Virgin Orbit raises far less than expected from SPAC merger

WASHINGTON — Virgin Orbit will get lower than half the cash it initially anticipated from its merger with a particular goal acquisition firm (SPAC) as that deal wins shareholder approval.

Virgin Orbit introduced Dec. 28 that shareholders of NextGen Acquisition Corp. II, a SPAC that introduced in August it could merge with Virgin Orbit, had accepted the merger. The deal is ready to shut by the top of the month, turning Virgin Orbit right into a publicly traded firm on the Nasdaq beneath the ticker image VORB.

When the businesses introduced the merger, they projected elevating $483 million for Virgin Orbit: $383 million from the proceeds of the SPAC and $100 million from a concurrent personal funding in public fairness (PIPE) spherical that included AE Industrial Companions and Boeing as buyers.

Nevertheless, Virgin Orbit mentioned within the assertion that the merger will present simply $228 million in gross proceeds, with $68 million coming from SPAC proceeds. That implies a excessive fee of redemptions, the place shareholders of the SPAC train their proper to get their a reimbursement reasonably than retain their shares within the merged firm. High redemption rates have been an issue for SPAC mergers normally in latest months.

The remaining $160 million comes from the PIPE, which incorporates the unique $100 million plus extra funding from the Virgin Group and Mubadala Funding Firm. Virgin Orbit introduced Dec. 23 that the Virgin Group had agreed to take a position as much as $100 million in make sure the deal met the “minimal money situation” of the merger settlement.

The businesses didn’t disclose within the announcement what that minimal money situation was however mentioned the $228 million raised was enough to satisfy it. In accordance with the merger agreement filed with the Securities and Exchange Commission in August, the minimal money situation was $200 million.

It’s unclear what near-term results, if any, the shortfall in capital could have on Virgin Orbit, however it could require the corporate to hunt extra funding by way of a secondary providing. In an August investor presentation, Virgin Orbit estimated needing $420 million in money, beginning within the second half of 2021, to achieve optimistic money circulate in 2024.

Regardless of the decreased capital, executives with Virgin Orbit and NextGen hailed the completion of the merger. “The capital raised by way of this transaction, mixed with our new entry to the general public markets, will allow us to scale rocket manufacturing and lengthen our house options enterprise and product improvement whereas we proceed to develop globally by way of key partnerships with clients worldwide,” Dan Hart, chief govt of Virgin Orbit, mentioned in an organization assertion.

“I’m thrilled to help Virgin Orbit because it turns into a publicly traded enterprise and builds on the unimaginable successes that we’ve seen this yr,” Richard Branson, founding father of Virgin Orbit, mentioned within the assertion.

Branson and Virgin Orbit executives will rejoice going public with an “opening bell” ceremony at Nasdaq Jan. 7. That may happen days earlier than the subsequent Virgin Orbit launch, a mission referred to as “Above the Clouds” and at present scheduled for no sooner than Jan. 12.


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