Virgin Galactic shares tumble as company says it's raising $425 million in debt
By Jackie Wattles, CNN Business
(CNN) -- Shares of Virgin Galactic — the space tourism company that carried its billionaire founder, Richard Branson, to the edge of space last summer — took a major price hit on Thursday after the company announced it's raising as much as half a billion dollars in debt.
Its stock shed more than 16% at one point during trading Thursday morning, hitting a low of $10.36 per share. That's a far cry from its all-time high of $62.80, hit in early 2021.
The company is issuing at least $425 million — and possibly up to $500 million — worth of convertible senior notes, a type of debt instrument, in a private offering.
In a statement, Virgin Galactic said it plans 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 in order to facilitate high-volume commercial service."
The hit to the company's stock compounded an already rough few months for the company.
Ever since Virgin Galactic garnered international attention by launching Branson to space in July 2021, the company has faced significant delays. A report from the New Yorker revealed that warning lights had gone off in the cockpit during Branson's flight and the space plane had traveled outside its designated airspace for 41 seconds. The Federal Aviation Administration grounded all flights pending a review, which concluded in September and gave Virgin Galactic the all-clear.
Still, the company is delaying the start of commercial services, citing unrelated technology upgrades, and isn't expected to fly paying customers before this October. At the time Virgin Galactic went public in 2019, it had been touting plans to start commercial service in 2020.
Meanwhile, Virgin Galactic's chief competitor in the suborbital space tourism game, Jeff Bezos' Blue Origin, has launched three successful crewed missions for celebrities and paying customers.
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