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Vertical has begun piloted flight testing of its second VX4 prototype.
UK electric air taxi startup Vertical Aerospace has secured a $50 million investment lifeline in a deal that will reduce its debt and strengthen the balance sheet ahead of a fundraising round.
Founder and former CEO Stephen Fitzpatrick, who fought to retain control of the company, will stay on as a board member.
Mudrick Capital Management, which provided loan financing as part of Vertical’s public listing in 2021, has agreed to convert half the outstanding debt, $130.2 million, into equity and delay maturity of the remaining half to December 2028. The deal will give Mudrick 71% of Vertical’s voting ordinary shares.
In addition, distressed-asset investor Mudrick will provide Vertical with $25 million in upfront funding plus another $25 million backstop in case the company is unable to raise that amount in the planned equity placement. The backstop commitment will be reduced by any amount raised from third parties.
Fitzpatrick, who provided Vertical with an additional $25 million in funding in March but reneged on a commitment to provide a further $25 million in August, has been granted the right to purchase up to $25 million in shares under the planned equity placement or within the 12 months afterward.
Under the deal, the first half of Mudrick’s outstanding notes is to be converted to equity in Vertical at $2.75 a share and fixes the conversion price for the remaining outstanding notes at $3.25 a share. Vertical says this supports its fundraising plans by providing greater certainty for future investors.
“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 program and bringing the VX4 to market,” Vertical CEO Stuart Simpson said in a statement.
After technical setbacks and funding challenges, Vertical unveiled its Flightpath 2030 strategic plan in early November, pushing back planned type certification of the VX4 electric vertical-takeoff-and-landing (eVTOL) air taxi to 2028–a delay of four years from the target announced when Vertical went public in 2021.
Unveiling the plan, Vertical said it needed to spend $98 million to finance its activities for the next 12 months, roughly $78 million of which would come from new financing. The plan calls for the startup to deliver 150 aircraft by the end of the decade and ramp up production to 200 a year by the end of 2030.
“It is great to be able to announce this new funding today. We have been working hard to find a way to support the company in the short term, but also set us up for long-term success,” Fitzpatrick said in a statement. “This agreement underscores our appreciation of Vertical Aerospace’s position in the eVTOL sector,” said Jason Mudrick, founder and chief investment officer at Mudrick Capital.
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