Reaction Engines, the British hypersonic aviation pioneer, has crashed into administration after weeks of talks with potential backers failed to result in a rescue deal.
Sky News has learnt that 173 of the company’s 208 staff were made redundant on Thursday morning by PricewaterhouseCoopers (PwC), the administrators.
The collapse of a company which makes advanced cooling technology for engines also threatens to create a headache for a quartet of Formula One racing teams which use engines supplied by Mercedes-Benz.
Talks to secure roughly £20m in additional funding to keep Reaction Engines alive had initially focused on the UAE’s Strategic Development Fund (SDF), the investment arm of the UAE’s Tawazun Council.
However, these began to falter earlier this month, with strategic shareholders BAE Systems and Rolls-Royce Holdings unwilling to provide enough capital to bail it out.
In a statement on Thursday, Sarah O’Toole, joint administrator and partner, PwC, said: “It’s with great sadness that a pioneering company with a 35-year history of spearheading aerospace innovation has unfortunately been unable to raise the funding required to continue operations.
“We know this is a deeply uncertain and unsettling time for the Company’s talented and dedicated employees.
“We are committed to providing them with all the necessary support at this time.”
Sky News revealed earlier this week that administrators were expected to be appointed on Thursday.
Under the earlier discussions, SDF would have emerged as the single-biggest investor in Reaction Engines, which has developed cooling technology which is aimed at powering aircraft to Mach 25 – or 19,000 miles per hour – outside the Earth’s atmosphere.
According to Reaction Engines’ most recent update to shareholders, it grew its commercial revenues by more than 400% last year and is understood to have a strong pipeline of contract and R&D opportunities.
In January last year, Reaction Engines announced that it had raised £40m of additional equity, taking the total sum it had banked from investors to roughly £150m.
Founded in 1989, the company is chaired by Philip Dunne, a former defence minister.
“The company has primarily been funded by grants and equity fundraises, given its R&D focus,”
PwC said.
“The company had been pursuing opportunities to raise further funds, but unfortunately, these attempts were unsuccessful.
“Consequently, the Directors have been left with no alternative but to place the Company into administration.
Reaction Engines’ remaining employees will be retained temporarily at its Oxfordshire base “to complete a number of existing orders and support in winding down operations,” PwC added.