Richard Branson’s Satellite Launch Company Isn’t Doing So Hot

Richard Branson, Founder and Owner of Virgin Group, during Virgin Orbit's Tubular Bells: Part One mission on June 30, 2021.

Richard Branson, Founder and Owner of Virgin Group, during Virgin Orbit’s Tubular Bells: Part One mission on June 30, 2021.
photo: Virgo Orbit

Virgin Investments Limited has pumped $55 million into Virgin Orbit since November last year, which is a worrying sign for the fledgling satellite launch company.

Liquidity issues, an excruciatingly slow launch rate, and a botched satellite delivery in January — these are some of our not-so-favorite things when it comes to Virgin Orbit these days. The Richard Branson-owned company is struggling, and based on recent developments, it appears to be struggling rather hard.

U.S.-based Virgin Orbit has received a $10 million senior secured convertible bond from Virgin Investments Limited (VIL), the investment arm of Branson’s Virgin Group, according to a filing with the U.S. Securities and Exchange Commission on Feb. 1 described. Funds from the loan, effective January 30, will be used by Virgin Orbit for working capital. This brings the total to $55 million that VIL has donated to Virgin Galactic over the past three months.

LauncherOne deployment from the Cosmic Girl plane.

LauncherOne deployment from the Cosmic Girl plane.
photo: Virgo Orbit

Not to be confused with Virgin Galactic, Virgin Orbit is in the business of launching small payloads into low Earth orbit, which it does using a modified Boeing 747 aircraft by the name Cosmic Girl and his LauncherOne rocket. Virgin Galactic, also part of Branson’s Virgin Group, uses spaceplanes to carry space tourists on suborbital flights. Virgin Galactic had its own problemsbut flights are from the commercial space company set to resume sometime in the second quarter of 2023.

The newly purchased senior secured convertible bond has an annual interest rate of 12% and a maturity date set for November 24, 2024. I’m no financial expert, but 12% interest is a lot. The debenture is contingently convertible into Virgin Orbit shares and, importantly, VIL is granted “a first security interest in substantially all” of Virgin Orbit’s respective assets, “including all aircraft, aircraft engines (including aircraft spare parts) and related assets” , according to the SEC filing. So if Virgin Orbit is forced to file for bankruptcy, Branson gets the prerogatives of all of those things — including Cosmic Girl—before other creditors.

The $10 million injection will now be applied to VIL’s other recent investments: a $25 million Convertible Senior Unsecured Notes published on 4.11 and a $20 million senior secured convertible notes from 19.12, both at 6% interest. The latter debt, which is secured, also grants Branson first rights to Virgin Orbit’s assets.

The launch provider had cash-strapped for the past few months, with Parabolic Arc reporting that Virgin Orbit’s net loss through September averaged $15.5 million per month, meaning the $10 million injection will be gone in a matter of weeks. The company ended Q3 2022 with $71 million in cash, but even with the most recent loan, “the current loss rate could put the company at risk of running out of cash as early as Q2 unless it can make additional ones.” Secure funds,” SpaceNews reported. We’ll hear more about Virgin Orbit’s financial position in late March when the company does so expected to publish its results for the fourth quarter of 2022.

Virgin Orbit’s performance so far hasn’t been outstanding. Founded by Branson in 2017, the company has only launched five products since then go into operation in January 2021, the most recent of which, the Start me Mission failed after 30 minutes, thwarting the first attempt at an orbital launch from British soil. LauncherOne is now on the ground for an investigation.

More about this story: Virgin Orbit rocket crashes during first UK orbital launch attempt

The company’s financial woes and troubled track record will worry the Luxembourg Defense Directorate, which recently signed an agreement agreement with the company. Luxemburg and its partners hope to use the LauncherOne system to extend NATO’s reach into space.

More: SpaceX claimed Starlink was available in Africa last year, but it just arrived Richard Branson’s Satellite Launch Company Isn’t Doing So Hot

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