Virgin Galactic Holdings, Inc. filed a Form 8-K on June 22, 2026, reporting under Item 3.02 that it had entered into a privately negotiated exchange agreement with a holder of its 2.50% Convertible Senior Notes due 2027. Under the agreement, the holder will exchange approximately $52.5 million in aggregate principal amount of the 2027 notes for shares of the company's common stock and pre-funded warrants. The filing states the holder "has agreed to accept the Shares in lieu of the cash payment obligation that they otherwise would be entitled to receive for the principal and interest under the 2027 Notes." The company lists its common stock on the New York Stock Exchange under the symbol SPCE; the report was signed by Chief Financial Officer and Treasurer Douglas Ahrens.

The disclosed purpose is balance-sheet management. According to the 8-K, the company entered into the exchange "to improve liquidity, manage its cash position and strengthen its balance sheet as it prepares for commercial operation in the fourth quarter of 2026." The transaction converts a near-dated cash obligation into equity: rather than the company paying principal and interest in cash when due, the noteholder takes stock now. The filing quantifies the effect on the 2027 note balance directly, stating that following completion the company will reduce the outstanding 2027 notes by approximately 75%, from $70.4 million to $17.9 million in aggregate principal amount outstanding.

"The Company entered into the Exchange to improve liquidity, manage its cash position and strengthen its balance sheet as it prepares for commercial operation in the fourth quarter of 2026."— Virgin Galactic Holdings, Inc., Form 8-K, June 22, 2026, source

How the share count is set

The number of shares the holder receives is not fixed on the signing date; the 8-K describes a five-day pricing mechanic. The shares — defined in the filing to include common stock and pre-funded warrants collectively — will be determined over a five-day observation period beginning June 22, 2026. For each trading day in that window, one-fifth of the aggregate principal amount being exchanged (including accrued and unpaid interest) is divided by the daily volume-weighted average price (Daily VWAP) of the common stock. The five daily share amounts are then added together, and the resulting total is issued to the holder on the closing date, which the filing says is expected to be on or about June 29, 2026, subject to customary closing conditions.

The 8-K places explicit boundaries on that pricing. The Daily VWAP "will be subject to a floor of no lower than $3.03 and a cap of no higher than $4.09." Those collar levels matter because they govern how many shares the company issues: a higher VWAP within the band yields fewer shares for the same principal, and a lower VWAP yields more. By splitting the exchange into five equal daily slices priced off each day's VWAP, the structure averages the share count across the observation window rather than fixing it on a single day's close — a mechanic that smooths the effect of day-to-day price movement on how much stock the holder ultimately receives. The filing is careful to note that the Daily VWAP "will solely be used to determine the total number of Shares to be issued" and "will not impact the principal amount of the 2027 Notes being exchanged" — that principal figure, roughly $52.5 million, is fixed regardless of where the stock trades during the observation period.

Pre-funded warrants and the exemption used

Part of the consideration takes the form of pre-funded warrants rather than common stock outright. The 8-K states these warrants carry a nominal exercise price of $0.0001 per share and are being issued in lieu of common stock "solely for the holder to manage its beneficial ownership," and are intended to be economically equivalent to common stock. Pre-funded warrants are a common mechanism that lets a holder receive the economic value of shares while staying below a beneficial-ownership threshold, exercising into stock later as needed. The 8-K frames their use here narrowly — as a tool for the holder to manage its ownership position — rather than as a separate financing feature, and states they are economically equivalent to the common stock they replace.

On the legal posture, the filing states the issuance is being made in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act, with the shares issued only to investors qualifying as "qualified institutional buyers" under Rule 144A and institutional "accredited investors" under Rule 501 of Regulation D. The shares have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption. The 8-K's forward-looking-statements section flags that the disclosure includes statements about completion of the exchange and the timing of commercial operations, and directs readers to the risk factors in the company's most recent annual report on Form 10-K.

What the filing documents is a discrete liability-management transaction rather than a new capital raise: no cash comes into the company from the exchange, and no new money funds operations. The receipt on file establishes the principal amount being retired (~$52.5 million), the resulting reduction in the 2027 note balance (from $70.4 million to $17.9 million), the pricing collar ($3.03 floor, $4.09 cap), and the expected closing window (around June 29). The exact number of shares — and therefore the dilution — will be fixed only after the five-day observation period concludes and would be reportable in subsequent disclosure. Until then, the document records the terms agreed, not the final share count delivered.