Vertical Aerospace Ltd. (NYSE:EVTL) shares are trading higher premarket on Monday. The company disclosed a signed term sheet with its majority shareholder, Stephen Fitzpatrick, and primary creditor, Mudrick Capital Management.
The term sheet outlines a $50 million funding commitment from Mudrick Capital, with $25 million in upfront funding and an additional $25 million backstop, which can be reduced by third-party funding.
Stephen Fitzpatrick also has the option to invest an additional $25 million on the same terms.
This funding is expected to support the company's Flightpath 2030 Strategy, aimed at positioning Vertical as a global leader in the eVTOL market by the decade's end, including the ongoing development and certification of the VX4.
As part of the agreement, Vertical Aerospace's founder, Stephen Fitzpatrick, will stay on the board to provide ongoing strategic direction as the company advances through its certification program.
To strengthen its balance sheet, the company will convert approximately $130 million of convertible notes (50% of the outstanding amount) into equity at $2.75 per share, significantly reducing debt.
The conversion price for the remaining convertible notes is set at $3.50 per share, which supports future fundraising.
The repayment date for the remaining loan has been extended to December 2028, providing additional security during Vertical's certification process.
Stuart Simpson, CEO of Vertical Aerospace, said, "This funding agreement underscores the strong confidence of our investors in our Flightpath 2030 Strategy and our ambition to lead the global eVTOL market."
"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 flight test programme and bringing the VX4 to market."
Price Action: EVTL shares are up 7.31% at $5.14 premarket at the last check Monday.
Photo via Midjourney
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