Vertical Aerospace Assembles Comprehensive Financing Package of up to $850 million

Ver­ti­cal Aero­space has announced the sign­ing of an agree­ment in prin­ci­ple as part of a financ­ing pack­age total­ing up to $850 mil­lion. 

The new com­pre­hen­sive financ­ing pack­age pro­vides Ver­ti­cal with access to a cap­i­tal­ized run­way to build upon the Company’s sig­nif­i­cant oper­a­tional progress and sup­port achieve­ment of its strate­gic mile­stones over the next 12 months and beyond.

These include com­plet­ing pilot­ed tran­si­tion flight, pub­lic flight demon­stra­tions of the cur­rent pro­to­type, pro­gress­ing its hybrid-elec­tric demon­stra­tor, expand­ing the Ver­ti­cal Ener­gy Cen­ter, advanc­ing con­struc­tion of its air­craft man­u­fac­tur­ing facil­i­ty, and begin­ning pro­duc­tion of the first full-scale Valo cer­ti­fi­ca­tion air­craft.

The Com­pa­ny is now posi­tioned to have approx­i­mate­ly $160 mil­lion of work­ing cap­i­tal in the near term, com­bin­ing the $50 mil­lion of equi­ty cap­i­tal raised today (Mon­day) and $30 mil­lion to be drawn under the facil­i­ties imme­di­ate­ly on their exe­cu­tion with exist­ing cash on hand and antic­i­pat­ed tax relief and gov­ern­ment grants.

Overview of Com­pre­hen­sive Financ­ing Pack­age 

The com­pre­hen­sive financ­ing pack­age is struc­tured to pro­vide Ver­ti­cal with access to cap­i­tal across mul­ti­ple instru­ments. Mudrick Cap­i­tal Man­age­ment, L.P. (“Mudrick Cap­i­tal”) and Yorkville Advi­sors Glob­al, LP (“Yorkville”) part­nered with the Com­pa­ny to assem­ble the financ­ing pack­age. It com­pris­es four com­po­nents:

• Equi­ty Cap­i­tal Issuance – $50 mil­lion. The Com­pa­ny today closed the new issuance of ordi­nary shares, rais­ing $50 mil­lion of imme­di­ate work­ing cap­i­tal
• Con­vert­ible Secured Notes – Matu­ri­ty Exten­sion and Up to $50 mil­lion of New Notes. Mudrick Cap­i­tal has agreed as part of the agree­ment in prin­ci­ple to amend the Company’s exist­ing 10.00% / 12.00% PIK Con­vert­ible Secured Notes to extend their matu­ri­ty from Decem­ber 2028 to Decem­ber 2030 – ensur­ing debt matures after planned cer­ti­fi­ca­tion in 2028. Mudrick Cap­i­tal also agreed in prin­ci­ple to pro­vide a facil­i­ty under which it would pur­chase up to $50 mil­lion of new addi­tion­al con­vert­ible secured notes sub­ject to cer­tain con­di­tions, issuable in tranch­es over 12 months, and on the same terms as the exist­ing notes
• Series A Con­vert­ible Pre­ferred Equi­ty – Up to $250 mil­lion. Yorkville has agreed in prin­ci­ple to pur­chase up to $250 mil­lion of Series A Con­vert­ible Pre­ferred Shares of the Com­pa­ny, issuable at the Com­pa­ny’s option in tranch­es over 24 months, sub­ject to cer­tain con­di­tions. The pre­ferred shares are to car­ry a 0% div­i­dend, and con­vert at a share price deter­mined at indi­vid­ual tranche issuance and con­ver­sion dates, in the ordi­nary course
• Equi­ty Line of Cred­it — Up to $500 mil­lion. Yorkville also has agreed in prin­ci­ple to pro­vide an equi­ty line of cred­it of up to $500 mil­lion over 36 months, with the abil­i­ty for the Com­pa­ny to draw on it from time to time sub­ject to cus­tom­ary con­di­tions. This struc­ture would enable Ver­ti­cal to raise com­mon equi­ty at pro­gres­sive­ly high­er prices as it achieves key mile­stones, cap­tur­ing the full ben­e­fit of val­u­a­tion appre­ci­a­tion for exist­ing share­hold­ers

Pur­suant to the agree­ment in prin­ci­ple, the par­ties have com­mit­ted to use best efforts to exe­cute the defin­i­tive doc­u­ments by April 19th, at which point the full suite of cap­i­tal facil­i­ties would become avail­able to the Com­pa­ny. 

