Virgin Orbit near deal to raise $200 mln from Matthew Brown - term sheet

Virgin Orbit Holdings

22/03/2023 11:36

(Adds company comment on operations; updates shares)
    By Joey Roulette
       WASHINGTON, March 22 (Reuters) - Billionaire Richard
Branson's cash-strapped Virgin Orbit Holdings Inc  VORB.O  is
nearing a deal for a $200-million investment from Texas-based
venture capital investor Matthew Brown via a private share
placement, according to a term sheet seen by Reuters.
    The space startup did not comment on the likely deal, but
said on Wednesday it would resume operations on March 23 and
prepare for its next mission by recalling some of its employees,
sending its shares up 60% in premarket trading.
    Matthew Brown Companies did not immediately respond to a
request for comment.
    A deal would be a boost of confidence for the satellite
launch company that has been grappling with dwindling cash and
mounting losses in recent quarters in a highly competitive
market. 
     Virgin Orbit's market capitalization slumped to a record
low of $150 million on Tuesday from more than $3 billion two
years ago when it went public through a blank-check deal.
    In January, its rocket LauncherOne failed a mission to
deploy nine small satellites into lower Earth orbit due to an
anomaly during its flight through space. 
    The company, which received about $35 million of capital
injections from Branson's Virgin Investments in recent months,
said last week it was exploring options and was in talks for
fresh funding.    
    Virgin Orbit and Matthew Brown are aiming to close the deal
on Friday, according to the term sheet, which is not binding and
remains subject to final agreement.
    Virgin Orbit's board agreed to move forward with the deal at
a meeting held on Tuesday, according to a person with direct
knowledge of the matter.
    Under the deal, Matthew Brown will be entitled to convert
his $200 million investment in Virgin Orbit's preferred shares
into common shares at the volume weighted average price in the
30 days before the deal is signed. 
    The converted shares will possess the same voting rights as
the common stock. Virgin Investments is currently the largest
shareholder with a stake of nearly 75%.
    The company booked a loss of nearly $44 million for the
third quarter and had cash reserves of about $71, a sharp drop
from $122 million as of June-end. It has yet to announce a date
for its fourth-quarter results.
    Virgin Orbit's statement on workforce confirmed an earlier
Reuters report that said it plans to recall a small team from
furlough for rocket upgrades. The company said more employees
will be back to work on March 27. 

 (Reporting by Joey Roulette; Writing by Miyoung Kim; Additional
reporting by Tiyashi Datta; Editing by Jamie Freed, Louise
Heavens and Arun Koyyur)
 ((miyoung.kim@thomsonreuters.com; 65 6870 3026; Reuters
Messaging: miyoung.kim.thomsonreuters.com@reuters.net))