Vertical Aerospace Ltd 6-K, filed Nov 12, 2024
Vertical Aerospace Ltd. (EVTL)
About this 6-K
Vertical Aerospace Ltd filed this 6-K on November 12, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2024
Commission File Number: 001-41169
Vertical Aerospace Ltd.
(Exact Name of Registrant as Specified in Its Charter)
Unit 1 Camwal Court, Chapel Street
Bristol BS2 0UW
United Kingdom
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
EXPLANATORY NOTE
Press Release
On November 12, 2024, Vertical Aerospace Ltd. (the “Company”) published a press release launching “Flightpath 2030”, its revised strategy and business plan for transforming the Company from prototype to production. A copy of the press release is furnished as Exhibit 99.1 hereto.
Liquidity and Funding Update
As previously communicated, the board of directors of the Company (the “Board”) has been exploring all options available to the Company with respect to its funding needs. Discussions remain ongoing among the Company, its majority shareholder and senior secured lender to address the Company’s more immediate cash requirements.
The Company remains optimistic that those discussions will culminate in a consensual transaction that would not only provide funding for the Company further into 2025, but also remove or mitigate certain structural obstacles that have impeded the Company from accessing substantial third party funding since its public listing. The Company’s objective is that such a transaction would facilitate a clearer path to delivering fundraising opportunities to support it through to completion of the development and certification of its aircraft.
In parallel the Company continues to explore all alternative options available to it with respect to its funding needs.
As of September 30, 2024, the Company had £42.8 million / $57.4 million of cash and cash equivalents on hand, based on unaudited management accounts. This September 30, 2024 information is preliminary and subject to adjustment and has been prepared by, and is the responsibility of, the Company’s management. PricewaterhouseCoopers LLP has not audited, reviewed, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or other form of assurance with respect thereto.
Notice of Event of Default under Convertible Senior Secured Notes
Over the course of the discussions referred to above with its senior secured lender, Mudrick Capital Management L.P. (“Mudrick Capital”), the Company became aware of certain existing circumstances that Mudrick Capital could view as causing the Company not to be in compliance with certain covenants under the indenture (the “Indenture”) relating to the Company’s 7.00% / 9.00% Convertible Senior Secured PIK Toggle Notes due 2026 (the “Notes”). The Company promptly informed Mudrick Capital thereof. On November 1, 2024, the Company received a notice of default (the “Default Notice”) from Mudrick Capital. The Default Notice asserts that defaults have occurred in respect of the Company’s covenants under the Indenture (i) relating to causing its wholly-owned subsidiaries to become guarantors of the Company’s obligations under the Indenture and the Notes, as a consequence of the absence of a guarantee from Vertical Aerospace Group Ltd., a wholly-owned subsidiary of the Company (“VAGL”), and (ii) for all material intellectual property relating to the Company’s business to be owned by the Company and its guarantors, as a consequence of all such material intellectual property’s being owned by VAGL ((i) and (ii) together, the “Notified Defaults”).
Pursuant to the terms of the Indenture, the Company has the right to cure certain defaults (which right would encompass the asserted Notified Defaults) within sixty (60) days after the date of notice to the Company before any such default would constitute an event of default under the Indenture, permitting the holders of at least 25% of the aggregate principal amount of the Notes to issue notice to accelerate repayment of the Notes.
Additionally, the Indenture provides that any event of default may be waived with the consent of the Note holders. Without admission as to whether any default under the Indenture has in fact occurred, the Company is in discussion with Mudrick Capital as the sole holder of the Notes in respect of the Notified Defaults. In particular, the Company will seek agreement from Mudrick Capital that in the event of a successful outcome to the discussions relating to a consensual transaction as referred to above, the Notified Defaults be waived on a temporary basis pending consummation of such consensual transaction and on a permanent basis on and from such consummation.
