6-K
Vertical Aerospace Ltd. (EVTL)
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 ItsCharter)
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
On November 24, 2024, the Board of Directors (the “Board”) of Vertical Aerospace Ltd. (the “Company”) resolved in favor of an agreement in principle (the “Agreement in Principle”), which has been documented in a term sheet dated November 24, 2024 by and among the Company, its majority shareholder, Stephen Fitzpatrick, and its primary creditor and senior secured lender, Mudrick Capital Management L.P. (“Mudrick Capital”) (the “Term Sheet”), to address the Company’s more immediate cash requirements and faciliate longer-term fund raising. A copy of the Term Sheet is furnished as Exhibit 99.1 hereto.
The Term Sheet is not legally binding and is subject to the implementation and execution of final transaction agreements documenting its terms, acceptable to the parties thereto, as well as amendments to the Company’s Memorandum and Articles of Association requiring approval by a two-thirds majority of the votes cast by the Company’s shareholders at a general meeting of shareholders.
The Agreement in Principle, as contemplated in the Term Sheet, once consummated in binding transaction agreements, would represent a consensual transaction among the parties thereto that would not only provide funding for the Company’s operations towards the end of 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 believes that the Agreement in Principle will facilitate a clearer path to delivering fundraising opportunities to support it through to completion of the development and certification of its aircraft.
On November 25, 2024, the Company issued a press release in relation to the Agreement in Principle, a copy of which is furnished as Exhibit 99.2 hereto.
The material terms of the Agreement in Principle include the following:
Fixing of Conversion Price for Outstanding Notes and Other Indenture Amendments
| · | Subject to certain conditions, the Indenture, dated as of December 16, 2021, among the Company and<br>U.S. Bank National Association as trustee and collateral agent (the “Indenture”), among others, governing the 7.00% / 9.00%<br>Convertible Senior Secured PIK Toggle Notes due 2026 (the “Notes”) is to be amended by way of one or more supplemental indentures<br>or replaced with a new indenture (collectively, the “Indenture Amendments”), to reflect the following, among other things: |
|---|---|
| o | to provide for a fixed conversion price for the Notes remaining outstanding of $3.50 per ordinary share; |
| --- | --- |
| o | the interest rate applicable to the Notes, both in respect of cash interest and PIK interest, are to be increased to 10.00% and 12.00%,<br>respectively; |
| --- | --- |
| o | the maturity date of the Notes is to be extended to December 15, 2028; |
| --- | --- |
| o | the redemption provisions of the Notes are to reflect an updated profile corresponding to the new maturity date and coupon; |
| --- | --- |
Partial Conversion of Convertible Notes
| · | Mudrick Capital is to immediately convert half, or approximately $130 million, of the principal amount of the Company’s then-outstanding<br>Notes held by it, at a conversion price of $2.75 per Company ordinary share; |
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| o | Immediately following such conversion, it is expected that Mudrick Capital will own 71% of the Company’s ordinary shares, based<br>on the total number of ordinary shares in issue as at the date of this Form 6-K; |
| --- | --- |
Indenture Enhancements
| · | Promptly following the partial conversion: |
|---|---|
| o | Vertical Aerospace Group Ltd. is to become a Guarantor under the Indenture; and |
| --- | --- |
| o | Mudrick Capital is to waive all existing defaults and events of default under the Indenture; |
| --- | --- |
Funding Commitments and Options
| · | Mudrick Capital is to commit to fund up to $50 million to the Company in its next funding round (the “Equity Placement”),<br>subject to the following: |
|---|---|
| o | $25 million is to be funded by Mudrick Capital on a non-contingent basis; |
| --- | --- |
| o | a backstop commitment for an additional $25 million to be funded by Mudrick Capital if the Company is not able to raise such amount<br>in the Equity Placement (with such backstop commitment reducing dollar-for-dollar for any amounts raised from third parties, including<br>existing shareholders of the Company); |
| --- | --- |
| · | Stephen Fitzpatrick is to have (the “Participation Rights”): |
| --- | --- |
| o | the right to participate for $25 million in the Equity Placement on the same economic terms as other investors in the Equity Placement;<br>or |
| --- | --- |
| o | in the event he elects not to participate in the Equity Placement, a 12-month option to invest $25 million in ordinary shares of the<br>Company at a strike price equal to the per share purchase price paid by investors in the Equity Placement; |
| --- | --- |
Governance Matters
| · | The majority of the members of the Board are to be independent; |
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| · | Mudrick Capital is to acquire certain director nomination rights, proprotionate to its share ownership percentage, and certain consent<br>rights in respect of any amendments to such director nomination rights as well as changes to the composition of the Board; |
