Branson’s Virgin Orbit fortunes crashed to Earth last month, a little-known investor named Matthew Brown appeared offering a $200 million ransom.
Within two days of being contacted by Brown, Virgin Orbit CEO Dan Hart had won board endorsement for a preliminary deal with the 33-year-old Texas-based investor, according to related documents and email exchanges. reviewed by Reuters and three knowledgeable people. of the discussions
“We had our board meeting this morning with an agreement to go ahead, so now I have the input I need,” Hart told Brown in a March 21 email seen by Reuters.
In a separate email to staff that day, Hart offered a hopeful note for Virgin Orbit’s 750 workers, most of whom had been furloughed to save cash when the company halted business in early March. In the email, Hart said the Long Beach, California-based company would begin an “incremental restart” of operations.
There would not be a full resumption of operations.
The potential deal with Brown unraveled in less than a week with Virgin Orbit cutting contact and threatening legal action against him if he revealed confidential details about the potential investment, according to the cease-and-desist letter reviewed by Reuters, and the three people , who declined to be named due to the sensitivity of the matter.
Previously unreported details of a deal that was never made provide a window into Virgin Orbit’s failed fight to avoid bankruptcy. The company, which was worth $3.8 billion at the end of 2022 and counted the US military among its top clients, filed for Chapter 11 this week.
Hart, a former Boeing (NYSE:) veteran, did not respond to a request for comment about the conversations with Brown. Virgin Group, which owns 75% of Virgin Orbit, also declined to comment for this article. The group is providing financing to Virgin Orbit as the satellite launch company searches for a bankrupt buyer.
The legal notice was in response to an interview Brown gave on CNBC on March 23 when he said he was in “final discussions” to close on a $200 million investment in Virgin Orbit within 24 hours. The letter from a company attorney said Brown had exaggerated the nature of the conversations and violated a confidentiality agreement.
Virgin Orbit’s stock price rebounded more than 60% the day after Brown’s appearance on CNBC.
The television interview followed a Reuters report saying Brown was close to reaching an agreement for a proposed investment in the company, citing the term sheet signed by Hart and Brown and a planned closing date of March 24.
When the company cut off contact with Brown on March 25, it discovered problems with Brown’s credibility, the three people said. One said executives found evidence that contradicted details Brown had provided about his background.
In interviews with Reuters over the past week, Brown dismissed allegations that he had misrepresented himself. He said Virgin Orbit had not provided the information he wanted before it felt comfortable transferring the $200 million to an escrow account as agreed in the term sheet. Brown did not specify the information he was seeking and Reuters could not independently verify his claim.
“Absolutely, 100%, he had the money,” Brown added.
‘GET LOW BELOW THE RADAR’
Reuters found apparent discrepancies in several key elements of statements made by Brown on CNBC or on LinkedIn about the companies he says he has worked for, his investments and associates.
Brown told Reuters he had no shares in Virgin Orbit and had not benefited from going public with his offer and the brief share price jump that followed. The company’s bankruptcy filing Tuesday showed “Matthew Brown” held 238 shares at the time of filing. Those shares were worth $48 on Thursday.
Brown said the listed investor was a different Matthew Brown.
Reuters was unable to find corporate records for two companies where Brown said on LinkedIn he had been an adviser or partner: Hong Kong-based Hogshead Spouter and Hawaii-based Kona Private Capital.
Brown told Reuters he worked through offshore entities, without elaborating. He said that he didn’t know where Kona and Hogshead were registered.
In his interview with CNBC, Brown said that he had worked with OpenAI. An OpenAI spokesperson said she had never worked with it.
When asked about this, Brown told Reuters he structured deals to protect investor confidentiality with a preference to “stay under the radar.”
At the time of his approach to Virgin Orbit, Brown’s LinkedIn page included an endorsement from Dan McDermott, identified as a former Hogshead Spouter colleague and former Hong Kong Monetary Authority official. The central bank said it had no record of employing McDermott.
Contacted by LinkedIn, McDermott declined to answer questions about his background.
Brown said he had worked for the Woods Family Office, a Houston-based private wealth firm, from 2008 to 2021, starting at age 18 in the role of chief executive managing $6 billion and later as a senior adviser. The family office, whose website identifies Eric Woods as the director, did not respond to a request for comment.
When asked about his company via LinkedIn, Eric Woods said, “I have nothing to say and neither does my family office.” He added: “While Matt is an adviser, we are not affiliated with Matt’s purchase of Virgin, which I assume that is.”
Following a Reuters inquiry to LinkedIn as to whether the Woods and McDermott accounts were genuine, both accounts were removed. LinkedIn declined to discuss the specific cases, but said its policy was to remove accounts it deemed fraudulent.
Brown said he could not speak for the two men or explain why their LinkedIn accounts were suspended. He added that Woods was “a great man and a very successful man” and “from what I remember of Dan, an incredible human being.”
‘CHANGE’
Brown told Reuters he was a producer on a 2009 documentary, “Loose Change,” which suggested the 9/11 attacks were a US government conspiracy.
Korey Rowe and Dylan Avery, partners on the project, said they gave Brown a producing credit when the film was released. Brown had given Avery a camera, Avery told Reuters. Both Rowe and Avery said that Brown failed to pay thousands of dollars in recording studio costs that he had verbally promised, and they cut his credit on later versions of the film.
Brown said that he provided a “reasonable” amount of funding and that his break with the two “came down to a difference in personalities”.
Virgin Orbit filed for bankruptcy on Tuesday. It has never recovered from a botched mission in January that sent a payload of satellites into the ocean.
It was a spectacular fall for a company that British billionaire Branson spun off from his space tourism venture Virgin Galactic in 2017 in hopes of challenging Elon Musk’s SpaceX.
Virgin Group had provided guaranteed loans to the company, but no new capital as the unit’s cash dwindled.