Air taxi firm Vertical says Mudrick to convert some notes to equity, extend repayment deadline

By Abhijith Ganapavaram

(Reuters) – UK-based Vertical Aerospace said on Monday that investor Mudrick Capital has agreed to convert 50% of its outstanding convertible debt notes to equity and extend the repayment date on the rest to December 2028, giving the cash-strapped air-taxi maker financial breathing room.

Mudrick will also commit $25 million in upfront funding in Vertical’s next equity round and an additional $25 million backstop that will be reduced by any amounts raised from third parties, according to a press release being published later today.

The agreement will extend Vertical’s cash runway into the fourth quarter of next year. The company had previously flagged ongoing concern doubts.

The term sheet includes an option for Vertical founder Stephen Fitzpatrick to invest a further $25 million into the company in the next year after he missed a previous deadline to inject money.

Mudrick earlier this month served a default notice to Vertical on convertible senior secured notes due 2026 after the company told the investor it might fall foul of certain covenants under their agreement.

Under the term sheet unveiled on Monday, approximately $130 million of Mudrick’s convertible notes will be converted into equity at $2.75 per share, Vertical said.

The company is among a few eVTOL makers looking to upend urban travel by offering rides. However, the industry needs to tackle regulatory hurdles and overcome battery limitations. They also have to convince the public that their aircraft are safe.