UK-based Vertical Aerospace announced on Monday that investor Mudrick Capital has agreed to convert 50% of its outstanding convertible debt notes to equity, extending the repayment date for the remainder to December 2028. This deal provides the cash-strapped air-taxi maker with crucial financial support.
In addition to the debt restructuring, Mudrick will commit $25 million in upfront funding for Vertical’s next equity round and an additional $25 million backstop, to be reduced by any third-party contributions. This agreement is set to extend Vertical’s cash runway into the fourth quarter of next year, helping the company avoid potential liquidity issues.
The term sheet also includes an option for Vertical’s founder, Stephen Fitzpatrick, to invest a further $25 million in the company after missing a previous deadline. Earlier this month, Mudrick had issued a default notice to Vertical due to concerns about the company potentially breaching certain covenants related to its convertible senior secured notes due 2026.
Under the new terms, approximately $130 million of Mudrick’s convertible notes will be converted into equity at a price of $2.75 per share. Vertical, a leader among eVTOL (electric vertical take-off and landing) companies, continues to pursue urban air mobility solutions, though it faces challenges including regulatory hurdles, battery limitations, and the need to gain public trust in the safety of its aircraft.