Stu­art Simp­son, Chief Exec­u­tive Offi­cer at Ver­ti­cal Aero­space, said: “Today marks a new dawn for Ver­ti­cal Aero­space. We have assem­bled a com­pre­hen­sive, flex­i­ble financ­ing pack­age designed to exe­cute our strate­gic plan, and mate­ri­al­ly strength­ened our abil­i­ty to build and cer­ti­fy Valo.

“We are grate­ful to Mudrick Cap­i­tal and Yorkville for their sup­port of our tech­nol­o­gy, team and mis­sion.”

Jason Mudrick, Chief Invest­ment Offi­cer at Mudrick Cap­i­tal Man­age­ment, added: “We have backed Ver­ti­cal Aero­space since 2021 because we believe they are build­ing the most tech­ni­cal­ly advanced air­craft in the indus­try.

This financ­ing pack­age is designed to give Ver­ti­cal ample run­way and the finan­cial foun­da­tion it needs to achieve cer­ti­fi­ca­tion, enter com­mer­cial ser­vice, and real­ize the sub­stan­tial val­ue we see in this busi­ness. We are proud to be deep­en­ing our com­mit­ment at this piv­otal stage.”

A Path to Cer­ti­fi­ca­tion-Dri­ven Val­ue Cre­ation

This com­pre­hen­sive financ­ing pack­age enables Vertical’s deliv­ery of the tech­ni­cal and oper­a­tional mile­stones on its strate­gic road map.

Ver­ti­cal also main­tains free­dom and flex­i­bil­i­ty to access oth­er cap­i­tal sources out­side of the pack­age in the future. By shoring up its bal­ance sheet, the Com­pa­ny believes the mar­ket can now focus on its core prod­uct poten­tial and busi­ness fun­da­men­tals. 

Dómh­nal Slat­tery, Chair­man of the Board, Ver­ti­cal Aero­space, said: “Over the past year, we’ve had exten­sive con­ver­sa­tions with exist­ing and prospec­tive share­hold­ers about what mat­ters most as we move through our next phase: dis­ci­plined, mile­stone-aligned access to cap­i­tal.

“This financ­ing pack­age pro­vides imme­di­ate work­ing cap­i­tal and pro­vides man­age­ment with flex­i­ble tools to access addi­tion­al cap­i­tal in a man­ner that pro­motes cap­i­tal effi­cien­cy, as we progress through our cer­ti­fi­ca­tion mile­stones. We are more excit­ed than ever about Ver­ti­cal’s prospects.”

Agree­ment in Prin­ci­ple Sta­tus

The par­ties have reached an agree­ment in prin­ci­ple on the key terms of the pro­posed facil­i­ties. The agree­ment in prin­ci­ple is non­bind­ing and remains sub­ject to the nego­ti­a­tion and exe­cu­tion of defin­i­tive agree­ments, com­ple­tion of due dili­gence and sat­is­fac­tion of var­i­ous oth­er con­di­tions.

There can be no assur­ance that the par­ties will enter into defin­i­tive agree­ments or that any trans­ac­tion will be con­sum­mat­ed on the terms cur­rent­ly con­tem­plat­ed, or at all.

Any descrip­tions of the terms of the pro­posed facil­i­ties con­tained here­in are sum­maries only, are non‑binding and are sub­ject in all respects to the nego­ti­a­tion, exe­cu­tion and deliv­ery of defin­i­tive doc­u­men­ta­tion and the sat­is­fac­tion of any con­di­tions prece­dent set forth there­in. Access to the financ­ing will be sub­ject to the defin­i­tive agree­ments and mar­ket con­di­tions.