Virgin Orbit pauses operations for a week, furloughs nearly entire staff as it seeks funding
- Virgin Orbit is furloughing nearly all its employees and pausing operations for a week as it looks for a funding lifeline.
- Company executives briefed staff on the situation in an all-hands meeting at 5 p.m. ET on Wednesday.
- The company had $71.2 million in cash on hand at the end of the third quarter, with a $42.9 million adjusted EBITDA loss, and has since raised about $55 million in debt via an arm of Richard Branson's Virgin Group.
Virgin Orbit is furloughing nearly all its employees and pausing operations for a week as it looks for a funding lifeline, people familiar with the matter told CNBC.
Shares of Virgin Orbit fell 30% in trading on Thursday to close at $0.71 a share. The stock has slid steadily from its debut near $10 a share in December 2021.
Company executives briefed staff on the situation in an all-hands meeting at 5 p.m. ET on Wednesday, according to people who were in the meeting. The furlough is unpaid, though employees can cash in PTO, with only a small team continuing to work. Virgin Orbit is also moving up payroll by a week to Friday.
In the all-hands, company leaders told employees that they aimed to provide an update on the furlough and funding situation by next Wednesday or Thursday, according to the people, who asked to remain anonymous to discuss internal matters.
A Virgin Orbit spokesperson, in a statement to CNBC, confirmed that the company is starting an "operational pause." Virgin Orbit plans to give "an update on go-forward operations in the coming weeks," the spokesperson added.
The rocket-building company 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. But the company's last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.
"Our investigation is nearly complete and our next production rocket with the needed modification incorporated is in final stages of integration and test," Virgin Orbit's spokesperson said.
When Virgin Orbit reported third-quarter results in early November, it disclosed cash on hand of $71.2 million as of the end of the quarter. In the face of $30.9 million in revenue, Virgin Orbit reported an adjusted EBITDA loss of $42.9 million for the period as it continued to burn cash.
Since the fourth quarter, the company has steadily brought in funds in the form of debt via an investment arm of Richard Branson's Virgin Group. The company raised $25 million in an unsecured convertible note in November, before raising $20 million and $10 million in senior secured convertible notes in December and February, respectively. The notes give Branson's parent company "first-priority" to Virgin Orbit's assets.
As of Wednesday, the company had yet to announce when it would report fourth-quarter 2022 results.
Earlier this week, Virgin Orbit CEO Dan Hart last-moment canceled a scheduled appearance on a panel during a space industry conference in Washington, D.C. set for Tuesday.
Canaccord Genuity, one of only a few Wall Street firms that had analysts on Virgin Orbit, said in a note to clients on Thursday that it was placing its rating and price target on the company's stock "under review until investors get resolution on the company's financing."