The news of halted operations, failed financing and job cuts did not sit well with shareholders, as Virgin Orbit saw its shares drop 50% after the announcement.
Aeronautical engineering firm Virgin Orbit Holdings Inc (NASDAQ: VORB) has revealed plans to halt operations after failing to secure a funding lifeline as expected. Company CEO Dan Hart relayed the unfortunate news to employees on Thursday, adding that there would be a mass layoff. Before the move to halt operations, word on the street was that Virgin Orbit was expecting a $200 million investment from venture capital investor Matthew Brown. Reuter cited a term sheet showing the company was about to close a deal with the investor through a private placement of shares.
Virgin Orbit moves to halt operations amid financial crisis
The news broke while Virgin Orbit was on the brink of bankruptcy. Thus, the expected capital was crucial to the company’s survival as it is in its biggest financial mess since its inception. The firm posted a loss of nearly $44 million in the third quarter. During the same period, its cash reserve plummeted from $122 million to $71 million. In addition to the expected investment from Brown, there were rumors that Virgin Orbit was in discussions with two restructuring companies to obtain financing. These firms are Ducera and Alvarez & Marsal (A&M).
However, all efforts to secure a funding lifeline have turned out to be a miscarriage for Virgin Orbit, which has resorted to halting all operations. The CEO revealed that the company was unable to secure financing that would have provided “a clear path” out of the current financial situation. During a meeting of all, he explained that Virgin Orbit has no choice but to stop operations and “implement immediate, dramatic and extremely painful changes.”
As a result of the “painful changes,” Virgin Orbit is laying off almost all of its workers. The company will lay off all but 100 positions. The company said in a statement that the layoff would affect 675 positions, or about 85%. With concern in his voice, Hart said:
“This company, this team, all of you, mean the world to me. And I have not stopped and will not stop supporting you, whether you are here on the trip or whether you are elsewhere.
Virgin Orbit shares
News of halted operations, failed financing and job cuts did not sit well with shareholders, with Virgin Orbit seeing its shares drop 50% after the announcement. The company’s shares are currently trading at $0.17. The aeronautical engineering company has lost more than 95% in the last twelve months.
To support the workers who are leaving while it halts operations, Virgin Orbit is promising severance packages. At the same time, the CEO said that there would be a cash payment and an extension of benefits. Hart mentioned providing a “direct channel” with sister company Virgin Galactic (NYSE: SPCE) to help victims of job cuts find new positions.
next
Ibukun is a crypto/finance writer interested in conveying relevant information, using non-complex words to reach all kinds of audiences. In addition to writing, he enjoys watching movies, cooking, and exploring restaurants in the city of Lagos, where he resides.
Subscribe to our telegram channel.
Join
