Vertical Aerospace has launched a new $90 million funding round, partly tying when investors are able to redeem the warrants on offer with the flight-test progress of its VX4 aircraft.
Details of the public offering were disclosed in a prospectus filed with the US Securities and Exchange Commission on 22 January. Initially seeking to raise $75 million, the company on 23 January announced it had increased the target to $90 million.
Investors participating in the funding round will receive shares alongside two types of warrant, Tranches A and B, giving the holder the right to purchase shares at a pre-set price. Tranche A warrants have an exercise price of $6 per share and Tranche B warrants $7.50 per share.
While both are exercisable immediately, only the Tranche B warrants are solely time-limited, expiring five years after they are issued.
However, the conditions attached to the Tranche A warrants are more complex. The prospectus reveals that they will either expire after five years, or, if earlier, after the VX4 performs a successful wingborne take-off, flies “to high speed” and carries out a conventional landing, plus the company’s shares trade at a certain level – 103% of the Tranche A warrant price – across a 10-day period.
Conventional take-off and landing operations are Phase 3 of Vertical’s four-stage flight-test plan; the VX4 recently began Phase 2B testing, or low-speed thrustborne manouevres.
Depending on the progress of flight-tests and regulatory approvals, those wingborne flights could take place this year.
Although Vertical is attempting to raise $75 million from the offering, $25 million of the total will be provided by its largest shareholder, Mudrick Capital.
Under an agreement ratified late last year, which also saw a debt-for-equity swap, Mudrick will act as backstop for a further $25 million if additional outside investment cannot be found.
Vertical says that as of 31 December 2024, it had cash and cash equivalents of £22.5 million ($27.7 million) on hand, down from £42.8 million at the end of September. It previously indicated that the $50 pledged by Mudrick would provide sufficient cash runway until the end of 2025.
Additionally, Vertical says that founder Stephen Fitzpatrick will resign from the company’s board following the closing of the offering, which will take place on or around 24 January.
This story has been updated with additional information from Vertical Aerospace on size, pricing and timing.
