In a desperate measure to help save his airline and leisure interests, Richard Branson is selling US$500 million (£405m) in Virgin Galactic shares to stem the impact of the coronavirus crisis.
In a statement to the New York Stock Exchange, Branson’s Virgin Group said it intended to sell 25 million shares via a series of transactions, prompting a 5% fall in the share price of Virgin Galactic during pre-market trading, The Guardian reported.
The shares, which account for just over a fifth of the billionaire’s stake in the space tourism business, were worth US$500 million at their pre-announcement price of US$20.
“Virgin intends to 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,” said the company.
The freeze in global travel is affecting a host of Virgin Group companies, including Virgin Atlantic, as well as its holidays, cruises and hotels businesses.
The collapse in air travel forced Virgin Australia into administration and left Virgin Atlantic in severe financial difficulty, The Guardian reported.
The extent of Virgin Atlantic’s woes were underlined this month when the carrier announced plans to pull out of Gatwick airport and cut a third of jobs.
The airline, in which Branson still holds a majority 51% stake, has been seeking emergency investment but is also seeking some form of state bailout to tide it over while planes remain grounded.
The plea for UK taxpayer help has prompted a backlash, with people pointing to Branson’s vast personal wealth as a potential source of rescue funding, The Guardian reported.
While the airline has not been profitable in recent years, it has at least recorded positive earnings in the past, registering three consecutive years in the black until 2017.
Virgin Galactic, by contrast, has never made a profit and has been plagued by successive delays to its plans to carry tourists into space for £202,000 per trip.
It is vying for space tourism supremacy with the SpaceX project launched by the Tesla founder, Elon Musk, and the Blue Origin venture headed by Amazon’s Jeff Bezos, the world’s richest person.
Virgin Galactic’s spacecraft can host up to six paying passengers, meaning each flight could earn the company up to US$1.5 million in revenue. It says it has more than 600 people already in the queue to take the trip.
As well as selling shares in Virgin Galactic, Branson has said he will mortgage his private Caribbean island to raise money to help his business empire.
Branson is the UK’s seventh richest person with an estimated £4.7bn fortune and has lived tax-free on Necker Island in the British Virgin Islands for the last 14 years.
According to a report from the BBC, potential investors include private equity firms Greybull Capital, which came under scrutiny after the collapse of British Steel, and Apollo Global Management.