Virgin Galactic announced today that it has plans to raise $425M aggregate principal amount of convertible senior notes due 2027, including up to an additional $75M of the principal amount of notes.
Virgin Galactic Plans to Raise up to $500M
On January 13th, 2022, Virgin Galactic (Ticker: SPCE) announced that it will continue its borrowing spree, with plans to raise up to $500M in debt to take tourists into space and back.
The unsecured obligations will accrue interest payable semi-annually on February 1 and August 1 of each year, beginning on August 1, 2022. The notes will mature on February 1, 2027, unless earlier repurchased, redeemed or converted.
‘’The Company intends to use the net proceeds from the offering to fund working capital, general and administrative matters. This round of funding will help accelerate the development of its spacecraft fleet in order to facilitate high-volume commercial service.’’ Virgin Galactic said in a press release today.
Virgin Galactic went public via Special Purpose Acquisition Company (SPAC) in October of 2019. The stock is down over 20% YTD and over 60% in the last 12 months.
In 2020, space tourism was a very hot topic. As we approached 2021, the company’s share price more than doubled as retail traders piled in. However, as inflation persisted throughout 2021, the share price continued to tumble.
Delays to its spacecraft testing and development have also placed immense pressure on the share price. On October 14, 2021, Virgin Galactic announced the delay of its commercial flights to the fourth quarter of 2022.
Key Takeaway
Virgin Galactic’s stock fell as much as 15% during the market open. This came as investors feared the dilution that’s ahead in order to fund their next space craft flights. With the enhancement of Unity 24 and Unity 25 under development, it may be some time until Virgin Galactic’s space crafts take flight again.
