Vertical Aerospace, a company specializing in electric vertical takeoff and landing (eVTOL) aircraft, has announced a financial package designed to strengthen its balance sheet and support its strategic objectives. The agreement, involving the company's majority shareholder Stephen Fitzpatrick and primary creditor Mudrick Capital Management, will provide up to $50 million in new funding.
The term sheet, signed today, outlines the commitment from Mudrick Capital, which includes an immediate $25 million infusion and an additional $25 million backstop. This is part of a larger transaction expected to add approximately $180 million to Vertical's balance sheet, with about $130 million of debt being converted into equity at $2.75 per share. This conversion substantially lowers the company's debt burden and deleverages its financials. Additionally, the conversion price for the remaining convertible notes has been set at $3.50 per share, offering clarity for future investors.
Vertical Aerospace's founder, Stephen Fitzpatrick, will continue to play a strategic role as a board director, guiding the company's Flightpath 2030 Strategy. This strategy aims to position Vertical as a leader in the eVTOL market by the end of the decade, with ongoing development and certification of the VX4 aircraft.
The funding agreement is expected to address immediate capital needs and assist in securing long-term financing, allowing Vertical to focus on advancing its piloted flight test program and bringing the VX4 to market. The company has recently progressed to untethered, piloted thrustborne flight in Phase 2 of testing and is working with the UK Civil Aviation Authority to move into wingborne flight tests, a pivotal step toward certification.
The UK-based company, founded in 2016, has garnered approximately 1,500 pre-orders for the VX4 from customers on four continents, including American Airlines (NASDAQ:AAL) and Japan Airlines. Vertical Aerospace combines partnerships with leading aerospace firms and its own proprietary technology to develop what it positions as the world's most advanced and safest eVTOL.
The non-binding term sheet reflects the material terms of the agreement in principle, which is still subject to the execution of final transaction agreements and shareholder approval. This move is seen as a significant step in Vertical Aerospace's efforts to lead in the sustainable aviation sector. The details of the agreement were disclosed in the company's Form 6-K furnished to the Securities and Exchange Commission on November 25, 2024, and are based on a press release statement.
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