In the absence of obtaining such a waiver, if Mudrick Capital were to be entitled to accelerate repayment 60 days following delivery of the Default Notice, or December 31, 2024, and did accelerate such repayment, the Company does not currently expect to hold sufficient cash reserves to comply with such notice, which would entitle Mudrick Capital to enforce its security over the shares in VAGL. The Company’s ability to address the Notified Defaults would be subject to VAGL’s agreeing to enter into a guarantee, which may be outside the direct control of the Company to procure.
Changes to Board Composition
On November 11, 2024, the Board appointed Stuart Simpson, the Company’s Chief Executive Officer, to serve as an executive director of the Company by unanimous written resolution of the Board, effective immediately.
On November 10, 2024, the Board appointed Stephen Welch as the new chairman of the Board, effective immediately, by unanimous affirmative vote of the directors in office. Additionally, on November 11, 2024, Stephen Welch was appointed to the board of directors of VAGL, effective immediately, by unanimous written resolution of the directors of VAGL.
As of November 6, 2024, Mike Flewitt no longer serves as a director on the Company’s Board. Mr. Flewitt served as a director of the Company since July 2022 and its chairman since August 2023. The Company thanks Mr. Flewitt for his support in the Company’s progress during the period of his service, and wishes him the very best in his future endeavors.
Forward-Looking Statements
This Report of Foreign Private Issuer on Form 6-K (the “Form 6-K”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any express or implied statements contained in this Form 6-K that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding our ability to raise additional capital to fund our operations, the Notified Defaults being waived or cured prior Mudrick Capital enforcing its security over the shares in VAGL, the Company’s cash reserves as at any particular future date, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate,” “will,” “aim,” “potential,” “continue,” “is/are likely to” and similar statements of a future or forward-looking nature. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the important factors discussed under the caption “Risk Factors” in the Company's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) on March 14, 2024, as such factors may be updated from time to time in the Company’s other filings with the SEC. Any forward-looking statements contained in this Form 6-K speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. The Company disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this Form 6-K, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.
INCORPORATION BY REFERENCE
The information included in this Report on Form 6-K (including Exhibit 99.1 hereto, but excluding the quotation from the Company’s CEO) is hereby incorporated by reference into the Company’s Registration Statements on Form F-3 (File No. 333-270756 and File No. 333-275430) (including any prospectuses forming a part of such registration statements) and to be a part thereof from the date on which this Report on Form 6-K is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press release of Vertical Aerospace Ltd. dated November 12, 2024. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Vertical Aerospace Ltd. | ||
| Date: November 12, 2024 | By: | /s/ Stuart Simpson |
| Stuart Simpson | ||
| Chief Executive Officer | ||
Exhibit 99.1
Vertical Aerospace Launches "Flightpath 2030", a strategy to pioneer electric aviation
London, UK; New York, USA – 12/11/2024: Vertical Aerospace Ltd. (“Vertical” or the "Company") (NYSE: EVTL; EVTLW), a global aerospace and technology company that is pioneering zero emission aviation, today announces "Flightpath 2030," its strategy for market leadership before the end of the decade.
As Vertical advances its piloted flight test programme, which has entered into Phase 2, "Flightpath 2030" sets a clear route for the company’s journey from prototype to production. This strategic plan builds on the progress made by the business to date and is underpinned by learnings from its piloted flight test programme, using a full-sized prototype, positive engagement with its home regulator, the Civil Aviation Authority (CAA) and robust planning by Vertical’s Leadership Team.
Stuart Simpson, CEO at Vertical Aerospace, said: “This is a transformational moment for Vertical as we advance from prototype to production. Since I became CEO, I’ve been clear that I want Vertical to lead — not just compete in — the eVTOL sector.
The strategy and goals we are unveiling today provide a new level of detail on how exactly we intend to get there – the best team, delivering the safest and most versatile aircraft, with the most compelling business model in the industry.”
Market leadership through embedding a pioneering culture, redefining aerospace best practice, intelligent partnering and being safety obsessed.
