Shares of Virgin Orbit Holdings Inc. fell sharply on Tuesday after the rocket launch provider said it has filed for Chapter 11 bankruptcy and will be looking for a buyer.
Virgin Orbit stock
VORB,
slid 24% in premarket trading, with shares set to add to an already 89.5% loss so far this year. In a statement, the company said it had filed in Delaware and will use the process to “maximize value for its business and assets” as it seeks a sale.
The company that is majority owned by Richard Branson’s Virgin Group said it has received a commitment from venture capital conglomerate Virgin Investments Limited for $31.6 million in new money debtor-in-possession financing to continue operating and find a buyer, once it gets approval from the bankruptcy court.
“We believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers as we continue in the process to sell the Company. At this stage, we believe that the Chapter 11 process represents the best path forward to identify and finalize an efficient and value-maximizing sale,” Dan Hart, CEO of Virgin Orbit, said in a statement.
The announcement comes after Virgin Orbit said last week that it would lay off around 85% of the company’s workforce, as it was unable to secure funding following a failed rocket launch in January. The satellite-launching spinoff of Sir Richard Branson’s Virgin Galactic Holdings Inc. went public via a SPAC merger in December 2021, but shares have struggled, with 2022 also a big losing year as the stock dropped 76%.
Shares of Virgin Galactic
SPCE,
were also seeing some pressure from the news, dropping 1.2% in premarket trading. Branson is the largest shareholder for both companies, according to FactSet data, and is also chairman of Virgin Atlantic Airways.
This post was originally published on Market Watch
