A British company that aims to pioneer hypersonic flight and that counts Boeing and Rolls Royce Holdings among its backers is struggling to raise new funds in a context of tight cash flow.
Sky News has learned that Oxfordshire-based Reaction Engines has appointed consultants to raise new capital.
The company’s shareholders, which also include FTSE-100 weapons maker BAE Systems, have been briefed on efforts to secure new cash in recent weeks.
Silverpeak, a consultancy firm, has been appointed to orchestrate the fundraising, with the company believed to need tens of millions of pounds more capital.
Reaction, founded in 1989, is chaired by Philip Dunne, former Minister of Defense.
Specializing in the development of advanced propulsion systems, the company is developing a new type of engine intended to propel aircraft at Mach 25, outside the Earth’s atmosphere.
In an update to investors, seen by Sky News, Dunne said its financial performance last year was “not in line with our forecasts”.
Warning that Reaction Engines would also be loss-making this year, he added: “While the company has a track record of success in raising capital, it is clear that market conditions are more difficult than when we last raised new capital in 2022.” .
In January last year, it announced that it had raised £40 million in additional capital, bringing the total sum it had deposited from investors to around £150 million.
“As an emerging technology company, we have always tried to be prudent in managing our costs; however, we have taken additional steps to control costs and focus investment in areas that will support near-term revenue generation,” wrote Dunne.
“As a result, we were able to keep the loss for 2023 broadly in line with our budget for the year.”
“It became evident during [the first quarter] that there was an ongoing mismatch between the features we added in anticipation of growth and development of the sales pipeline.”
He added that the company’s workforce was reduced earlier this year, with its leadership structure streamlined.
Reaction Engines’ ability to attract interest and funding from some of the world’s largest aerospace companies underlines the enthusiasm it has sparked among strategic and financial investors.
Its shareholders also include Schroders, Baillie Gifford Asset Management and the UAE Strategic Development Fund.
Reaction Engines declined to comment on its search for new financing.
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