Virgin Galactic's customer backlog would singlehandedly
double the total number of humans to have ever gone to
space
NEW YORK, July 9, 2019 /PRNewswire/ --
- Virgin Galactic has developed a set of unique technologies
designed to enable a safe and familiar flying experience for
customers to go into space and become officially designated
astronauts
- Virgin Galactic's technologies have created the first vehicle
built for commercial service to put humans into space
- Virgin Galactic already has customer reservations from more
than 600 people in 60 countries representing approximately
$80 million in total collected
deposits and $120 million of
potential revenue
- Virgin Galactic has already been granted its FAA commercial
space launch license, and the New Mexico Spaceport has also
received its Spaceport license
- Pro forma enterprise value of the merger is $1.5 billion and represents:
-
- 1.5x invested capital ($1 billion+ of capital invested to
date)
- 2.5x estimated revenue for 2023
- 5.5x estimated EBITDA for 2023
- Social Capital Hedosophia Founder and CEO, Chamath Palihapitiya, will invest an additional
$100 million in the transaction and
will become Chairman of the combined entity
VIRGIN GALACTIC ("VG") and SOCIAL CAPITAL HEDOSOPHIA ("SCH"), a
public investment vehicle sponsored by Social Capital and
Hedosophia, announced that the boards of directors of each company
have approved a definitive agreement under which VG and SCH will
merge, with the current shareholders of SCH expected to own up to
approximately 49% of the combined company. Upon closing of the
transaction, which is expected in the second half of 2019, VG will
be introduced as the first and only publicly traded commercial
human spaceflight company.
Company Highlights
VG is a vertically integrated
aerospace company specializing in commercial human
spaceflight. Using proven and reusable technology, it intends
to offer its customers a unique, multi-day experience culminating
in a personal spaceflight that includes out-of-seat zero gravity
and views of Planet Earth from space.
VG believes it has now reached an inflection point in its
development as it progresses towards launching commercial
operations. In particular, by demonstrating the repeatability of
the full flight profile through the completion of two crewed
spaceflights, VG believes it has overcome a substantial number of
the technical hurdles required to make the company a viable and
profitable commercial service.
VSS Unity, VG's spaceship, was the first and remains the only
vehicle built for regular commercial service to have put humans
into space. VG's inaugural spaceflight in December 2018 was also the first and only human
space launch from U.S. soil since 2011. During its second
spaceflight in February 2019, VSS
Unity became the first vehicle built for commercial service to
carry pilots as well as crew.
Having reached these milestones, the Board of VG believes that
the additional capital provided by the merger with SCH will provide
the company with the support needed to reach commercialization.
In addition to the more than $1
billion that has been invested in VG since its inception in
2004, VG believes its position within the emerging commercial human
spaceflight market is reinforced by other significant barriers to
entry for potential competitors. These include the vertically
integrated technical and operational expertise built over 15 years,
an established and highly experienced workforce and the strength of
the Virgin Group's brand recognition. VG has built a unique,
pre-commercial service order book of more than 600 space tourism
customers backed by over $80 million
in deposits. In a transforming world of experiences and social
media, VG believes that the market for exclusive, experiential
products will continue to expand quickly and represents a
significant opportunity for future growth.
As part of its commercial operations, VG has exclusive access to
the principal assets at Spaceport America, New Mexico. Spaceport America is the world's
first, purpose built commercial spaceport. As announced on
May 10, 2019, VG is moving more than
100 spaceline staff and its space vehicles to Spaceport America,
which will become the new location of its operational headquarters.
Spaceport America will be the site of VG's initial commercial
spaceflights and where the company will deliver a high-end,
exclusive customer experience over the multi-day pre-flight
period.
As part of this transaction, the existing management team of VG
will remain in place following the close of the transaction with
George T. Whitesides remaining as
CEO, while a new Board, comprised of seven directors, will be
augmented by the addition of Chamath Palihapitiya, as Chairman, and
Adam Bain, both of whom are
committed to the success of VG.
Sir Richard Branson, Founder
of VG, said:
"Great progress in our test flight program
means that we are on track for our beautiful spaceship to begin
commercial service. By embarking on this new chapter, at this
advanced point in Virgin Galactic's development, we can open space
to more investors and in doing so, open space to thousands of new
astronauts. We are at the dawn of a new space age, with huge
potential to improve and sustain life on Earth. I am delighted
that SCH has decided to become such an important part of our
amazing journey. They share our dreams and together we will make
them reality."
George Whitesides, CEO of VG,
said:
"This transaction represents the next step of our
exciting journey. We believe it will offer us the financial
flexibility to build a thriving commercial service and invest
appropriately for the future."
