UAE Fund Nears Deal to Boost Hypersonic Aviation Pioneer

A British hypersonic aviation company is nearing a £20 million rescue deal with the UAE's Strategic Development Fund, which would become its largest shareholder, pending government approval. This funding is crucial as the company has been facing financial difficulties and risks insolvency if new capital is not secured soon. The deal involves a two-part financing strategy, including loans from existing shareholders and an equity injection from the fund. Reaction Engines, known for developing advanced engine technology capable of reaching Mach 25, has been struggling financially despite a significant increase in commercial revenues last year. The company has a strong pipeline of contracts and research opportunities, particularly in military applications, which could provide substantial revenue in the future. However, the involvement of the UAE fund requires scrutiny under the National Security and Investment Act due to the sensitive nature of the technology. Rolls-Royce Holdings has opted out of the rescue deal, while BAE Systems may contribute a small amount. The urgency of the situation is underscored by the fact that if the first tranche of funding is not received soon, the company may have to file for insolvency. PricewaterhouseCoopers has been put on standby to manage the administration process if necessary. Founded in 1989 and chaired by former defense minister Philip Dunne, Reaction Engines has a history of capital raising but is currently lossmaking. The company’s financial performance has not met expectations, and market conditions have become more challenging since its last equity raise in 2022.