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Virgin Orbit catches fire during an unauthorized descent

Virgin Orbit, a troubled space corporation, announced it was unable to get extra finance to keep it solvent, so it is firing about 85% of its workers in an effort to further cut costs.

The information was reported to the U.S. Securities and Exchange Commission on Thursday, exactly two weeks after the business placed all of its employees on leave and went into a “operational stop” to raise additional money. There were rumors that Texas-based venture capitalist Matthew Brown might step in to save the day, but those rumors fell apart during the last weekend. The filing from today attests to Virgin’s inability to secure a second source of funding.

Virgin CEO Dan Hart is heard saying, “We have no alternative but to execute immediate, significant, and incredibly painful reforms,” in audio from an all-hands meeting on Thursday afternoon that CNBC obtained.

“Probably the hardest all-hands that we’ve ever done in my life,” he added of the phone conversation.

The reductions affect all departments. The cash-strapped Virgin Orbit will have to pay about $8.8 million in severance payments and employee benefits costs, in addition to a further $6.5 million for outplacement services and regulatory compliance. Yet, even the personnel reduction has a cost.

Virgin received a $10.9 million investment from Virgin Group, the holding company for billionaire Richard Branson’s multiple businesses, to cover these urgent costs.

Branson, who continues to hold the primary ownership of the corporation, is the creator of Virgin Orbit. But, it appears that even Branson, who recently donated more than $55 million to the floundering space corporation through his conglomerate Virgin Group, is done supporting the business.

Virgin Orbit’s innovative technology, which utilizes a modified Boeing 747 to deploy a rocket mid-flight, has resulted in four successful missions. Virgin’s ambitions to continue launching this year have been severely hampered by the failure of the company’s most recent mission, which was launched from Cornwall, England, due to a problem with the rocket’s second stage.

Virgin Orbit’s stock has plummeted from $1.32 at the beginning of the month to barely $0.34 today.


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