Yahoo Finance Branson's Virgin Orbit demands $46m from bailed out OneWeb
Sir Richard Branson’s rocket launch company is demanding $46m (£36m) of unpaid compensation from OneWeb, weeks after ministers agreed a taxpayer-funded bailout to rescue the bankrupt satellite operator.
Virgin Orbit is seeking the payout because OneWeb cancelled dozens of launches it had ordered in 2015. It is insisting the failed company honour a termination fee agreed as part of the contract.
OneWeb fell into bankruptcy in March because it was unable to service billions of pounds in debt. Under the current rescue plan, in which the Government and Indian telecoms group Bharti Global will each pay $500m for a 45pc stake, lenders are only due to recoup a fraction of the more than $2bn OneWeb owes.
Los Angeles-based Virgin Orbit is not due to get anything. In a submission to a New York bankruptcy court objecting to the current plan, Virgin Orbit demanded the $46.3m it says it is owed after OneWeb terminated 35 of the 39 launches it had ordered.
The company took OneWeb to court over the matter last year, but proceedings were halted due to OneWeb’s bankruptcy when Japanese investor SoftBank refused to put any more cash into the company. Virgin Orbit’s objection could add a new complication to an already fractious bankruptcy process.
Virgin Orbit’s objection could add a new complication to an already fractious bankruptcy process.
A group of unsecured creditors which are due to receive just $6.1m of the hundreds of millions they are owed by OneWeb are already challenging the plan, which OneWeb has warned could jeopardise its rescue at the hands of the Government.
Virgin Orbit, which was separated from Sir Richard’s other space venture Virgin Galactic in 2017, plans to lower the cost of space launches by firing rockets from modified Boeing 747 jets flying at 35,000ft.
It was dealt a setback in May when its first test launch failed but is due for a second test later this year.
OneWeb, whose satellite constellations are set to be used to provide internet from space and potentially as the foundation of a sovereign satellite navigation system, did not comment.
A Virgin Orbit spokesperson said: “Virgin Orbit has had a long running commercial dispute with OneWeb over the cancellation of a series of launches first agreed in 2015. We have been trying to settle this dispute for a number of years and made many proposals to resolve it. All of this predates the bankruptcy of OneWeb and its recent acquisition by a consortium led by the UK Government and Bharti. Virgin Orbit is owed substantial termination fees and the dispute is currently being heard in the New York Courts alongside other OneWeb creditor appeals.”
Sir Richard had been a founding investor in OneWeb and had said the company’s plans to deliver satellite internet could make “affordable access available to everyone”.
In filings last year, OneWeb had asked a court to dismiss Virgin Orbit’s lawsuit, saying that it misrepresented the original contract and that Virgin had overcharged for the proposed launches.
Before it collapsed into bankruptcy, OneWeb relied on Russian Soyuz rockets for the 74 satellites it has launched to date.
The New York bankruptcy court is overseeing disputes between multiple creditors who are fighting to recoup a small amount of cash and equity that is due to be distributed before the joint venture between the UK and Bharti can complete the takeover.
SoftBank, as one of OneWeb’s biggest creditors, is also due to take a minority stake in the company that emerges.
