Air taxi firm Vertical says Mudrick to convert some notes to equity, extend repayment deadline (updated)

Vertical Aerospace

25/11/2024 11:43

(Adds shares in paragraph 3, background in paragraph 6)
    By Abhijith Ganapavaram
       Nov 25 (Reuters) - UK-based Vertical Aerospace  M000.F 
said on Monday that investor Mudrick Capital has agreed to
convert half of its outstanding convertible debt to equity and
extend the repayment date on the remainder to December 2028,
providing the cash-strapped air-taxi maker with financial
breathing room.
    Mudrick will commit $25 million in upfront funding for
Vertical's next equity round and an additional $25 million
backstop, which can be reduced by amounts raised from third
parties.
    The company's U.S.-listed shares jumped 14% in light
premarket trade.
    The agreement will extend Vertical's cash runway into the
fourth quarter of next year.  The company had previously flagged
going concern doubts.
        The term sheet includes an option for Vertical's
founder, Stephen Fitzpatrick, to invest a further $25 million
within the next year.
  
    In September, Vertical said it was in talks with Fitzpatrick
about his investment commitment after a balance due on August 14
became outstanding.
    Mudrick earlier this month served a default notice to
Vertical on convertible senior secured notes due 2026 after the
company warned it might breach certain covenants.
    Under the term sheet unveiled on Monday, approximately $130
million of Mudrick's convertible notes will be converted into
equity at $2.75 per share, Vertical said.
    Vertical is among the several eVTOL makers aiming to
revolutionize urban travel, but faces regulatory hurdles,
battery limitations, and the challenge of convincing the public
of their aircraft's safety.

 (Reporting by Abhijith Ganapavaram in Bengaluru; Editing by
Tasim Zahid)
 ((Email: Abhijith.G@thomsonreuters.com; Mobile:
+91-9019785574;))