Vertical Aerospace has resolved its urgent liquidity issues and made room for possible third-party financing through a new strategic agreement it negotiated with investor Mudrick Capital, as cash flow became an ever-greater worry. The eVTOL company in the UK aims to further strengthen its financial position by closing a new funding round in Q1 2025. This will allow them to fund operations until the end of the year.
Vertical confirmed in an SEC filing that it plans to “launch and complete the [new] equity placement during the first quarter of 2025 before the company has used all its existing resources.” The extension of its operations into the first quarter of 2025 depends on the successful closing of this deal and the injection of additional capital. An extraordinary general meeting of shareholders is currently taking place to “vote upon certain amendments to the company’s memorandum and articles of association in accordance with the Secures $180M Investment agreement.
Vertical Secures Investment to Support Flightpath 2030
The announcement of this “significant Secures $180M Investment agreement that strengthens [Vertical’s] balance sheet and funds [the company] towards the end of next year” on December 20th is a significant milestone. The funding from US investment management firm Mudrick Capital and Vertical’s major shareholder and founder, Stephen Fitzpatrick, will strengthen the company’s financial position at a crucial juncture, contributing to the enhancement of its recently disclosed ‘Flightpath 2030’ strategy.
In addition to funding Vertical’s operations until the end of 2025, the arrangement removes or at least reduces some structural barriers that have prevented the company from obtaining significant finance from other sources since its public listing, as confirmed by Vertical.
Vertical predicted a net cash loss from operations of £40–£45 million for the second half of 2024, despite having £42.8 million in cash and equivalents on hand as of 30 September 2024. It seems to have consumed less cash than expected, with about £25 million available as of 20 December. However, an imminent cash runaway will need faster financial solutions due to the flight test campaign’s continuation and the following certification process.
Vertical Secures $180M Deal with Mudrick Capital
In November, Vertical and Mudrick Capital announced their new “comprehensive deal,” which would add some $180 to Vertical’s balance sheet. The amount might reach $50 million, with $25 million coming in immediately,d another $25 million serving as a “backstop,” and approximately $130 million in debt being turned into equity. We also suggested other financially advantageous alternatives, like deferring loan repayment until Vertical’s updated certification date of 2028.
The firm cited the completion of Vertical’s second full-scale prototype aircraft as the reason for the operating loss of £20 million in the first half of 2024, despite the company’s industry-leading capital efficiency. According to a 20 December SEC filing, Vertical’s net loss for the nine months ended 30 September 2024 was £45.6 million.
Summary
Based on its confidence, Vertical is sure of Secures $180M Investment of its focused OEM business model” and wants to be sustainably cash generative, achieving cash break-even in 2030. Stuart Simpson summed up the previous three months as “a momentous quarter” by saying, “I could not be prouder of the team or more excited to get into 2025.” This quarter included the piloted flight test program launch, something he said fewer companies in the sector had accomplished.
FAQs
What is the Flightpath 2030 strategy?
Vertical Aerospace's "Flightpath 2030" strategy aims to ensure the successful development and certification of its eVTOL aircraft, to achieve cash break-even by 2030.
What is the significance of the investment deal with Mudrick Capital?
The deal provides Vertical Aerospace financial stability by adding $180 million to its balance sheet. This investment will help fund operations through 2025 and support the company's growth towards achieving its goals.
How will Vertical Aerospace use the $180 million funding?
The funding will help strengthen the company’s balance sheet, support ongoing flight test campaigns, and contribute to the continued development of eVTOL aircraft.
What are the financial outcomes for Vertical in 2024?
Despite a forecasted net cash loss, Vertical managed to retain approximately £25 million in available cash by December 2024, with a projected need for more funding due to ongoing development and certification efforts.
