Vertical Aerospace Group Ltd. ("Vertical"), a leading UK-headquartered engineering and aeronautical business developing electric Vertical Take-Off and Landing (eVTOL) aircraft, has entered into a definitive agreement for a business combination with Broadstone Acquisition Corp. ("Broadstone"), a special purpose acquisition company. The transaction will result in Vertical becoming a publicly-traded company, with a pro forma equity value of approximately $2.2 billion. Vertical will be listed on the New York Stock Exchange following the combination, which is expected to close in the second half of 2021, under the ticker EVTL.

Vertical is also announcing investments from American Airlines, Avolon, Honeywell and Rolls-Royce, who have invested in the PIPE and are part of Vertical's strategic partner ecosystem; Microsoft's M12, 40 North and Rocket Internet SE have also invested in the business.

Commercial partnerships and individual conditional pre-orders have also been agreed with American Airlines, Virgin Atlantic and Avolon for up to 1,000 aircraft in total, providing a direct route to market and opportunity to work together on key go-to-market workstreams.

Vertical's mission is to make air travel personal, on-demand and carbon-free through designing, manufacturing, selling and servicing one of the world's best eVTOL aircraft, the VA-X4. It will travel at speeds over 200mph, be near silent when in flight, produce zero emissions and at low cost per passenger mile.

The VA-X4 is expected to be certified to the same standards as large commercial airliners and therefore is expected to be 100x safer than a helicopter. Vertical intends to certify the VA-X4 to European Union Aviation Safety Agency (EASA) standards – the most stringent global standards – in order to unlock a large UAM TAM of $1 trillion by 2040, with an upside TAM of $4.4 trillion by 2040[1].

Vertical was founded in 2016 by Stephen Fitzpatrick, an established entrepreneur best known as the founder of the Ovo Group, a leading energy company determined to create a world without carbon and which includes Ovo Energy, the UK's second-biggest energy retailer with revenues of $6.5 billion. Stephen remains the majority shareholder in this business.

Over the past five years, Vertical has focused on building an experienced and senior team in the eVTOL industry who have over 1,200 combined years of experience, and have certified and supported over 30 different civil and military aircraft and propulsion systems. This includes:

Michael Cervenka, former Head of Future Technologies at Rolls-Royce; Eric Samson, former VP Engineering and Chief Engineer at General Dynamics; Tim Williams, former Chief Engineer of Rolls-Royce; Madhu Bhabuta, former Chief Technology Officer of the UK's Ministry of Defence; Dr. Limhi Somerville, former Technical Manager at Jaguar Land Rover responsible for the cell facility, battery functional safety and advanced cell development; Paul Harper, former UK Chief Airworthiness Engineer at Airbus, and Eduardo Dominguez, former CEO of Airbus' Urban Mobility.

By combining this world-class team with a deliberately built ecosystem of top-tier partners, Vertical has assembled a broad mix of people and organisations with both commercial track records as well as experience testing, building and certifying some of the world's most advanced aircraft.

Vertical's ecosystem approach draws on R&D commitments and the commercial and manufacturing expertise of partners such as Rolls-Royce, Honeywell, GKN and Solvay alongside an in-house focus on high value-add design and proprietary technology, creating an asset-light business model with highly attractive unit economics. These strategic partnerships accelerate Vertical's path to certification, de-risk execution, allow for a lean cost structure, and will enable production at scale.

As a result of this, Vertical is able to achieve profitability and cash flow breakeven with annual sales of less than 100 aircraft (calculated as number of aircraft sales required to reach positive net income and cash flow in 2024).

American has agreed to pre-order, subject to certain conditions precedent and future agreed upon milestones, up to 250 aircraft, and an option to order an additional 100 aircraft. Avolon has agreed to pre-order up to 310 aircraft with an option for a further 190, and Virgin Atlantic has an option to purchase between 50 and 150 aircraft.

In addition, all parties will work together towards the prompt certification and deployment of aircraft in commercial operations. In the United States of America, American Airlines expects to work with Vertical on passenger operations and infrastructure development. In the United Kingdom, Virgin Atlantic and Vertical expect to work together to explore the joint venture launch of a Virgin Atlantic branded short haul eVTOL network, including operations and infrastructure development.

Key Transaction Terms

The business combination values the combined company at a pro forma enterprise value of approximately $1.8 billion and pro forma equity value of $2.2 billion at the $10.00 per share PIPE price. The boards of directors of both Broadstone and Vertical have approved the proposed transaction, which is expected to be completed in the second half of 2021, subject to, among other things, the approval by Broadstone's shareholders and satisfaction or waiver of the other conditions stated in the definitive documentation. The transaction is expected to result in gross proceeds of $394 million.

The ordinary share PIPE includes commitments from institutional investors, 40 North and Microsoft's M12 as well as the following strategic investors: American Airlines, Avolon, Rolls-Royce and Honeywell.

Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Broadstone with the Securities and Exchange Commission and available at www.sec.gov.

Advisors

Winston & Strawn LLP is serving as legal advisor and Citi is serving as advisor to Broadstone. Latham & Watkins LLP is serving as legal advisor and Barclays is serving as lead financial advisor and lead capital markets advisor to Vertical. Barclays and Citi acted as joint placement agents on the PIPE.

[1] Morgan Stanley, eVTOL/Urban Air Mobility TAM Update, May 2021