Billionaire entrepreneur Richard Branson’s satellite-launching company Virgin Orbit Holdings Inc (NASDAQ:VORB) has announced an 85% workforce reduction after failing to secure funding.
The news comes two weeks after the group, 75%-owned by Branson's Virgin Group, announced a pause on operations in an attempt to shore up finances, with it later reported to be hoping to secure a US$200mln lifesaving investment from Texas-based venture capitalist Matthew Brown.
Net losses in the most recent quarterly update exceeded US$43mln, with US$71mln cash in the bank at the end of the third quarter.
Virgin Orbit estimates that it will incur a further US$15mln (£12.1mln) in costs related to the reduction, comprising US$8.8mln in severance payments and employee benefits, US$6.5mln in “other costs primarily related to outplacement services”, according to SEC filings.
Around 675 employees to be let go in the restructuring, with workforce reductions are expected to be completed by April 3.
"We have no choice but to implement immediate, dramatic and extremely painful changes," Virgin Orbit chief executive Dan Hart told employees, CNBC reported.
Painful few months
Virgin Orbit has not turned a profit since being spun out of Branson’s Virgin Galactic space-tourism venture in 2017.
In January, the group’s LauncherOne satellite launcher failed in its attempt to conduct the first orbital launch from British soil in what Hart called a “painful” mission anomaly, caused when a cheap component became dislodged.
Branson had made a series of top-up fundraisings since the second half of last year, the latest of US$10mln last month by Virgin Group's investment arm via a senior secured convertible note, following a US$25mln cash injection in November and another US$20mln via a secured note in December.
Virgin Orbit reportedly failed to raise external equity capital and exhausted other fundraising options after the December deal saw the company pledge all of its assets to Branson's company as part of the security for the secured note.
*** Additional reporting by Oliver Haill ***