XCOR running out of time to find investor
WASHINGTON — XCOR Aerospace, a company forced to lay off its staff earlier this year when it ran into financial problems, has only weeks left to find an investor willing to rebuild the company or else face liquidation, the company’s chief executive says.
In an Oct. 19 interview, Michael Blum, a member of the board of directors of XCOR who took over as chief executive at the end of June, said the company has been in discussions with potential strategic partners and other investors interested in its propulsion technology and Lynx suborbital spaceplane, but those negotiations have taken longer than expected to finalize.
“Our time is slowly running out,” Blum said. The XCOR board and its major shareholders have been providing a “minimum amount of capital” over the last several months to keep the company going and pay its bills, but said their patience is running out. “Once that happens, the future gets very bleak.”
XCOR has been in discussions with a number of potential partners and investors, Blum said. One approach has involved discussions with strategic partners, including an unidentified large aerospace and defense company primarily interested in XCOR’s propulsion technology and related intellectual property.
XCOR has also been in talks with investor groups. One such group, he said, is particularly interested in XCOR’s Lynx suborbital spaceplane as a means to quickly get into the space tourism market. XCOR has been working on the Lynx for several years, and the prototype vehicle is about two-thirds complete. A second group, Blum said, is in the industrial and manufacturing sector that is already familiar with XCOR.
Those discussions with potential investors started months ago, Blum said, but have been going slowly, particularly over the summer. He said the company likely has only a few weeks to finalize a deal or else will have to file for Chapter 7 bankruptcy liquidation.
“By early November, either one of these deals pulls the trigger and saves XCOR, or we file for Chapter 7,” he said.
XCOR’s current predicament began at the end of June, when the company said “adverse financial conditions” forced it to terminate all its remaining employees. That came shortly after the previous chief executive, Jay Gibson, was nominated by the White House to become the Deputy Chief Management Officer at the Department of Defense.
Gibson, asked about XCOR’s situation at a July 18 Senate confirmation hearing, blamed it on the sudden termination of subcontract from a larger company. “With less than 30 days notice, we were told that funding was terminated,” Gibson said. He didn’t name the company, but XCOR had previously been working with United Launch Alliance on a liquid-oxygen, liquid-hydrogen engine program that had been the focus of the company since an earlier round of layoffs in 2016.
Blum said XCOR had hired about half a dozen former employees as contractors to work part-time since the layoffs, including both technical and administrative staff. Many former XCOR employees have found jobs at other companies since the layoffs. “We do keep in touch with them,” Blum said. “Some might be able to come back if there’s a viable long-term plan.”
He said an agreement to save the company might not come until the last minute, as potential investors seek leverage to get the best possible deal. “They all know the clock is slowly running out on XCOR,” he said.
“These things often do go down to the wire,” Blum added. “I’m cautiously optimistic about this, but these things are also very nerve-wracking.”