Richard Branson has put another $5 million into Virgin Orbit (NAS: VORB) this week, raising to $60 million the amount the billionaire has put into the struggling launch provider over the past four months.
Branson’s company, Virgin Investments Ltd. (VIL), made the investment in the form of a “senior secured convertible note…which is convertible into shares of the Company’s common stock or other Qualified Securities.” The note has an interest rate of 12% — 16% in the event of a default — and a maturity date of Nov. 4, 2024.
Investments in Virgin Orbit
by Virgin Investments Ltd.
| Date | Amount (Millions) | Interest Rate | Interest Rate (Default) | Maturity Date |
|---|---|---|---|---|
| 11/4/22 | $25 | 6% | 10% | 11/4/24 |
| 12/19/22 | $20 | 6% | 10% | 11/4/24 |
| 1/30/23 | $10 | 12% | 16% | 11/4/24 |
| 3/3/23 | $5 | 12% | 16% | 11/4/24 |
In the event of a default, VIL has the right to foreclose on “substantially all of their respective assets, including all aircrafts, aircraft engines (including spare aircraft parts) and related assets, other than certain customary excluded assets and permitted liens described in the Convertible Note.”
The provision applies to all $60 million that VIL has provided to the company since Nov. 4, 2022. Nineteen days after the first cash infusion, Virgin Orbit announced it has abandoned plans to sell additional stock to the public “due to current market conditions.”
Virgin Orbit has struggled to ramp up flights of its LauncherOne booster while dealing with dwindling cash reserves. Virgin Orbit’s cash and cash equivalents dwindled from $194.2 million at the end of 2021 to $71.2 million at the end of the third quarter on Sept. 30.
VIL’s $25 million investment in November came three days prior to reporting third quarter revenue of $30.9 million and a net loss of $43.6 million. The company’s net loss was $139.5 million, for a monthly average of $15.5 million, for the first nine months of 2022.
Virgin Orbit conducted a total of only four launches in 2021 and 2022. The company’s most recent launch from Spaceport Cornwall in England failed in early January, destroying nine satellites and leaving LauncherOne grounded until an investigation is completed and modifications made. Virgin Orbit said the booster failed after a propellant filter broke loose.
It was the second failure in six flights for the air-launched rocket. The first failure occurred on the maiden launch with no satellite aboard on May 25, 2020.
Investors will get a better picture of Virgin Orbit’s finances when the company releases its fourth quarter and full year results. The company has not announced a date for the release.
Virgin Orbit began trading on Nasdaq at the end of 2021 after merging with a special purpose acquisition company (SPAC) named NextGen Acquisition Corp. II. A SPAC is a “blank check” company that is already publicly traded; the investment vehicle’s only purpose is find a company to take public under its own name. A SPAC typically has two years to complete a merger or to return investors’ money. Investors can ask for their money back if they don’t like an approved merger deal.
Virgin Orbit and NextGen had planned to raise $483 million, with $383 million coming from SPAC investors and $100 million from outsiders. The total amount raised was only $228 million. Only $68 million came from the SPAC, indicating that many SPAC investors likely asked for their money back rather than own shares in in Virgin Orbit.
The Virgin Group and Mubadala Investment Co. invested an additional $60 million to raise the amount provided by outsiders to $160 million. Mubadala is the sovereign wealth fund of the Abu Dhabi government and a co-owner of Virgin Orbit.
Virgin Orbit went public near the end of a wave of space SPACs that kicked off three years ago by its sister company, Virgin Galactic (NYS: SPCE). Branson’s space tourism company began trading on the New York Stock Exchange on Oct. 28, 2019, after merging with a SPAC run by Silicon Valley billionaire Chamath Palihapitiya.
