The Virgin Orbit Holdings Inc (NASDAQ: VORB) stock price rallied 67.1% after an exclusive story by Reuters revealed that the cash-strapped space company was in the final stages of a financing deal with Matthew Brown companies worth about $200 million.
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The report cited a term sheet seen by Reuters indicating that the two companies were on track to finalise the funding deal on Friday. Investors cheered the news, given that Virgin Orbit had paused its operations after facing a cash crunch and had furloughed most of its employees.
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The funding from Matthew Brown companies is expected to revive the company, whose market capitalisation had shrunk to $148.24 million yesterday, marking a steep drop from its $3 billion valuation when it went public via a SPAC merger on 30 December 2021.
Virgin Orbit’s founder, billionaire entrepreneur Richard Branson, has given over $35 million to the struggling company over the past few months. Still, it seems he was getting tired of funding the company, which announced it was exploring strategic alternatives.
According to Reuters, a person familiar with the discussions confirmed that Virgin Orbit’s board had voted to move forward with the deal on Tuesday. The deal allows Matthew Brown to convert his $200 million in Virgin Orbit’s preferred shares into common shares at the volume-weighted average price 30 days before the deal’s signing.
Virgin Orbit shares had traded much higher earlier in the day but had retraced some of their gains at writing. The converted common shares will have equal voting rights to existing shares. Virgin Investment’s 75% stake in the space company will decline once the deal is approved.
The space company recorded a $44 million loss during the third quarter of its current financial year. Its losses ballooned after its rocket, LauncherOne, failed to deploy nine small rockets into lower Earth orbit in January due to an anomaly during its space flight.
With competition heating up in the space industry, the margin of error allowed to space startups is shrinking as many companies compete in different space industry segments.
*This is not investment advice.
Virgin Orbit (VORB) stock price.
The Virgin Orbit (VORB) stock price soared 67.06% to trade at $0.7404, from Tuesday’s closing price of $0.4432.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.