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| · | Stephen Fitzpatrick is to remain on the boards of the Company and Vertical Aerospace Group Ltd. (while receiving no compensation for<br>service on either board) so long as his ultimate shareholding in the Company remains above 3%; |
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| · | All veto rights and reserved matters in favor of Stephen Fitzpatrick are to be removed; and |
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Other Matters
| · | The Investment Agreement by and between the Company and Imagination Aero Investments Limited (“IAIL”) dated February 22,<br>2024 shall have expired (including in respect of the second tranche $25 million funding commitment) and such obligations shall be replaced<br>by the Participation Rights. |
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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 impliedstatements contained in this Form 6-K that are not statements of historical fact may be deemed to be forward-looking statements,including, without limitation, including, without limitation, statements regarding the consummation of the Agreement in Principle, includingthe entry into final transaction agreements and the satisfaction of all closing conditions, completion of the committed funding from MudrickCapital and use of proceeds therefrom, the sufficiency of the proceeds from the committed funding to meet the Company’s more immediatecapital expenditure requirements, the Company’s satisfaction of all closing conditions to the committed funding, our ability andplans to raise additional capital to fund our operations, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate,” “will,” “aim,” “potential,” “continue,” “is/are likelyto” and similar statements of a future or forward-looking nature. These forward-looking statements reflect our current views withrespect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information containedin the forward-looking statements as a result of a number of factors, including, without limitation, the important factors discussed underthe 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 withthe SEC. Any forward-looking statements contained in this Form 6-K speak only as of the date hereof and accordingly undue relianceshould not be placed on such statements. The Company disclaims any obligation or undertaking to update or revise any forward-looking statementscontained in this Form 6-K, whether as a result of new information, future events or otherwise, other than to the extent requiredby applicable law.
INCORPORATION BY REFERENCE
The information included in this Report on Form 6-K (including Exhibit 99.1 but excluding Exhibit 99.2) 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
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 25, 2024 | By: | /s/ Stuart Simpson |
| Stuart Simpson | ||
| Chief Executive Officer |
Exhibit 99.1
VERTICAL AEROSPACE LTD.
Term Sheet – November 24, 2024
| PARTIES | |
|---|---|
| Company: | Vertical<br> Aerospace Ltd., a Cayman Islands exempted company. |
| VAGL: | Vertical<br> Aerospace Group Limited, a company incorporated under the laws of England and Wales, and a wholly-owned subsidiary of the Company. |
| Mudrick Capital: | Mudrick<br> Capital Management L.P. or any fund, investor, entity or account that is managed, sponsored or advised by Mudrick Capital Management<br> L.P. or its affiliates. |
| SF Investors: | Stephen<br> Fitzpatrick, Imagination Aero Investments Limited or any other fund, entity or account that is affiliated with Stephen Fitzpatrick. |
| STEP A: AMENDMENTS TO INDENTURE AND PARTIAL CONVERSION OF NOTES | |
| --- | --- |
| AMENDMENTS TO INDENTURE | |
| Capitalized terms used in this section without definition shall have the respective meanings ascribed to them in the Indenture, dated as of December 16, 2021, between, among others, the Company (as defined below) and U.S. Bank National Association as trustee and collateral agent (the “Indenture”), governing the 7.00% / 9.00% Convertible Senior Secured PIK Toggle Notes due 2026 (the “Notes”) issued by the Company. | |
| Amendments to the Indenture: | Subject to the Conditions set out below,<br> the Indenture is to be amended by way of one or more supplemental indentures or replaced with a new indenture (collectively, the<br> “Indenture Amendments”), as follows: |
| · | to provide for a fixed Conversion Rate to reflect a Conversion Price that is (a) effective<br> as of the date of the Supplemental Indenture, $2.75 per Ordinary Share, subject to a restriction that such fixed Conversion Rate is<br> only applicable up to and including half (approximately $130.2 million assuming payment of PIK Interest on December 15, 2024)<br> of the total principal amount of the then-outstanding Notes, and (b) effective on and after the date that the Conversion Consideration<br> in respect of half (approximately $130.2 million assuming payment of PIK Interest on December 15, 2024) of the total principal<br> amount of the then-outstanding Notes is delivered by the Company pursuant to Section 5.03 of the Indenture (such date of delivery,<br> the “Partial Conversion Date”), $3.50 per Ordinary Share. For the avoidance of doubt, such fixed Conversion Rate,<br> in each case, shall not be subject to down-round adjustment as provided in Section 5.05(A)(vi) of the existing Indenture); |
