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Virgin Galactic shares fell after company announces to raise $425 million in debt

By Shubhangi on Jan 14, 2022 | 04:34 AM IST

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Virgin Galactic shares fell as much as 16% in trading hitting a low of $10.36

Branson’s company expects to raise $425 million from the sale of 2027 convertible senior notes

Shares of billionaire Richard Branson’s space tourism company Virgin Galactic Holdings Inc (NYSE: SPCE) fell on Thursday on the news of company’s plans to raise almost $500 million in debt.

“The company intends to use the net proceeds from the offering to fund working capital, general and administrative matters and capital expenditures to accelerate the development of its spacecraft fleet,” Virgin Galactic said in a statment.

Virgin Galactic shares fell as much as 16% in trading hitting a low of $10.36 on Thursday. The previous close of the company was $12.37.

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Branson’s company expects to raise $425 million from the sale of 2027 convertible senior notes through a private offering. Virgin Galactic is also expected to offer an additional $75 million option to buyers.

SPAC merger

The space tourism company went public via a merger with a special purpose acquisition company, or SPAC, from Chamath Palihapitiya in October 2019.

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The company said at that time that it would begin flying customers in 2020. Also, Branson with three other company employees launched into space in July 2021.

The company has postponed its commercial service to late this year due to delay in its spacecraft testing and development.

Picture Credits: Virgin Galactic

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