Virgin Galactic Announces Capital Realignment Transactions to Optimize Debt Structure and Support Growth of Spaceline Operations
Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic” or the “Company”) announced today that it has entered into a series of strategic, privately negotiated agreements (collectively referred to as the “Transactions”) with a limited group of holders of its 2.50% convertible senior notes due 2027 (the “Existing Convertible Notes”). These transactions mark a significant step in the Company’s ongoing efforts to strengthen its balance sheet, reduce overall debt, and better align its capital structure with its planned commercial growth in space tourism operations.
Under the agreements, Virgin Galactic plans to repurchase and retire approximately $355 million in aggregate principal amount of its Existing Convertible Notes. Upon completion of these transactions, the Company expects a net reduction in indebtedness of roughly $152 million, while extending the maturity of the majority of its remaining debt to the second half of 2028. This debt realignment is intended to provide financial flexibility and alignment with the projected ramp-up of Spaceline commercial flights, enabling Virgin Galactic to focus on operational expansion and long-term value creation for its shareholders.
Overview of the Capital Realignment Strategy
The capital realignment plan includes multiple components, combining both registered offerings of equity and private placements of secured debt instruments. Specifically, the Company plans to:
- Registered Direct Offering:
- Issue and sell for cash approximately $46 million of common stock (“Shares”) and pre-funded warrants (“Pre-Funded Warrants”) to purchase additional shares of common stock.
- Pricing for this offering will be determined based on a volume-weighted average price (VWAP) over a seven-day trading period starting from the announcement date.
- This portion of the offering is designed to raise immediate liquidity for the Company while providing new and existing investors the opportunity to participate in Virgin Galactic’s ongoing growth story.
- Private Placement of First Lien Notes:
- Concurrently, Virgin Galactic will issue approximately $203 million in aggregate principal of 9.80% First Lien Notes due 2028 (the “New Notes”) under a newly established indenture, with Wilmington Savings Fund Society, FSB, serving as trustee and collateral agent.
- These New Notes will be secured by a first-priority lien on substantially all of the Company’s assets and the assets of its guarantors, subject to customary exceptions.
- Additionally, Purchase Warrants will be issued to buyers of the New Notes, exercisable at 155% of the purchase price of the registered Shares.
- The combination of secured notes and warrants provides investors with both income and equity participation potential while allowing Virgin Galactic to achieve its goal of debt reduction and extended maturities.
- Repurchase Agreements for Existing Convertible Notes:
- Virgin Galactic has also negotiated repurchase agreements with a select group of holders of its Existing Convertible Notes.
- The proceeds from the Registered Offering and Private Placement will be utilized to repurchase approximately $355 million of these notes, effectively reducing outstanding debt and improving the Company’s debt profile.
- The repurchase and retirement of these Existing Convertible Notes are expected to enhance financial stability, lower interest expense, and support long-term commercial initiatives.
Expected Timing and Regulatory Framework
The closing of these capital realignment transactions is scheduled to occur on or about December 18, 2025, subject to customary closing conditions. The Registered Offering will be conducted under Virgin Galactic’s existing shelf registration statement on Form S-3 (File No. 333-272826), which includes its current ATM program.
The Private Placement, by contrast, will be conducted pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended. Securities issued in this private placement will not be registered under the Securities Act or state securities laws and may not be offered or sold in the U.S. except under applicable exemptions or after registration.
Following completion of the Transactions, Virgin Galactic anticipates filing a new registration statement with the Securities and Exchange Commission (SEC) to register the resale of common stock issuable upon exercise of the Purchase Warrants, as well as shares issuable under the terms of the New Notes Indenture. This step will facilitate liquidity for warrant holders and broaden the potential investor base.
Strategic Objectives and Business Implications
Virgin Galactic’s capital realignment serves multiple strategic objectives:
- Debt Reduction and Interest Savings:
- By retiring approximately $355 million in Existing Convertible Notes, the Company reduces its total indebtedness by $152 million, effectively strengthening its balance sheet.
- Lower debt levels improve the Company’s financial flexibility, enabling it to invest in fleet expansion, commercial operations, and marketing initiatives for its Spaceline business.
- Extended Debt Maturity:
- Extending the maturity of the remaining debt to late 2028 provides the Company with greater runway to execute its growth strategy without facing near-term refinancing pressures.
- Alignment with Commercial Operations:
- The timing of the extended maturities is strategically aligned with Virgin Galactic’s projected ramp-up of commercial spaceflight operations, allowing the Company to prioritize growth and customer acquisition over immediate debt servicing.
- Enhanced Investor Participation:
- The combination of registered offerings and private placements ensures that both public and private investors can participate in Virgin Galactic’s growth story while gaining exposure to equity upside and secured debt instruments.
- Operational Flexibility:
- By securing first-lien positions for the New Notes, the Company provides investors with confidence in the priority of repayment, while maintaining operational flexibility for strategic investments in technology, fleet upgrades, and commercial infrastructure.
Advisors and Legal Counsel
- GLC Advisors & Co., LLC served as financial advisor to Virgin Galactic in these transactions.
- O’Melveny & Myers LLP acted as legal counsel to the Company.
These advisors played a crucial role in structuring the transactions to balance debt reduction, capital access, and alignment with long-term growth objectives.
Regulatory Filings and Disclosure
Additional details regarding these Transactions will be disclosed in a Current Report on Form 8-K, which Virgin Galactic is filing today with the SEC. The filing provides full transparency regarding the terms, participants, and structure of the transactions, consistent with the Company’s commitment to investor communication and compliance with securities laws.
Virgin Galactic emphasized that this press release does not constitute an offer to sell or solicitation to buy securities. Any such offer or sale would be made only in accordance with applicable securities laws, registration requirements, or exemptions therefrom.
Virgin Galactic’s capital realignment comes at a pivotal time as the Company prepares to scale its Spaceline commercial spaceflight operations, which are expected to redefine space tourism and suborbital travel. With a strengthened balance sheet, extended debt maturities, and strategically structured capital, the Company is now better positioned to:
- Expand its fleet and flight operations.
- Accelerate commercial ticket sales and marketing campaigns.
- Enhance customer experience and safety infrastructure.
- Invest in research and development for next-generation spacecraft technologies.
By proactively managing its debt and capital structure, Virgin Galactic is signaling confidence in its long-term growth trajectory and demonstrating a commitment to financial prudence while advancing the commercial space industry.
The completion of Virgin Galactic’s capital realignment transactions represents a significant milestone in the Company’s strategic roadmap. By reducing indebtedness, extending maturities, and securing additional liquidity through equity and first-lien debt instruments, Virgin Galactic is strengthening its financial foundation for the next phase of growth.
With these steps, the Company is well-positioned to execute its vision of commercial spaceflight expansion, deliver unique experiences to customers, and create long-term value for shareholders. The capital realignment underscores Virgin Galactic’s commitment to sustainable growth, operational excellence, and strategic financial management as it navigates the next chapter in the emerging space economy.
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