| --- | --- |
| · | with effect from December 15, 2024, to provide for a fixed interest rate of 10.00% for Cash Interest<br> and 12.00% for PIK Interest; |
| · | the Maturity Date is to be December 15, 2028; and |
| · | the definitions of Make-Whole Premium, Redemption Multiplier and Fundamental Change Redemption Multiplier<br> are to reflect the following redemption profile: |
| o | for any redemption prior to the fourth anniversary of the Issue Date: make-whole premium<br> payable; |
| --- | --- |
| o | on or after the fourth anniversary of the Issue Date but prior to the fifth anniversary of the Issue Date, 112.0%; |
| o | on or after the fifth anniversary of the Issue Date<br> but prior to the sixth anniversary of the Issue Date, 106.0%; and |
| --- | --- |
| o | on or after the sixth anniversary of the Issue Date, 100.0%. |
| PARTIAL CONVERSION | |
| --- | --- |
| Partial Conversion: | Promptly<br> following entry into the Indenture Amendments, Mudrick Capital shall, pursuant to Section 5.02 of the Indenture, provide a Notice<br> of Conversion in respect of $130 million principal amount of the outstanding Notes at the Conversion Price of $2.75 per Ordinary<br> Share (the “Partial Conversion”). |
| Conversion Consideration: | Upon receipt<br> of the Notice of Conversion, the Company shall deliver the Conversion Consideration pursuant to Section 5.03 of the Indenture,<br> amounting to approximately 47,343,585 Ordinary Shares and representing approximately 71% of the total number of voting Ordinary Shares<br> in issue based on the number of such Ordinary Shares as at the date of this Term Sheet. |
| CONDITIONS | |
| --- | --- |
| Mudrick Capital Conditions to Indenture Amendments and Partial Conversion Date: | Subject to waiver by Mudrick Capital, the<br> Indenture Amendments and Partial Conversion shall be conditional upon:<br><br> <br><br><br> <br>(a) entry<br> into a subscription agreement among the Company, VAGL, Mudrick Capital and the SF Investors (the “Subscription Agreement”),<br> documenting the terms of the Committed Funding, First Equity Placement and Mr. Fitzpatrick’s Participation Rights as set<br> forth in this Term Sheet;<br><br> <br><br><br> <br>(b) entry<br> into a forbearance agreement (the “Forbearance Agreement”), which shall include:<br><br> <br><br><br> <br>o support<br> undertakings from all parties in respect of the transactions contemplated by this Term Sheet (including, the Company Undertakings<br> and Majority Shareholder Undertakings set out below);<br><br> <br><br><br> <br>o milestones<br> to be agreed (including completion of the Indenture Amendments and the Partial Conversion by December 31, 2024);<br><br> <br><br><br> <br>o a<br> forbearance in respect of any outstanding Defaults or Events of Default under the Indenture until (i) February 1, 2025,<br> in respect of Sections 3.15(a) and 3.16(a) of the Indenture and (ii) until the earlier of February 1, 2025<br> and the date that the Committed Funding (as defined below) is received by the Company, in respect of Section 3.13 of the Indenture,<br> in each case subject to: |
| § | the Company, VAGL and the SF Investors complying with<br> their forbearance undertakings; |
| --- | --- |
| § | compliance with customary information rights (including delivery of financial<br> information); and |
| § | customary termination events (including upon breach of any milestone,<br> insolvency, steps taken to file for insolvency or MAE); and |
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| o a<br> waiver in respect of the Fundamental Change repurchase provisions in the Indenture in connection with the transactions contemplated<br> by this Term Sheet;<br><br> <br><br><br> <br>(c) Mudrick<br> Capital’s consent, as sole noteholder, to the Indenture Amendments, which consent Mudrick Capital undertakes to procure;<br><br> <br><br><br> <br>(d) the<br> Company granting fixed and floating charges over all of its assets as security for the Notes and all liabilities under the Indenture<br> (as amended);<br><br> <br><br><br> <br>(e) Company<br> shareholder approval with respect to the Indenture Amendments, Partial Conversion and all amendments to the Company’s memorandum<br> and articles of association required to facilitate the Partial Conversion and the Governance Changes set out below, including, for<br> the avoidance of doubt, an increase in the number of authorized shares to cover the Ordinary Shares to be issued pursuant to the<br> Indenture Amendments and the Partial Conversion, if necessary;<br><br> <br><br><br> <br>(f) entry<br> into, and effectiveness of, all amendments to the Company’s memorandum and articles of association required to (a) provide<br> for the governance provisions contemplated in this Term Sheet and (b) terminate all of the SF Investors’ rights thereunder<br> in accordance with this Term Sheet;<br><br> <br><br><br> <br>(g) the<br> termination of the SF Reserved Matters Letter Agreement between the Company and Mr. Fitzpatrick dated March 13, 2024; and<br><br> <br><br><br> <br>(h) entry<br> into one or more registration rights agreements between the Company and Mudrick Capital.<br><br> <br><br><br> <br>The foregoing actions shall be inter-conditional<br> on each of such other actions being effected. | |