From the company’s inception, Vertical set out to focus on engineering and product excellence, building an aircraft which meets the highest safety standards and needs of its customers operating the VX4. Vertical’s customers include some of the world’s largest airlines, helicopter operators and aircraft lessors.
Vertical’s mission is to pioneer electric aviation, by integrating four strategic intents – pioneering culture, redefining aerospace best practice, intelligent partnering and safety obsessed - into every stage of development and operations. This is reflected in the strategic goals it has set out to deliver.
Flightpath 2030: by the end of the decade, Vertical is targeting:
| · | Delivering at least 150 aircraft to our customers, achieving significant milestones in high-quality, large-scale production. Vertical is currently collaborating with leading aerospace firms including GKN Aerospace, Hanwha, Honeywell, Leonardo, Molicel and Syensqo, combining this with innovation as needed, such as with its own proprietary powertrain and propeller technology. |
| · | Achieving an annual production rate exceeding 200 VX4 units in Q4 2030, with plans to scale up to greater than 700 units per year in the medium-term, to deliver against a leading pre-order book. To achieve this goal, Ross Crawford, who has extensive experience in early-stage manufacturing ramp ups, including at Jaguar Land Rover, has been appointed to lead Vertical’s manufacturing capabilities. |
| · | Positioning Vertical to become sustainably cash generative, achieving cash break-even in 2030, given the capital efficiency of its focused OEM business model. Gross profit margin is currently expected to build to >40% in the following years. |
| · | Certifying the VX4 in 2028, followed by certifying its first major upgrade in 2030. This update versus previous expectations follows Vertical’s positive engagement with the CAA as well as its progress, insights, and growing confidence from the second piloted flight test plan, which began in 2024 and recently advanced to Phase 2: untethered, piloted thrustborne flight—a critical milestone on the path to certification. The aircraft is performing beyond expectations. |
The VX4’s high performance powertrain allows for future capacity increases, giving customers flexibility. While the current prototype seats four passengers, its cabin width and robust powertrain enable the potential to accommodate six passengers and extend its range with minimal adjustments to the design or certification requirements.
| · | Maintaining a zero accident rate, certifying to the highest level of safety – 10-9, the same as for commercial airliners - whilst upholding our commitment to rigorous safety standards across the business. |
David King, Chief Engineer at Vertical Aerospace, said: “The eVTOL sector isn’t just another iteration of existing tech; we’re defining an entirely new category of aircraft.
Innovating in this space demands a radical shift in how we develop aerospace solutions. In the UK, with its unmatched aviation heritage, world-class talent, and a thriving ecosystem, we’re driving that change. Today’s plan sets out exactly how we will make this new dawn of travel a reality.”
Outlook
Vertical has an industry-leading capital efficient business model as a focused OEM and has achieved significant key milestones towards certification including:
| - | The CAA expanding the scope of Vertical’s Design Organisation Approval in July, a requirement for the Type Certification of the VX4 and its entry into service. | |
| - | Successfully progressing its full-scale piloted flight test programme – most recently initiating Phase 2 – untethered thrustborne. | |
| - | Developing proprietary certifiable battery technology in-house with the sixth-generation packs in use in its current prototype. |
As of September 30, 2024, the Group had £42.8 million/$57.4 million of cash and cash equivalents on hand, based on unaudited management accounts.
Vertical currently expects the capital required for the business to deliver its operational goals over the next 12 months to be broadly consistent with spend over the last 12 months of £78.4 million/$98.0 million. This spend will increase over time as Vertical approaches certification and then production.
Discussions are ongoing regarding potential third party investment. Vertical is optimistic that these discussions will result in a transaction that will provide funding further into 2025 and facilitate future fundraising opportunities. In parallel Vertical continues to explore all alternative options available with respect to its funding needs.
