By Scott Kanowsky
Investing.com -- Shares in Virgin Orbit Holdings Inc (NASDAQ:VORB) slumped by as much as 53% in premarket U.S. trading on Friday after the satellite-launch provider reportedly told its employees that the firm would halt its operations indefinitely.
The rocket company owned by British billionaire Sir Richard Branson said in a filing with the U.S. Securities and Exchange Commission that it would also lay off 85% of its staff after it failed to "secure meaningful funding." Employees across the business would be impacted, it added.
The filing showed that Branson's investment arm injected $10.9 million into the group via a senior secured convertible note, which Virgin Orbit said would be enough to pay out severance to the estimated 675 workers who will be dismissed. Total costs related to the lay-offs are estimated to be approximately $15M.
Chief Executive Officer Dan Hart informed employees about the ceased activities and job cuts in a meeting on Thursday, CNBC first reported. Hart called the move "immediate, dramatic and extremely painful," but said the group was left with "no choice."
Virgin Orbit was spun off from Branson's space tourism firm Virgin Galactic in 2017 to develop rockets to carry small satellites into space. But it has yet to make a profit as a public entity, and has faced increasing scrutiny since a launch from the U.K. in January failed.