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| Further Condition to Partial Conversion: | The<br> Partial Conversion shall be conditional upon receipt of any required regulatory approvals. |
| OTher matters | |
| --- | --- |
| Headquarters of the Company: | Mudrick<br> Capital is to provide good faith assurances to the Company that the Company will remain headquartered and based in the United Kingdom,<br> subject to parameters to be determined. |
| Branding, Name and Identity of the Company: | Mudrick<br> Capital is to commit to retaining the Company’s “Vertical Aerospace” name and brand identity. |
| IAIL’s Prior Commitment: | All parties<br> to this Term Sheet agree and acknowledge that all remaining obligations arising pursuant to the Investment Agreement by and between<br> the Company and Imagination Aero Investments Limited (“IAIL”) dated February 22, 2024 (the “IAIL Investment Agreement”) have expired (including in respect of the second tranche $25 million funding commitment) and that<br> such obligations shall be replaced by the participation rights as set out below. Further, the Company agrees that it shall cover<br> IAIL’s, Mr. Fitzpatrick’s and Mudrick Capital’s reasonable legal costs in connection therewith. |
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| STEP B: GOVERNANCE AND RELEASES | |
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| INDENTURE ENHANCEMENTS | |
| Additional Guarantor and Collateral / Waiver: | Promptly following the Partial Conversion<br> Date:<br><br> <br><br><br> <br>(a) VAGL<br> shall become a Guarantor and Security Provider in respect of the Notes and the Indenture, including granting a fixed and floating<br> charge over all its assets; and<br><br> <br><br><br> <br>(b) Mudrick<br> Capital shall waive all existing defaults and events of default under the Indenture as amended and restated in accordance with the<br> terms of this term herein. |
| GOVERNANCE CHANGES | |
| --- | --- |
| Board Composition: | So long as the SF Investors beneficially<br> own more than 3% of the Ordinary Shares in issue, Mr. Fitzpatrick shall have the right and be entitled to remain on the board<br> of directors of the Company (the “Board”) and VAGL (while receiving no compensation for service on either board),<br> and Mudrick Capital shall take all actions necessary to implement the foregoing, including voting in favor of any resolution to appoint<br> Mr. Fitzpatrick to the board of the Company and VAGL (“Mr Fitzpatrick’s Board Rights”).<br><br> <br><br><br> <br>Immediately upon the Partial Conversion Date<br> and without limitation to Mr. Fitzpatrick’s Board Rights, the Board shall otherwise consist of a majority of independent<br> directors (as determined by the Nomination and Corporate Governance Committee and as set forth in the NYSE rules) nominated for election<br> by Mudrick Capital, and the Company and the Nominating and Corporate Governance Committee of the Board shall cause such nominees<br> to be put forth for appointments in accordance with the Company’s memorandum and articles of association.<br><br> <br><br><br> <br>Thereafter and, in each case, without limitation<br> to Mr. Fitzpatrick’s Board Rights:<br><br> <br><br><br> <br>(a) So<br> long as Mudrick Capital owns at least 10% of the outstanding Ordinary Shares (assuming the Notes that have not been converted to<br> Ordinary Shares are not converted to Ordinary Shares), Mudrick Capital shall be entitled to nominate for election a proportionate<br> number of directors to serve on the Board (rounded to the nearest whole number), and to nominate directors to fill any vacancies<br> resulting from the departure from the Board of a director so-nominated by Mudrick Capital, and the Company and the Nominating and<br> Corporate Governance Committee of the Board shall cause such nominees to be put forth for appointments in accordance with the Company’s<br> memorandum and articles of association.<br><br> <br><br><br> <br>(b) Subject<br> to applicable law and NYSE rules, Mudrick Capital’s Board designees shall also be entitled to proportionate representation<br> (with a minimum of one member) on the compensation committee and all other committees of the Board; provided that if applicable law<br> or NYSE rules prevent Mudrick Capital’s Board designee(s) from serving on any committee, Mudrick Capital shall be<br> entitled to appoint an observer to serve on such committee.<br><br> <br><br><br> <br>(c) Mudrick<br> Capital’s right to nominate member(s) of the Board shall terminate on the first date on which Mudrick Capital beneficially<br> owns less than 10% of the outstanding Ordinary Shares (on a fully converted basis). |
