Harland & Wolff, the beleaguered shipbuilder responsible for the iconic Titanic, is in heated discussions with its Wall Street financier, Riverstone Credit Partners, about landing a crucial loan to bolster its precarious financial status. The fresh funding of £20 million, which would be an addition to the existing credit facility of £105 million, could cause significant modifications to the board of governance and might signal the exit of incumbent CEO, John Wood.
The talks have gained momentum after it surfaced that the recently established Labour government is set to reject H&W’s appeal for a loan assurance of £200 million. This aid was to facilitate the acquisition of new funding from a consortium of commercial banks at reduced interest rates. The previous Conservative government had deliberated this guaranty for over a year, but the decision was perpetually deferred due to objections posed by the Treasury.
Over 1,500 jobs spread across four sites in Belfast, Appledore in Devon, and Methil and Arnish in Scotland are in jeopardy, which has led to massive distress among various British workers’ unions.
The new Labour government expresses dissatisfaction regarding what it perceives as H&W’s poor performance under Wood’s leadership. Wood previously steered energy company InfraStrata, and orchestrated a £6 million bailout of H&W in 2019 after it had sunk into administration. His vision was to resurrect shipbuilding and repair operations in Belfast and other UK locales. Despite securing a part of a £1.6 billion contract for constructing new Royal Navy vessels, multiple financial hiccups persist at H&W.
The company had stated that market speculators projected revenues of £200 million for the current financial year. Yet H&W, which is listed on Aim, saw its shares frozen in July when it did not disclose audited accounts. Unaudited accounts hinted at an operating deficit of £24.71 million for the preceding financial year. The warning from the firm’s CFO about securing the loan assurance “as soon as possible” due to high “financing costs” amplifies its uncertain state.
Upon the Financial Times revealing the potential refusal of the £200 million loan assurance by the new government, the firm responded by issuing a statement, labelling the article as “conjectural.”
In a communication to their investors, the firm stated that they haven’t received any governmental verdict concerning their application. They have maintained a steady flow of information and updates to aid the government in their decision-making process.
On Thursday, the company refrained from immediately commenting on the matter. Similarly, Riverstone chose to remain silent. – Copyright The Financial Times Limited 2024.