In 2025, Vertical plans to:
| - | Fly full-scale piloted transition. | |
| - | Build and fly its third full-scale VX4 prototype. | |
| - | Fly full-scale piloted flights demonstrating real-world use cases. | |
| - | Earn additional DOA privileges including Flight Conditions privilege granted by the CAA. | |
| - | Initiate production with long-range parts purchasing. | |
| - | Strengthen its operating model and shift its approach to focus on execution. |
Details of webcast
The strategy presentation can be viewed on Vertical’s Investor Relations website. A webcast will take place today at 0830 ET (13:30 GMT), hosted by the company’s leadership. To access the webcast, visit Vertical’s Investor Relations website: https://investor.vertical-aerospace.com/events-and-presentations/events/.
If unable to attend the webcast, to listen by phone, please dial +1 646 307-1963 or +1 0800 715 9871; Conference ID 8922591.
About Vertical Aerospace
Vertical Aerospace is a global aerospace and technology company pioneering electric aviation. Vertical is creating a safer, cleaner and quieter way to travel. Vertical’s VX4 is a piloted, four passenger, Electric Vertical Take-Off and Landing (eVTOL) aircraft, with zero operating emissions. Vertical combines partnering with leading aerospace companies, including GKN, Honeywell and Leonardo, with developing its own proprietary battery and propeller technology to develop the world’s most advanced and safest eVTOL.
Vertical has c.1,500 pre-orders of the VX4, with customers across four continents, including American Airlines, Japan Airlines, GOL and Bristow. Headquartered in Bristol, the epicentre of the UK’s aerospace industry, Vertical was founded in 2016 by Stephen Fitzpatrick, founder of the OVO Group, Europe’s largest independent energy retailer. Vertical’s experienced leadership team comes from top tier automotive and aerospace companies such as Rolls-Royce, Airbus, GM and Leonardo. Together they have previously certified and supported over 30 different civil and military aircraft and propulsion systems.
For more information:
Justin Bates, Head of Communications justin.bates@vertical-aerospace.com +44 7878 357 463
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. We intend such forward-looking statements to be covered by the safe harbour provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding the design and manufacture of the VX4, the features and capabilities of the VX4, business strategy and plans and objectives of management for future operations, including the building and testing of our prototype aircrafts on timelines projected, including completion of the piloted test programme phases, selection of suppliers, certification and the commercialization of the VX4 and our ability to achieve regulatory certification of our aircraft product with any of our intended regulators on any particular timeline or at all, our ability and plans to raise additional capital to fund our operations, the differential strategy compared to our peer group, expectations surrounding pre-orders and commitments, our future results of operations and financial position and expected financial performance and operational performance, liquidity, growth and profitability strategies, our plans to mitigate the risk that we are unable to continue as a going concern, our plans for capital expenditures, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate,” “will,” “aim,” “potential,” “continue,” “are likely to” and similar statements of a future or forward-looking nature. Forward-looking statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation: our limited operating history without manufactured non-prototype aircraft or completed eVTOL aircraft customer order; our history of losses and the expectation to incur significant expenses and continuing losses for the foreseeable future; the market for eVTOL aircraft being in a relatively early stage; our potential inability to produce, certify or launch aircraft in the volumes or timelines projected; the potential inability to obtain the necessary certifications for production and operation within any projected timeline, or at all; any accidents or incidents involving eVTOL aircraft could harm our business; our dependence on partners and suppliers for the components in our aircraft and for operational needs; the potential that certain strategic partnerships may not materialize into long-term partnership arrangements; all of the preorders received are conditional and may be terminated at any time and any pre-delivery payments may be fully refundable upon certain specified dates; any circumstances; the inability for our aircraft to perform at the level we expect and may have potential defects; any potential failure to effectively manage our growth; our inability to recruit and retain senior management and other highly skilled personnel, our ability to raise additional funds when we need or want them, or at all, to fund our operations; our limited cash and cash equivalents and recurring losses from our operations raise significant doubt (or raise substantial doubt as contemplated by PCAOB standards) regarding our ability to continue as a going concern; and the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) on March 14, 2024, as such factors may be updated from time to time in our other filings with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. We disclaim any obligation or undertaking to update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.