Chamath Palihapitiya, Founder and CEO of Social Capital
Hedosophia, said:
"It is a privilege to partner with Sir
Richard Branson, a
once-in-a-generation visionary, to bring the reality of commercial
spaceflight to the world. We are confident that VG is light years
ahead of the competition. It is backed by an exciting business
model and an uncompromising commitment to safety and customer
satisfaction. I cannot wait to take my first trip to space and
become an astronaut."
Transaction Overview
On July 9,
2019, SCH (NYSE: IPOA) entered into a definitive agreement
to combine with VG with a combination of stock and cash financing.
The merged company will have an anticipated initial enterprise
value of $1.5 billion implying a 2.5x
multiple of 2023 projected revenue and a 5.5x multiple of 2023
projected EBITDA as commercial operations are expected to achieve
scale. After the completion of the transaction, the majority of the
net cash from SCH's trust is expected to be held on VG's balance
sheet to fund operations and support continued growth.
In connection with the transaction, SCH's founder has agreed to
invest an additional $100 million at
$10.00 per share at completion of the
transaction. The selling equity owners of VG will receive
$1.3 billion in total consideration,
inclusive of $1.0 billion of common
stock of the combined company valued at $10.00 per share and up to $300 million in cash consideration. Assuming no
redemptions by the public shareholders of SCH, current VG
shareholders and current holders of SCH will hold approximately 51%
and 49% of the combined company, respectively, at closing.
The transaction is currently expected to be completed during the
second half of 2019, subject to approval by SCH's shareholders and
other customary closing conditions. Credit Suisse acted as capital
markets advisor and Skadden, Arps, Slate, Meagher & Flom LLP
acted as legal advisor to SCH. M Klein and Company served as
financial advisor to VG and Virgin Group for the merger with SCH.
LionTree Advisors and Perella Weinberg Partners served as financial
advisors to the company regarding its capital raising
alternatives. Latham & Watkins LLP acted as VG and Virgin
Group's legal advisor.
Additional Information and Where to Find It
This press
release relates to a proposed transaction between VG and SCH. This
press release does not constitute an offer to sell or exchange, or
the solicitation of an offer to buy or exchange, any securities,
nor shall there be any sale of securities in any jurisdiction in
which such offer, sale or exchange would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. SCH intends to file a registration statement on Form
S-4 with the U.S. Securities and Exchange Commission (the "SEC"),
which will include a document that serves as a prospectus and proxy
statement of SCH, referred to as a proxy statement/prospectus. A
proxy statement/prospectus will be sent to all SCH shareholders.
SCH also will file other documents regarding the proposed
transaction with the SEC. Before making any voting decision,
investors and security holders of SCH are urged to read the
registration statement, the proxy statement/prospectus and all
other relevant documents filed or that will be filed with the SEC
in connection with the proposed transaction as they become
available because they will contain important information about the
proposed transaction.
Investors and security holders will be able to obtain free
copies of the registration statement, the proxy
statement/prospectus and all other relevant documents filed or that
will be filed with the SEC by SCH through the website maintained by
the SEC at www.sec.gov.
The documents filed by SCH with the SEC also may be obtained
free of charge at SCH's website at
http://www.socialcapitalhedosophiaholdings.com/docs.html or upon
written request to 120 Hawthorne Avenue Palo Alto, California 94301.
Participants in Solicitation
SCH and its respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from SCH's
shareholders in connection with the proposed transaction.
Information about SCH's directors and executive officers and their
ownership of SCH's securities is set forth in SCH's Annual Report
on Form 10-K filed with the SEC on March 18,
2019. To the extent that holdings of SCH's securities have
changed since the amounts reported in SCH's Annual Report, such
changes have been or will be reflected on Statements of Change in
Ownership on Form 4 filed with the SEC. Additional information
regarding the interests of those persons and other persons who may
be deemed participants in the proposed transaction may be obtained
by reading the proxy statement/prospectus regarding the proposed
transaction when it becomes available. You may obtain free copies
of these documents as described in the preceding paragraph.
