JWCA advises virgin galactic on its debut $425 million convertible and capped call issuance

january 2022 | read press release

Transaction Background

Virgin Galactic Holdings Inc. (“Virgin Galactic”) successfully raised $425mm in the convertible market at attractive terms (2.50% coupon and 27.5% conversion premium)

Virgin Galactic’s objectives included:

• Raise capital ahead of potential market volatility and uncertainty

• Support the continued development of its spacecraft fleet in order to achieve high volume commercial service

Virgin Galactic engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of the transaction

JWCA provided extensive analysis on deal structuring and related items, including:

• Convertible structuring

• Analysis of benefits / considerations of a capped call

• Syndicate structure and precedent data

• Accounting and tax analysis / implications

• Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the company

• Shareholder messaging

The transaction was conducted using a confidential marketing process before launching into a traditional one-day public marketing period

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support, and analysis throughout the execution process

Results

Virgin Galactic was well received by investors, despite broader market volatility and concerns around inflation and rising interest rates:

• The transaction was well oversubscribed, with over half of the demand coming from the confidential marketing process

• JWCA supported the management team on the entire day of the offering providing execution advice and ensuring a high-quality execution

Capped call documentation and auction process produced meaningful savings for Virgin Galactic, while maximizing flexibility