Virgin Galactic files prospectus on $1bn sale of securities

The company will use the proceeds of approximately $30.7 million for general corporate purposes

Virgin Galactic's VSS Unity, piloted by CJ Sturckow and Dave Mackay, starts its engines after release from its mothership, VMS Eve, on the way to its first spaceflight after launch from Spaceport America, New Mexico, U.S. May 22, 2021 in a still image from video. Virgin Galactic/Handout via REUTERS.  NO RESALES. NO ARCHIVES. THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.
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American space flight company Virgin Galactic filed a prospectus on the sale of $1 billion in mixed securities and up to 2.7 billion shares of common stock, according to its filing to the Securities and Exchange Commission.

The company will use the proceeds for general corporate purposes, it said on Friday.

"Assuming the exercise of all outstanding warrants for cash, we will receive an aggregate of approximately $30.7m," the company said in the prospectus.

The company's planned sale of securities comes following its successful manned test flight to the edge of space last week.

The success of VSS Unity test flight, which took off from New Mexico, has helped put the company back on its earlier schedule of flying founder Richard Branson to suborbital space as early as this summer and also boosted its stock price.

The company's stock closed up 0.45 per cent higher at $31.23 on Friday. Virgin Galactic has a market capitalisation of $7.52bn.

Virgin Galactic received a further boost on Thursday after analyst Ken Herbert from Canaccord initiated the coverage of the company's stock with a buy rating. The company's prospects also seemed bright, thanks to less competition in a potentially lucrative space travel market, Mr Herbert said in a note to clients.

VSS Unity is capable of transporting six passengers along with two pilots. Virgin Galactic has about 600 reservations on future flights, with ticket prices ranging between $200,000 and $250,000 each.

The company is tapping into the promising sector of suborbital tourism, which is expected to be a $2.8bn market with $10.4bn in revenue by 2030, according to specialised space industry consultancy Northern Sky Research. In addition to Virgin Galactic, Jeff Bezos-owned Blue Origin is also working to provide suborbital flights.