Virgin Orbit raises $10m in emergency funding
February 3, 2023
Sir Richard Branson’s Virgin Orbit satellite launch business has raised a financial stop-gap of $10 million (€9.1m), according to a filing with the US Securities & Exchange Commission (SEC) on January 30th. The cash comes from a sister – but separate – company, Virgin Investments Limited (VIL), the investment arm of the Branson’s Virgin Group.
The SEC filing says the cash would be used as “working capital” for the launch business and is secured by VIL in the form of a senior secured convertible note which is convertible into shares of the Company’s common stock or other Qualified Securities.
It is an expensive note, and the SEC filing says: “The Convertible Note contains customary events of default, bears interest at an annual rate of 12 per cent (or 16 per cent upon the occurrence and during the continuance of an event of default under the Convertible Note), payable in cash semi-annually, and has a maturity date of November 4th 2024.”
There are other obligations tied to the cash injection. Virgin Orbit has agreed, according to the SEC filing, that: “Upon the occurrence and continuation of an event of default under the Convertible Note, VIL is entitled to, among other things, foreclose on the assets that are the subject of the security interest. The Security Agreement also entitles VIL to exercise such rights in the event of the occurrence and continuation of an event of default under the convertible note sold and issued to VIL on November 4th 2022 in the principal amount of $25 million or the convertible note sold and issued to VIL on December 19th 2022 in the principal amount of $20 million.
This is the third cash-raising exercise in as many months for Virgin Orbit. November 2022 saw Virgin Orbit raise $25 million in the form of a senior unsecured convertible note from VIL, followed on December 19th by $20 million in another senior secured convertible note.
The costs of the debt has doubled in those few months, from 6 per cent in November last year to 12 per cent now.
Virgin Orbit has reported losses of $149.5 million for the first 9-months trading of 2022, and with just $71 million in cash on hand to it at the end of Q3.