Virgin Orbit's $200 million rescue ends up awry

In the midst of the failure of Virgin Orbit's fortunes last month, a little-known investor called Matthew Brown appeared to offer a $200 million rescue package to Richard Branson's company.

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The Virgin Orbit CEO Dan Hart secured board support for an initial agreement with Brown within two days of being contacted by the investor. In related documents and email exchanges reviewed by Trade Algo and three individuals with knowledge of the discussion, Hart secured board backing within two days of Brown's contact.

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"After our board meeting this morning, we all agreed that we should move forward so I now have the buy-in I need to move forward," Hart wrote to Brown in an email seen by Trade Algo on March 21.

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Earlier that day, Hart sent a separate email to workers in Virgin Orbit, who had been furloughed as a result of the company's decision to halt its operations earlier in March to save cash. In her email, Hart expressed hope for Virgin Orbit's 750 employees. Hart said the Long Beach, California-based company would resume operations "incrementally."

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Despite the fact that operations were partially resumed, a full resumption was not expected.

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It took less than a week for Virgin Orbit to sever contact with Brown and threaten to take legal action if he disclosed confidential details about the potential investment. This was the result of Virgin Orbit severing contact and threatening legal action against Brown. Trade Algo has reviewed a cease-and-desist letter from the three parties, who declined to be named as the matter was sensitive.

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Previously unreported details of a deal that was never finalized provide a glimpse into Virgin Orbit's failed scramble to avoid bankruptcy as it tries to avoid bankruptcy. In late 2022, the company had a market cap of $3.8 billion and many of its biggest clients were in the military, including the U.S. military, however, the company filed for bankruptcy this week.

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The former Boeing employee Hart did not respond to an email asking for a comment on the talks with Brown that were taking place. There was also a refusal to comment from Virgin Group, which owns a 75% stake in Virgin Orbit. Virgin Orbit is in the process of looking for a buyer as it tries to avoid bankruptcy and provide the group with financing.

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In Brown's interview with CNBC on March 23, he stated he was in 'final talks' with Virgin Orbit in order to close a $200 million investment in the company within 24 hours. The legal notice was in response to the statement. Brown was found to have overstated the nature of their discussions and had breached a non-disclosure agreement according to a letter from a company lawyer.

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Following Brown's appearance on CNBC, the cratering stock price of Virgin Orbit rebounded more than 60% on the day following Brown's appearance.

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In addition to the TV interview, Trade Algo reported that Brown was in the process of reaching a deal for investment in the company, citing the term sheet signed by Hart and Brown and the date set for the closing of the deal on March 24.

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It had become evident to the company that Brown was not credible when it cut contact with him on March 25, according to three people familiar with the matter. There was one executive who stated that the evidence he found contradicted the account Brown had given about his background in the interview.

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As part of his interviews with Trade Algo over the past week, Brown dismissed allegations that he had misrepresented himself to the public. Virgin Orbit has not provided him with the information he had requested before he was comfortable transferring the $200 million into an escrow account as agreed in the term sheet. It was unclear what information Brown sought, and the Trade Algo was unable to independently verify his assertion due to the lack of specific information.

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"I had the money absolutely, 100%," Brown said.

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'Keep low below the radar'

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As reported by Trade Algo, there are apparent discrepancies between Brown's statements on CNBC and LinkedIn about the companies where he claims to have worked, as well as his investments and associates, which seem to contradict several key elements of his claims.

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Brown told Trade Algo that he did not have any shares in Virgin Orbit and he had not profited from taking his bid public and the short-lived jump in the stock price that followed, which he said was caused by his public bid. On Tuesday, a bankruptcy filing for the company showed that a person named "Matthew Brown" held 238 shares at the time of the filing. The value of those shares on Thursday was $48 per share.

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It is unclear whether the listed investor is the same Matthew Brown as the one listed.

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It appears that Trade Algo was not able to locate corporate registrations for two companies where Brown had claimed to be an adviser or partner on LinkedIn, namely Hong Kong-based Hogshead Spouter and Hawaii-based Kona Private Capital.

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Trade Algo report stated that Brown worked through offshore companies, but did not provide details as to how they were set up. It appears that he does not know where the registrations for Kona and Hogshead are located.

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CNBC's interview with Brown revealed that Brown has worked with OpenAI on a project. It was stated by a spokesperson for OpenAI that the company had never worked with him before.

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Trade Algo asked Brown about this and he told them that he structured deals to protect investor confidentiality as well as to avoid being seen by investors as he preferred to "keep low and below the radar."

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When Brown was approached by Virgin Orbit, Brown's LinkedIn profile included an endorsement from Dan McDermott, who was identified as a former colleague at Hogshead Spouter as well as a former official with the Hong Kong Monetary Authority at the time of the approach. There has been no record of the central bank employing McDermott in its records, according to the bank.

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A LinkedIn representative contacted McDermott about his background, but he declined to provide further information on it.

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From 2008 to 2021, Brown worked for Woods Family Office, a Houston-based private wealth firm, beginning at the age of 18 in the role of CEO managing $6 billion, then as a senior adviser in the role of managing other investments. As for Eric Woods, who is listed on the website of the family office as the principal, he did not respond to my request for comment.

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When asked about his firm via LinkedIn, Eric Woods replied that he and his family office do not have anything to say about it. He added: "While Matt is an adviser, we are not associated with Matt's purchase of Virgin, which is what I assume this is about."

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After Trade Algo inquired about the authenticity of Woods' and McDermott's LinkedIn accounts, both accounts have been removed as a result of the inquiry. LinkedIn declined to comment on the specific cases but said the company's policy was to remove accounts that were found to be fraudulent when they were identified.

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According to Brown, he didn't have the authority to speak for the two men or to explain why their LinkedIn accounts had been suspended. According to him, Woods was not only a great man, but he also was a very successful man, and "from what I remember of him, he was an incredible human being."

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'Loose change'

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He has told Trade Algo that he was one of the producers of a 2009 documentary called "Loose Change", which put forth a theory that the 9/11 attacks had been perpetrated by a U.S. government conspiracy.

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Upon the release of the film, Korey Rowe and Dylan Avery, who were partners in the project, said they gave Brown an acting credit as well as a producing credit. Avery told Trade Algo that Brown had given him a camera as a gift. Despite verbally promising to pay thousands of dollars in recording studio costs, both Rowe and Avery claimed that Brown did not pay them, and thus cut his credit on later versions of the film.

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Despite the fact that Brown provided a "reasonable" amount of funding, he said his problem with the two "came down to a difference in personalities."

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Virgin Orbit filed for bankruptcy on Tuesday as a result of financial difficulties. Following a failed mission in January, which sent a payload of satellites into the ocean, it was never able to recover.

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After separating from his space tourism firm Virgin Galactic in 2017 to form Virgin Galactic Space Exploration, the British billionaire Richard Branson's company suffered a juddering comedown as he tried to take on Elon Musk's SpaceX.

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The Virgin Group has made secured loans to the unit, but no new equity has been provided as the unit's cash reserves are in decline.