Forward-Looking Statements Legend
This press release contains certain forward-looking statements
within the meaning of the federal securities laws with respect to
the proposed transaction between VG and SCH, including statements
regarding the benefits of the transaction, the anticipated timing
of the transaction and the products and markets and expected
performance of VG. These forward-looking statements generally are
identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "intend," "strategy," "future,"
"opportunity," "plan," "may," "should," "will," "would," "will be,"
"will continue," "will likely result," and similar expressions.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this
document, including but not limited to: (i) the risk that the
transaction may not be completed in a timely manner or at all,
which may adversely affect the price of SCH's securities, (ii) the
risk that the transaction may not be completed by SCH's business
combination deadline and the potential failure to obtain an
extension of the business combination deadline if sought by SCH,
(iii) the failure to satisfy the conditions to the consummation of
the transaction, including the adoption of the merger agreement by
the shareholders of SCH, the satisfaction of the minimum trust
account amount following redemptions by SCH's public shareholders
and the receipt of certain governmental and regulatory approvals,
(iv) the lack of a third party valuation in determining whether or
not to pursue the proposed transaction, (v) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the merger agreement, (vi) the effect of the
announcement or pendency of the transaction on VG's business
relationships, operating results, and business generally, (vii)
risks that the proposed transaction disrupts current plans and
operations of VG, (viii) the outcome of any legal proceedings that
may be instituted against VG or against SCH related to the merger
agreement or the proposed transaction, (ix) the ability to maintain
the listing of SCH's securities on the New York Stock Exchange, (x)
changes in the competitive and highly regulated industries in which
VG plans to operate, variations in operating performance across
competitors, changes in laws and regulations affecting VG's
business and changes in the combined capital structure, (xi) the
ability to implement business plans, forecasts, and other
expectations after the completion of the proposed transaction, and
identify and realize additional opportunities, and (xii) the risk
of downturns in the highly competitive and novel tourist
spaceflight industry. The foregoing list of factors is not
exhaustive. You should carefully consider the foregoing factors and
the other risks and uncertainties described in the "Risk Factors"
section of SCH's Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, the registration statement on Form S-4 discussed above
and other documents filed by SCH from time to time with the
SEC. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and VG and SCH assume no obligation and do not intend
to update or revise these forward-looking statements, whether as a
result of new information, future events, or otherwise. Neither VG
nor SCH gives any assurance that either VG or SCH will achieve its
expectations.
Use of Non-GAAP Financial Matters
This document includes certain forward-looking non-GAAP
financial measures with respect to VG's expected future
performance. These non-GAAP measures are an addition, and not a
substitute for or superior to measures of financial performance
prepared in accordance with GAAP and should not be considered as an
alternative to net income, operating income or any other
performance measures derived in accordance with GAAP or as an
alternative to cash flows from operating activities as a measure of
our liquidity. Not all of the information necessary for a
quantitative reconciliation of these non-GAAP financial measures to
the most directly comparable GAAP financial measures is available
without unreasonable efforts at this time. VG believes that these
forward-looking non-GAAP measures of financial results provide
useful supplemental information to investors about VG. VG's
management uses these forward looking non-GAAP measures to evaluate
VG's projected financial and operating performance. However, there
are a number of limitations related to the use of these non-GAAP
measures and their nearest GAAP equivalents. For example other
companies may calculate non-GAAP measures differently, or may use
other measures to calculate their financial performance, and
therefore VG's non-GAAP measures may not be directly comparable to
similarly titled measures of other companies.
About Social Capital Hedosophia
Social Capital Hedosophia Holdings is a partnership between the
investment firms of Social Capital and Hedosophia. Social Capital
Hedosophia Holdings unites technologists, entrepreneurs and
technology-oriented investors around a shared vision of identifying
and investing in innovative and agile technology companies. To
learn more about Social Capital Hedosophia, visit
www.socialcapitalhedosophiaholdings.com
About Virgin Galactic
Virgin Galactic is the world's first commercial spaceline.
Founded by Sir Richard Branson and
owned by the Virgin Group and Mubadala Investment Group, Virgin
Galactic will transform access to space for the benefit of life on
Earth. To date, over 600 men and women from 60 countries—greater
than the total number of humans who have ever been to space—have
reserved places to fly on Virgin Galactic's reusable space launch
system, consisting of carrier aircraft WhiteKnightTwo and
spacecraft SpaceShipTwo. SpaceShipTwo and WhiteKnightTwo are
manufactured and tested in Mojave,
California by its manufacturing partner, The Spaceship
Company (TSC). Spaceflight operations will be based at Spaceport
America in New Mexico, the world's
first purpose-built commercial spaceport.
About The Spaceship Company
The Spaceship Company (TSC) is Virgin Galactic's space-system
manufacturing organization. Headquartered at Mojave Air and Space
Port in Mojave, California, it is
building and testing a fleet of WhiteKnightTwo carrier aircraft and
SpaceShipTwo reusable spaceships that, together, form Virgin
Galactic's human spaceflight system. Its team of talented and
dedicated engineers, technicians and professionals are drawn
together by a willingness to disrupt and challenge the status quo
and deliver innovative aerospace solutions to our customers' needs.
TSC's extensive capabilities encompass preliminary vehicle design
and analysis, manufacturing, ground testing, flight testing and
post-delivery support.