Virgin Galactic founder Sir Richard Branson.
Billionaire Sir Richard Branson is set to sell as much as $400 million of his shares in Virgin Galactic as the mounting cost of the coronavirus pandemic threatens to cripple his business empire.
In a statement to the New York Stock Exchange on Monday, Branson’s Virgin Group announced that its subsidiary, Vieco 10 Limited, may offer and sell 25 million shares of its common stock in Virgin Galactic. Branson owns nearly 81% of Vieco 10. Shares “are expected to be sold from time to time,” according to the announcement, rather than in one large sale.
The decision to sell comes as Branson’s airline, Virgin Atlantic, where he is majority owner, faces going bust as the pandemic leaves flights grounded and holidays canceled around the world.
Crown Prince of Saudi Arabia Mohammed bin Salman Al Saud (R) poses with Richard Branson (L), ... [+]
With the share price fluctuating around $20—down from a high of $37 in February this year—the sale could raise $400 million. Virgin Group said in the statement that it will “use any proceeds to support its portfolio of global leisure, holiday and travel businesses that have been affected by the unprecedented impact of COVID-19.”
Virgin Galactic, Branson’s spaceflight company, aims to bring space tourism to the masses in the not-so-distant future. The company had its IPO in October last year, with Branson stealing a march on billionaires Elon Musk and Jeff Bezos in the budding space tourism market. It currently sports a $4.1 billion market cap. The company lost $210 million on revenue of a mere $3.8 million last year.
Reuters reported that actor Leonardo DiCaprio and pop star Justin Bieber will be amongst the first to join Branson on Virgin’s first suborbital flight.
Threat
Branson has moved to protect airline Virgin Atlantic, which has proved to be the most vulnerable of Virgin’s holdings. The plight of the airline has dominated headlines for all the right and wrong reasons since the pandemic began in mid-March.
Last week Virgin Atlantic announced it would cut 3,150 jobs and end flights from London Gatwick, with CEO Shai Weiss warning that although the airline has “weathered many storms,” nothing “has been as devastating as COVID-19 and the associated loss of life and livelihood for so many.”
Over the weekend Sky News reported that Branson had hired the investment bank Houlihan Lokey to find investors willing to inject emergency funding into the transatlantic airline.
Richard Branson holds model of satellite LauncherOne
The search for outside investment followed Branson’s failure to win government funding to support Virgin Atlantic.
In mid-April, Virgin Atlantic was told by the U.K. government to resubmit its proposal for a $622 million (£500m) coronavirus bailout package.
The Financial Times reported that the U.K. government was left unimpressed with its initial bid, which included a $622 million (£500m) package of commercial loans and guarantees.
In a blog post on the Virgin website Branson said, “We will do everything we can to keep the airline going—but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing for how long the planes will be grounded. This would be in the form of a commercial loan—it wouldn’t be free money and the airline would pay it back.
“The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won’t be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value,” Branson explained in his blog post.
