Capital Realignment Transactions Announced by Virgin Galactic
Final Maturity of New Notes Extended to December 31, 2028
Virgin Galactic Holdings has entered into separate, privately negotiated agreements (collectively, the “Transactions”) with a limited number of certain holders of its 2.50% convertible senior notes due 2027 (the “Existing Convertible Notes”), whereby the Company plans to repurchase and retire approximately $355 million in aggregate principal amount of its Existing Convertible Notes. The Company expects these Transactions, taken together, to reduce its indebtedness by approximately $152 million while extending the maturity for the majority of its remaining debt to the second half of 2028, which the Company believes creates better alignment with planned growth in Spaceline commercial operations.
The Company will issue and sell for cash, in a registered direct offering, an aggregate of approximately $46 million of (i) shares (the “Shares”) of its common stock, par value $0.0001 per share (the “Common Stock) and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase shares of its Common Stock (collectively, the “Registered Offering”), in each case priced by reference to a VWAP price over a seven trading day period commencing today. Concurrently with the Registered Offering, the Company will issue and sell for cash, in a private placement exempt from registration (i) approximately $203 million aggregate principal amount of a new series of its 9.80% First Lien Notes due 2028 (the “New Notes”) pursuant to the terms of an indenture, by and among the Company, the subsidiary guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee and collateral agent (the “New Notes Indenture”) and (ii) warrants to purchase shares of Common Stock (the “Purchase Warrants”), at an exercise price of 155% of the purchase price of the Shares, in an offering exempt from registration (the “Private Placement”). The New Notes and related guarantees will be secured by a first-priority lien on substantially all of the assets of the Company and any guarantors, subject to customary exceptions, pursuant to a security agreement and related collateral documents. Delivery of the New Notes will be made through the facilities of The Depository Trust Company.
The Company has also entered into repurchase agreements with a limited number of holders of its Existing Convertible Notes to repurchase such holders’ Existing Convertible Notes. At closing of the Transactions, the Company will use the cash consideration from the Registered Offering and Private Placement to repurchase approximately $355 million of its Existing Convertible Notes. The closing of the Transactions is scheduled to occur on or about December 18, 2025, and is subject to customary closing conditions.
The Shares, Pre-Funded Warrants and shares underlying the Pre-Funded Warrants to be issued in the Registered Offering are being offered under the Company’s existing shelf registration statement on Form S-3 (File No. 333-272826) that includes its current ATM program. The Private Placement will be conducted pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”), and the securities offered in the Private Placement will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
After completion of the Transactions, the Company anticipates filing a new registration statement with the Securities Exchange Commission to register the resale of shares of Common Stock issuable upon exercise of the Purchase Warrants as well as shares of Common Stock that may be issued pursuant to the terms of the New Notes Indenture. The completion and timing of closing of the Transactions is subject to customary closing conditions.
GLC Advisors & Co., LLC served as advisor to the Company in the Transactions. O’Melveny & Myers LLP served as legal counsel to the Company.
Additional details about the Transactions are included in a Current Report on Form 8-K that the Company is filing today with the Securities and Exchange Commission.