Vertical Aerospace receives $50 million funding lifeline from Mudrick Capital
November 25, 2024
Vertical Aerospace is to receive up to $50 million in new funding from US investment management firm Mudrick Capital Management, strengthening the UK eVTOL developer’s financial position and providing Vertical with ongoing funding for its VX4 development.
The overall transaction is expected to add approximately $180 million to Vertical’s balance sheet, including through the conversion of around $130 million of debt into equity. This agreement, including a cash injection (comprising $25 million in upfront funding and an additional $25 million ‘backstop’) comes at a crucial time for the Bristol-based company, which has previously indicated the urgency of raising additional funding to extend its projected cash runway into the third quarter of 2025.
Describing how the team have been “working hard to find a way to support the company in the short term, but also set [it] up for long term success,” Vertical Aerospace founder and majority shareholder Stephen Fitzpatrick said the “additional equity and stronger balance sheet will enable [Vertical] to fund the next stage of [its] development programme and deliver on [its] mission to bring the amazing electric aircraft to the skies”.
Under the new agreement, the $25 million backstop will be reduced by any amounts raised from third parties, although also includes the option for Fitzpatrick to invest a further $25 million on the same terms. Additionally, approximately $130 million of convertible notes (50% of the outstanding amount) will be converted into equity at $2.75 per share, “substantially reducing Vertical’s debt and significantly deleveraging the company’s sheet”. By fixing the conversion price for the remaining outstanding convertible notes at $3.50 per share, Vertical is confident its future fundraising plans will be supported.
Additionally, the repayment of Vertical’s remaining loan has now been extended until its revised certification date of 2028; providing additional security as it seeks to bring its aircraft to market. Outlining earlier this month that certification of its four-passenger VX4 is now expected in 2028 (two years later than previously projected), Vertical remains confident it can achieve cash break-even in 2030.
“This funding agreement underscores the strong confidence of our investor in our Flightpath 2030 strategy and our ambition to lead the global eVTOL market,” elaborated Vertical Aerospace CEO Stuart Simpson. “By addressing our more immediate capital needs and positioning us well to secure funding for the long-term, we can focus on advancing our piloted fight test programme and brining the VX4 to market”.
As part of the agreement, Fitzpatrick (who stepped down as Vertical’s CEO in May) will remain a member of the Board. Vertical also reiterated what it termed its “renewed commitment to the UK,” with the company to “continue to operate from its UK headquarters, maintaining its brand identity and focus on innovation”.
