UK: Vertical Aerospace “Offered USD75 Million Financing Deal BUT with a Catch?”

UK-based Ver­ti­cal Aero­space is viewed by some eVTOL pun­dits as being vul­ner­a­ble to a sim­i­lar fate as Lil­i­um. For giv­en the huge costs of bring­ing such an air­craft to mar­ket (some sug­gest a min­i­mum of USD1 bil­lion invest­ment is required), admin­is­tra­tion or to be blunt, bank­rupt­cy, is always a poten­tial threat to start-ups, par­tic­u­lar­ly in the avi­a­tion indus­try where the mon­ey pit is wider and deep­er than the Grand Canyon.

There­fore, Ver­ti­cal is present­ly faced with a conun­drum.

Mudrick Cap­i­tal Man­age­ment, the eVTOL company’s main cred­i­tor after plac­ing USD200 mil­lion in the form of con­vert­ible senior secured notes back in 2021, is propos­ing an equi­ty offer­ing worth USD75 mil­lion to help fund Ver­ti­cal towards 2026 and its pro­posed cer­ti­fi­ca­tion, accord­ing to a Secu­ri­ties and Exchange Com­mis­sion (SEC) Fil­ing. This means that Mudrick would become the major play­er and there­fore has the poten­tial to wrest con­trol away from Founder and CEO, Stephen Fitz­patrick.

The prob­lem being… when Fitz­patrick had to place his own mon­ey (UKP50 mil­lion) in Feb­ru­ary (two tranch­es of UKP25 mil­lion) to keep Ver­ti­cal and the VX‑4 devel­op­ment going, and by late August, this sec­ond tranche had still not been paid, Bris­tol alarm bells may have been ring­ing.

Back in June, Ver­ti­cal had cash and cash equiv­a­lents of around USD84 mil­lion, accord­ing to the com­pa­ny. So is this enough to keep the com­pa­ny sol­vent and on its tra­jec­to­ry towards cer­ti­fi­ca­tion in two years time fol­lowed by, hope­ful­ly, com­mer­cial­i­sa­tion? Next ques­tion: Isn’t an addi­tion­al USD75 mil­lion, while wel­come, still only a drop in the gigan­tic ocean of air­craft financ­ing?

Ver­ti­cal Aero­space, con­cern­ing the SEC fil­ing, com­ments, “The com­pa­ny is explor­ing all options avail­able with respect to its fund­ing needs.” 

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Last week’s shock announce­ment about Lil­i­um and the Ger­man eVTOL com­pa­ny star­ing into the abyss of insol­ven­cy, has been a wake-up call for the indus­try and Ver­ti­cal has been caught up in this wave of con­cern. At present, only around four or five West­ern-based eVTOL com­pa­nies that include Archer, Joby, Super­nal and Eve Air Mobil­i­ty, appear safe to the rav­ages of the mon­ey pit. 

Unless the UK Gov­ern­ment steps in and finan­cial­ly assists the Bris­tol-based com­pa­ny, which seems unlike­ly giv­en the new Labour admin­is­tra­tion, or an Elon Musk type of risk-tak­er decides to enter the UK eVTOL indus­try, Ver­ti­cal remains sus­cep­ti­ble. Accept the USD75 mil­lion and this cer­tain­ly may help towards the cer­ti­fi­ca­tion process, but who keeps con­trol? And where will the next required large tranche of mon­ey then come from?

Yet, the British-inspired com­pa­ny has not one but two aces up its sleeve. First, its tech­nol­o­gy part­ners are top class. They include Hon­ey­well, GKN Aero­space, Han­wha, Moli­cel, Leonar­do and Syen­sqo. Then, there are the pre-order sales of 1,500 VX-4s worth close to USD6 bil­lion which boasts the pur­chas­ing pow­er of Vir­gin Atlantic, Amer­i­can Air­lines, Avolon and Japan Air­lines. 

Some sug­gest there is an immi­nent shak­ing of the tree, fol­lowed by con­sol­i­da­tion with­in the eVTOL indus­try. Let us hope Ver­ti­cal Aero­space remains sol­vent and reach­es the fin­ish­ing line.

For more infor­ma­tion

https://vertical-aerospace.com/

(Images: Ver­ti­cal Aero­space)

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