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| Mudrick Capital’s Consent Rights: | From and after the Partial Conversion Date<br> until the date as of which Mudrick Capital beneficially owns less than 35% of the Ordinary Shares (on a fully converted basis), the<br> Company shall be required to obtain Mudrick Capital’s consent prior to:<br><br> <br><br><br> <br>(a) the<br> Company’s proposing of any amendment to any provision of the Company’s memorandum and articles of association or bylaws<br> (by merger, consolidation, reclassification, amendment or otherwise) that, once adopted, will materially and adversely affect the<br> rights of Mudrick Capital in respect of the appointment of directors to the Board; and<br><br> <br><br><br> <br>(b) any<br> change to the Board (other than in accordance with the Company’s memorandum and articles of association, as amended, as contemplated<br> by this Term Sheet). |
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| Mudrick Capital’s Pre-Emptive Rights: | From<br> and after the Partial Conversion Date, the Company will grant Mudrick Capital a customary<br> pre-emptive right to maintain its ownership percentage of the Company for so long as Mudrick<br> Capital and its affiliates maintain at least a 20% beneficial ownership position (on a fully<br> diluted basis), with customary exclusions for acquisitions and issuances to employees and<br> directors. |
| Mr. Fitzpatrick’s Rights: | So long as the SF Investors beneficially<br> own more than 3% of the Ordinary Shares:<br><br> <br><br><br> <br>(a) decisions<br> relating to future equity raises by the Company shall be taken by a majority of (i) the independent members of the then-constituted<br> Board or (ii) a committee of such independent members; and<br><br> <br><br><br> <br>(b) Mr. Fitzpatrick<br> shall retain a right to participate on a pro rata basis in any such future equity raises by the Company, subject to his 12-month<br> option in respect of only the First Equity Placement (as set forth below).<br><br> <br><br><br> <br>For so long as Mr. Fitzpatrick remains<br> on the Board or the board of directors of VAGL, (a) he shall have the right to appoint a representative for meetings of the<br> Board or the board of directors of VAGL that he is unable to attend and (b) the Company shall cover the cost of his executive/administrative<br> support, subject to a cap to be agreed.<br><br> <br><br><br> <br>The Company shall be required to obtain Mr. Fitzpatrick’s<br> consent prior to the Company’s proposing of any amendment to any provision of the Company’s memorandum and articles of<br> association or bylaws (by merger, consolidation, reclassification, amendment or otherwise) that, once adopted, will materially and<br> adversely affect Mr. Fitzpatrick’s Board Rights. |
| releases | |
| Release of Claims: | With<br> effect from the date on which each of the Indenture Amendments, the Partial Conversion, the<br> Indenture Enhancements and, for the avoidance of doubt, the Governance Changes have taken<br> place, each of Mudrick Capital, Mr. Fitzpatrick and the Company agree to release any<br> and all claims against one another under or in connection with the Indenture, the Indenture<br> Amendments, the Indenture Enhancements, the IAIL Investment Agreement and the Governance<br> Changes. |
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| step c: FUNDINGCOMMITMENT and FIRST equity placement | |
|---|---|
| Commitments: | As soon as reasonably practicable following<br> the Partial Conversion Date, Mudrick Capital shall commit to the Company to purchase up to $50 million of equity securities issued<br> by the Company (the “Committed Funding”) in and on the same economic terms as its next funding round (the “First Equity Placement”), as follows:<br><br> <br><br><br> <br>(a) $25<br> million of the Committed Funding is to be purchased by Mudrick Capital on a non-contingent basis; and<br><br> <br><br><br> <br>(b) Mudrick<br> Capital is to provide a backstop commitment of an additional $25 million to be purchased by Mudrick Capital if the Company is not<br> able to raise such amount in the First Equity Placement (with such backstop commitment reducing dollar-for-dollar for any amounts<br> raised from third parties, including existing shareholders of the Company).<br><br> <br><br><br> <br>Any funding by Mudrick Capital pursuant to<br> its foregoing Committed Funding shall constitute the First Equity Placement. |
| Conditions to Committed Funding: | Subject to waiver by Mudrick Capital, the<br> closing of the Committed Funding by Mudrick Capital shall be conditional upon:<br><br> <br><br><br> <br>(a) the<br> Company, in Mudrick Capital’s reasonable determination, conducting in good faith a robust equity process for the First Equity<br> Placement;<br><br> <br><br><br> <br>(b) receipt<br> of any required regulatory approvals;<br><br> <br><br><br> <br>(c) Company<br> shareholder approval with respect to the amendments to the Company’s memorandum and articles of association, including, for<br> the avoidance of doubt, an increase in the number of authorized shares to cover the Ordinary Shares issued and underlying all equity-linked<br> securities, if necessary;<br><br> <br><br><br> <br>(d) entry<br> into the Registration Rights Agreement (as defined below);<br><br> <br><br><br> <br>(e) customary<br> opinions of the Company’s counsel in connection with the Transaction Documentation (as defined below); and<br><br> <br><br><br> <br>(f) no<br> material adverse effect having occurred, or an event or occurrence that would reasonably be likely to give rise to a material adverse<br> effect, on the Company since its last audited financial statements. |
