Virgin Orbit raising $200 million from investor Matthew Brown, closing deal as soon as Thursday

Virgin Orbit is in final talks to raise funds from Texas-based investor Matthew Brown, two people familiar with the deal told CNBC, amounting to an injection of $200 million.

Virgin Orbit and Brown began deal talks last week, one of the people said, around the same time the company announced it was pausing operations and furloughing most employees to seek a financial lifeline. Brown would get a controlling stake in the rocket builder, according to the people, who asked to remain anonymous to discuss private negotiations.

The parties aim to close the deal as soon as Thursday, the people said.

At the same time, one of the people familiar with the matter said, the company has continued to talk to another, yet unnamed potential investor, who was in discussion with Virgin Orbit before the talks with Brown.

The deal comes as Virgin Orbit scrambles to rebuild its cash coffers and avoid a potential bankruptcy filing, CNBC earlier reported.

Virgin Orbit did not respond to CNBC’s request for comment. Reuters first reported the deal talks.

Shares of Virgin Orbit surged as much as 77% in trading Wednesday, before the stock gave up some of those gains to close up 33% at 59 cents a share.

Late Tuesday, CEO Dan Hart told employees that a “small” team would return to work on Thursday. Hart described this as a “first step” in an “incremental resumption of operations,” while Virgin Orbit is extending the unpaid furlough for the rest of the more than 750-person company “through at least Monday.”

Hart said Tuesday the company had “made some important progress” this week toward landing a funding deal.

Brown is the chairman of eponymous Dallas family office Matthew Brown Cos. and general partner at Energent Energy, an asset manager focused on renewables and climate investments.

He’s been eyeing the space sector for years, particularly the rocket launch business, with multiple prior investments in Elon Musk’s SpaceX, Rocket Lab and Astra, according to PitchBook. His family office was founded in 2008 and, per PitchBook, has around $364 million in “dry powder.”

The cash infusion comes at a critical moment in Virgin Orbit’s rocket development.

The company developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing midflight. But Virgin Orbit’s last mission suffered a midflight failure, as an issue during the launch caused the rocket to not reach orbit and crash into the ocean.

Virgin Orbit has been looking for new funds for several months, with majority owner Richard Branson unwilling to fund the company further. Branson, who spun Virgin Orbit out of Virgin Galactic in 2017, currently has 75% ownership of the company, while Emirati sovereign wealth fund Mubadala holds the second-largest stake, at 18%.