SCHEDULE: Mudrick Capital's Vertical Aerospace Stake Hits 58.4%

Mudrick Capital Management and its affiliates now beneficially own 58.4% of Vertical Aerospace Ltd. after a capital raise and propose new convertible note agreements.

Summary

• Mudrick Capital Management and its affiliates (the "Mudrick Funds") collectively beneficially own 101,021,846 Class A ordinary shares of Vertical Aerospace Ltd., representing 58.4% of the outstanding class.
• This ownership includes 54,659,585 directly held ordinary shares, 41,796,261 shares issuable from convertible senior secured notes, and 4,566,000 shares from various warrants.
• Vertical Aerospace recently completed a $50 million "at the market" share issuance program, which diluted Mudrick's percentage ownership by over 1%.
• Mudrick Capital Management has agreed in principle to extend the maturity of existing 10.00% / 12.00% Convertible Senior Secured Notes from December 2028 to December 2030.
• Mudrick also agreed in principle to provide a facility to purchase up to $50 million in new additional convertible secured notes, issuable in tranches over 12 months, on the same terms as the existing notes.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as moderately positive. While the capital raise and potential new financing are crucial for Vertical Aerospace's operations, the dilution and the 'in principle' nature of the new agreements introduce some uncertainty.

Positives

• Mudrick Capital Management's willingness to extend existing convertible note maturities and provide a facility for up to $50 million in new convertible notes demonstrates continued support and confidence in Vertical Aerospace.
• The capital raise of $50 million provides additional funding for Vertical Aerospace.

Negatives

• The "at the market" capital raise diluted the beneficial ownership percentage of Mudrick Capital Management by more than 1%.
• The need for a capital raise and additional convertible notes suggests ongoing funding requirements for Vertical Aerospace.

Risks

• The agreements for note extension and new note facility are "in principle" and "subject to further negotiation and the execution of definitive agreements," indicating a risk that these terms may not finalize as currently outlined.
• The company's reliance on convertible notes and warrants for funding introduces potential future dilution upon conversion or exercise.

Future Outlook

Mudrick Capital Management intends to continue reviewing its investment in Vertical Aerospace and may acquire more securities, convert notes, exercise warrants, sell shares, or engage in hedging. They also retain the ability to influence management and the Board regarding the Issuer's business and governance, including Board composition, given their consent rights.

Industry Context

StockSavvy.ai notes that the continued financial support from a significant investor like Mudrick Capital Management is crucial for early-stage, capital-intensive industries such as advanced air mobility (AAM) and eVTOL development, where companies often require substantial and sustained funding to reach commercialization. The extension of debt maturities and commitment to new convertible notes indicate a long-term view from a key stakeholder.

Corporate Governance

Stakeholder Impact

• Shareholders: Experience dilution from the $50 million capital raise. Potential for further dilution from conversion of existing and new convertible notes and exercise of warrants. Benefit from continued funding for company operations.
• Creditors (Mudrick Funds): Benefit from the proposed extension of convertible note maturities, providing more time for repayment or conversion. Potential to increase their investment through new convertible notes.

Next Steps

• Further negotiation and execution of definitive agreements for the extension of existing convertible notes and the new $50 million convertible note facility.
• Issuance of new additional convertible secured notes in tranches over 12 months.
• Ongoing review by Reporting Persons of their investment in Vertical Aerospace.
• Potential future acquisitions or dispositions of Issuer securities by Reporting Persons.
• Potential influence on management or the Board by Mudrick Capital Management.

Key Dates

Recommendation

The filing indicates continued financial support and a long-term commitment from a major investor, which is positive for a development-stage company. However, the ongoing need for capital raises and the dilution associated with them, coupled with the "in principle" nature of future financing, suggest a degree of financial uncertainty. Investors should hold while monitoring the finalization of financing agreements and operational progress.

Keywords

Vertical Aerospace, Mudrick Capital Management, Schedule 13D, Beneficial Ownership, Convertible Notes, Warrants, Capital Raise, Equity Dilution, SEC Filing, Aviation, eVTOL