| Mr. Fitzpatrick’s Participation Rights: | Mr. Fitzpatrick shall have:<br><br> <br><br><br> <br>(a) the<br> right to participate in the First Equity Placement to purchase up to $25 million in Ordinary Shares or equity-linked securities on<br> the same economic terms as other investors in the First Equity Placement; or<br><br> <br><br><br> <br>(b) in<br> the event he elects not to participate in the First Equity Placement, a 12-month option to purchase $25 million in Ordinary Shares<br> from the Company at a strike price equal to the per share purchase price paid by investors in the First Equity Placement. |
| GENERAL | |
| Lock-Up: | From the<br> Partial Conversion Date until a date to be agreed (the “Lock-Up Period”), each of Mudrick Capital<br> and Mr. Fitzpatrick and his affiliates (subject to customary exclusions to be agreed) will agree with the Company not to (i) sell,<br> offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose<br> of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position<br> within the meaning of Section 16 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”),<br> and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, with respect to the Ordinary<br> Shares (a “Transfer”), (ii) enter into any swap or other arrangement that transfers to another, in whole<br> or in part, any of the economic consequences of ownership of any of the Ordinary Shares, whether any such transaction is to be settled<br> by delivery of Ordinary Shares or other securities, in cash or otherwise, or (iii) publicly announce any intention<br> to effect any transaction specified in the immediately preceding subsections (i) or (ii) (any of the foregoing actions<br> in clauses (i)-(iii), the “Transfer Restrictions”). |
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| Registration Rights: | Mudrick Capital shall be granted customary<br> registration rights (including demand and piggyback registration rights to be agreed) with respect to the Ordinary Shares issued<br> and issuable pursuant to the transactions set forth in this Term Sheet (including, for the avoidance of doubt, any additional Ordinary<br> Shares issuable to Mudrick Capital pursuant to the Indenture Amendments) (subject to the “Lock-Up” and “Market<br> Manipulation” provisions set forth in this Term Sheet).<br><br> <br><br><br> <br>Without limiting the foregoing, the Company<br> will (i) promptly (and in any event no later than 30 days) following the Partial Conversion Date, file and cause to become effective<br> a customary shelf registration statement covering (a) the Ordinary Shares issued and issuable to Mudrick Capital pursuant to<br> the transactions set forth in this Term Sheet and (b) any additional Ordinary Shares issuable to Mudrick Capital pursuant to<br> the Indenture and (ii) have such registration statements deemed effective by the Securities and Exchange Commission within 30<br> days of the Partial Conversion Date. The Company will cause such registration statement to remain effective until the earlier of<br> the date (a) all registrable securities are sold by the holders thereof and (b) such securities are freely tradable under<br> Rule 144 without limitation as to volume or manner of sale. |
|---|---|
| Transaction Documentation: | The Forbearance Agreement, the Subscription<br> Agreement, the supplemental indenture(s) and any security documents to be entered into in connection with the Indenture Amendments<br> and the Indenture Enhancements, and other documents required to effect the matters set forth in this Term Sheet shall be referred<br> to as the “Transaction Documentation”.<br><br> <br><br><br> <br>The Transaction Documentation will incorporate<br> review from the accounting, tax, diligence, trustee, local counsel and stock exchange perspectives, among other inputs for public<br> company issuers. |
| Company Undertakings: | Prior to execution of the Forbearance Agreement,<br> the Company shall (subject to applicable fiduciary duties) progress contingency planning in connection with existing defaults under<br> the Indenture and update Mudrick Capital (periodically or upon request) on such contingency planning.<br><br> <br>Prior to execution of the remaining Transaction<br> Documentation, the Company shall (subject to applicable fiduciary duties):<br><br> <br><br><br> <br>(a) use<br> best endeavors to agree and enter into the Transaction Documentation;<br><br> <br><br><br> <br>(b) notify<br> Mudrick Capital prior to taking any steps to commence any insolvency-related proceedings; and<br><br> <br><br><br> <br>(c) other<br> than as part of good faith contingency planning referred to above, not solicit or pursue any alternative funding or restructuring<br> proposals and notify Mudrick Capital of any alternative financing and/or restructuring proposals received. |
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| Majority Shareholder Undertaking: | Mr. Fitzpatrick,<br> in his capacity as majority shareholder of the Company, agrees to use his best efforts to<br> (and cause his affiliates to) enter into one or more agreements (as applicable) to effectuate<br> the transactions contemplated by this Term Sheet. |
