Branson and Virgin Orbit’s creditors raise $36 million in fire sale

Sir Richard Branson’s dream of launching rockets into space from the wings of a converted 747 ended on Monday when rivals snapped up Virgin Orbit’s assets for just over $36 million.

The break-up price is less than 10 percent of the $3.7 billion valuation Virgin Orbit was assigned in December 2021, when the rocket company merged with a special-purpose buyout firm, Spacc, and debuted on the Nasdaq. It’s also a fraction of the $1 billion that Branson’s Virgin Investments claims to have injected into the venture.

Rocket Lab, the fast-growing startup with offices across the street from Virgin Orbit’s Long Beach, Calif., headquarters, has bought the company’s 140,000-square-foot rocket factory and equipment for $16.1 million.

Virgin Orbit’s converted plane, Cosmic Girl, has been sold to Stratolaunch, the company that makes the world’s largest plane, for $17 million, far less than Virgin Orbit’s investment in buying and converting the plane. Stratolaunch is developing technology to test the hypersonic missiles of its Roc aircraft. Before its collapse, Virgin Orbit was exploring similar options for Cosmic Girl.

A third space company, Launcher Inc, which was recently acquired by Vast, a private space station company, bought VO’s launch site and lease in the Mojave Desert for $2.7 million.

Including the sale of laptops and office equipment, the auction raised about $36.5 million for creditors. Branson’s Virgin Investment controlled roughly 75 percent of the company.

While the planes and manufacturing facilities have found buyers, the successful sale of Virgin Orbit’s unique horizontal launch system or the intellectual property behind the half-dozen LauncherOne rockets on the factory floor has not closed, a person with knowledge of the auction said. However, it is not clear whether the missiles can be used on other launch platforms or on the IP without the aircraft.

Virgin Orbit issued a statement Tuesday night confirming the sale and thanking its investors and stakeholders. The group said it was “at the forefront of an emerging commercial launch industry” and “made a lasting contribution to the development of satellite launch in the US and UK”.

“Virgin Orbit’s legacy in the space industry will forever be remembered,” the statement said.

The company laid off most of its workforce and filed for Chapter 11 protection from creditors in April, leaving $700,000 in the bank.

During several months of crisis negotiations with potential investors, it was not possible to secure new financing for the company, which burned nearly 50 million dollars per quarter to enter the fast-growing market.

The auction ends Branson’s five-year effort to tap the sector. Orbit spun off entrepreneur Virgin Galactic’s space tourism venture in 2017 and brought in additional investors including Boeing and the Emirati sovereign wealth fund Mubadala. The bankruptcy filings revealed that the group first sought a sale or new investment in early 2022, weeks after entering the market.

Virgin Orbit hoped to differentiate itself by offering highly flexible and dedicated launch services from anywhere in the world with a suitable runway. Its system carried the LauncherOne rocket to an altitude of 35,000 feet above the Earth, from where the rocket and the rocket satellites were sent into space.

Potential customers included government and military as well as commercial customers. The company announced a contract backlog worth $143 million last year. But the filings make it clear that Virgin has been unable to match competitors’ prices while also increasing the pace of its launch fast enough to generate sustainable revenues. While six launches were planned for last year, only two were realized. Accumulated losses over the life of the company were just over £1 billion, according to filings.