Virgin Galactic talks $425 million five-year convertibles to yield 2%-2.5%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., Jan. 13 – Virgin Galactic Holdings Inc. plans to price $425 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2% to 2.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Credit Suisse Securities (USA) LLC is the active bookrunner for the Rule 144A offering, which carries a greenshoe of $75 million.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are passive bookrunners.

The notes are non-callable until Feb. 6, 2025 and then are subject to a 130% hurdle.

They are putable upon a fundamental change.

The notes will be settled in cash, shares or a combination of both at the company’s option.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to fund the cost of the call spread, for capital expenditures to fund the development of its spacecraft fleet for high-volume commercial services and for other general corporate purposes.

Virgin Galactic is a Las Cruces, N.M.-based aerospace and space travel company.

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