|---|---|
| Expenses: | The Forbearance<br> Agreement will contain customary provisions for expenses, including reimbursement by the<br> Company of reasonable and documented expenses of legal counsel to Mudrick Capital (including<br> one firm of Cayman counsel) and the SF Investors (including one firm of Cayman counsel),<br> in connection with the transactions contemplated by this Term Sheet and the Forbearance Agreement. |
| Governing Law and Forum; Applicable Securities Laws: | This Term Sheet and the Transaction Documentation<br> (other than the Company’s governing documents) will be governed by the laws of the State of New York. All disputes, legal actions,<br> suits and proceedings arising out of or relating to this Term Sheet and the Transaction Documentation must be brought exclusively<br> in the state courts of New York or in the federal courts located in the state and county of New York.<br><br> <br><br><br> <br>The Company’s governing documents will<br> be governed by Cayman Islands law. VAGL’s governing documents will be governed by English law.<br><br> <br><br><br> <br>Nothing in this Term Sheet (or any related<br> or final documentation) shall be interpreted as creating or forming a “group”, including with Mudrick Capital, Mr. Fitzpatrick<br> or any other SF Investor, or any other person, for the purposes of Rule 13d-5(b)(1) under the U.S. Securities Exchange<br> Act of 1934, as amended, or for any other similar provision of applicable law. The Company acknowledges and agrees that the obligations<br> of each of Mudrick Capital and Mr. Fitzpatrick and the other SF Investors under this Term Sheet (and any related or final documentation)<br> shall be several (and not joint) and none of the parties shall be responsible in any way for the actions or omissions of the other<br> parties. |
| Generally Non-Binding: | This Term<br> Sheet is intended solely as a basis for further discussion among the parties. Except as set forth in the sections of this Term Sheet<br> opposite the headings “Company Undertakings”, “Majority Shareholder Undertakings”, “Governing Law and<br> Forum; Applicable Securities Laws” and “Generally Non-Binding”, which shall be binding, this Term Sheet does not<br> constitute a contract, agreement or commitment of any kind or otherwise establish any legal obligation whatsoever (including, but<br> not limited to, any obligation to negotiate) with regards to any potential transaction or otherwise, and no such obligation shall<br> be deemed to exist between the parties or any of their respective affiliates, except to the extent set forth in written definitive<br> agreements that have been executed and delivered by the parties hereto. Entering into any definitive agreements will be subject to<br> receipt of all necessary internal and third party approvals. |
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IN WITNESS WHEREOF, the parties hereto have caused this term sheet to be duly executed as of the day and year first above written.
MUDRICK CAPITAL MANAGEMENT L.P.
On behalf of certain funds or accounts managed,
sponsored or advised by it
| By: | /s/<br> Jason Mudrick |
|---|---|
| Name: Jason Mudrick | |
| Title: Chief Investment<br> Officer | |
| VERTICAL AEROSPACE LTD. | |
| --- | --- |
| By: | /s/<br> Stephen Welch |
| Name: Stephen Welch | |
| Title: Chairman | |
| VERTICAL AEROSPACE GROUP LIMITED | |
| --- | --- |
| By: | /s/<br> Stephen Welch |
| Name: Stephen Welch | |
| Title: Director |
STEPHEN FITZPATRICK
| /s/Stephen Fitzpatrick | |
|---|---|
| IMAGINATION AERO INVESTMENT LTD. | |
| --- | --- |
| By: | /s/<br> Stephen Fitzpatrick |
| Name: Stephen Fitzpatrick | |
| Title: Director |
Exhibit 99.2
VerticalAerospace announces $50 million in new funding as part of $180 million transaction that will strengthen its financial position and advanceits Flightpath 2030 Strategy
| · | Vertical Aerospace secures agreement under which Mudrick Capital will commit<br>up to $50 million in the next equity round, promoting financial stability. |
|---|---|
| · | Transaction is expected to add approximately $180 million to Vertical’s<br>balance sheet, including through the conversion of approximately $130 million of debt into equity, significantly reducing Vertical’s<br>debt. The conversion price of the remaining convertible notes will be fixed. |
| --- | --- |
| · | Founder, Stephen Fitzpatrick, retains<br>a strategic role as a board director to guide the company through its Flightpath 2030 Strategy. |
| --- | --- |
London, UK; New York, USA – 25/11/2024:
Vertical Aerospace (Vertical) [NYSE: EVTL], a global aerospace and technology company pioneering electric aviation, today announced the signing of a term sheet among the Company, its majority shareholder Stephen Fitzpatrick, and its primary creditor Mudrick Capital Management.
This term sheet secures a commitment to $50 million in new funding, strengthening Vertical’s financial position. The funding will support the company’s newly launched Flightpath 2030 Strategy to establish itself as a global leader in the eVTOL market by the end of the decade, including the ongoing development and certification of the VX4.
The term sheet includes:
| · | $50 million funding commitment by Mudrick Capital: commitment includes $25 million in upfront funding, and an additional $25<br>million backstop that will be reduced by any amounts raised from third parties. The term sheet includes the option for Stephen Fitzpatrick<br>to invest a further $25 million on the same terms. |
|---|---|
| · | Balance sheet strengthening: approximately $130 million of convertible notes (50% of the outstanding amount) will be converted<br>into equity at $2.75 per share, substantially reducing Vertical’s debt and significantly deleveraging the company’s balance<br>sheet, enhancing its financial position. |
| --- | --- |
| · | Greater certainty for future investors: by fixing the conversion price for the remaining outstanding convertible notes at $3.50<br>per share, Vertical’s future fundraising plans will be supported. |
| --- | --- |
| · | Remaining loan repayment date extended to December 2028: extension of term provides further security through Vertical’s<br>certification programme. |
| --- | --- |
| · | Renewed commitment to the UK: Vertical will continue to operate from its UK headquarters, maintaining its brand identity and<br>focus on innovation. |
| --- | --- |
As part of the agreement, Vertical Aerospace’s founder, Stephen Fitzpatrick, will remain on the board, continuing to provide strategic direction as the company progresses through its certification programme.
Stephen Fitzpatrick, Founderof Vertical Aerospace:
“It is great to be able to announcethis new funding today. We have been working hard to find a way to support the company in the short term, but also set us up for longterm success. The additional equity and stronger balance sheet will enable us to fund the next phase of our development programme anddeliver on our mission to bring the amazing electric aircraft to the skies.
This comprehensive deal - alongside therecent piloted flight campaign and launch of the Flightpath2030 strategy - means Vertical is positioned to be a winner in one of the 21stcentury's most exciting technologies.
The UK has been at the forefront of theaerospace industry for the last hundred years. Aviation is one of the hardest sectors to decarbonise but ambitious British companies likeVertical are leading the world in pioneering zero emissions electric aircraft.”
Jason Mudrick, Founderand Chief Investment Officer at Mudrick Capital:
“This agreement underscores our appreciationof Vertical Aerospace’s position in the eVTOL sector and a team that has demonstrated its ability to deliver groundbreaking solutionsfor the future of sustainable aviation. By committing up to $50 million to the business and converting substantial debt into equity, we’resupporting a company, its leadership team and partners, as Vertical brings the safest and most versatile aircraft to market.”
Stuart Simpson, CEO of Vertical Aerospace:
"This funding agreement underscoresthe strong confidence of our investors in our Flightpath 2030 Strategy and our ambition to lead the global eVTOL market. By addressingour more immediate capital needs and positioning us well to secure funding for the long-term, we can focus on advancing our piloted flighttest programme and bringing the VX4 to market."
Vertical’s piloted flight test programme is progressing further toward certification, recently achieving untethered, piloted thrustborne flight in Phase 2 of testing. With the VX4 prototype performing beyond expectations, the company is now working with the UK Civil Aviation Authority to secure permits to move into Phase 3 — wingborne flight tests, which is a critical step toward certification.
The parties have signed a non-binding term sheet reflecting the material terms of the agreement in principle. It remains subject to implementation and execution of final transaction agreements, as well as shareholder approval of amendments to Vertical’s articles of association. Additional information can be found in the Company’s Form 6-K furnished to the Securities and Exchange Commission on November 25, 2024.
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 moreinformation:
Justin Bates, Head of Communications
justin.bates@vertical-aerospace.com
+44 7878 357 463
Forward-Looking Statements
This press release contains forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of 1995. Any express or implied statements contained inthis Form 6-K that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation,including, without limitation, statements regarding the consummation of the agreement in principle, including the entry into final transactionagreements and the satisfaction of all closing conditions, completion of the committed funding from Mudrick Capital and use of proceedstherefrom, the sufficiency of the proceeds from the committed funding to meet the Company’s more immediate capital expenditure requirements,the Company’s satisfaction of all closing conditions to the committed funding, our ability and plans to raise additional capitalto fund our operations*, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate,” “will,” “aim,” “potential,” “continue,” “is/are likelyto” and similar statements of a future or forward-looking nature. These forward-looking statements reflect our current views withrespect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information containedin the forward-looking statements as a result of a number of factors, including, without limitation, the important factors discussed underthe 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 withthe SEC. Any forward-looking statements contained in this Form 6-K speak only as of the date hereof and accordingly undue relianceshould not be placed on such statements. The Company disclaims any obligation or undertaking to update or revise any forward-looking statementscontained in this Form 6-K, whether as a result of new information, future events or otherwise, other than to the extent requiredby applicable law.*