The beleaguered shipbuilder Harland & Wolff, best known as the maker of the Titanic, has received a $25 million (€23.2 million) loan facility from its existing Wall Street lender, Riverstone. The company’s credit facility has increased from $115 million to $140 million, with an interest rate of 14 per cent, giving it a temporary reprieve following the UK government’s refusal to back a £200 million financial guarantee in July.
Harland & Wolff has confirmed the termination of former CEO John Wood’s engagement, which was one of the conditions for the new $25 million loan. This loan, according to the company, will improve and stabilise its financial position and that of its subsidiaries. Financial adviser Rothschild & Co has been appointed to analyse the company’s strategic options, with anticipation growing that the firm could be split up. Russell Downs, who was recently appointed as interim executive chairman, brings considerable expertise in restructuring.
The iconic 163-year-old shipbuilder said it would forsake plans to launch passenger services between Penzance and the Isles of Scilly to focus on its primary shipbuilding operations. Since July, shares in Harland & Wolff listed on Aim have been frozen due to the company’s failure to release audited accounts. The firm’s unaudited results demonstrated an operating loss of £24.7 million for 2023 and were expected to publish the audited figures later the same month. As the Financial Times revealed recently, the UK government was inclined to deny the company’s £200 million loan guarantee request, considering it an unsuitable use of public funds.
The shipbuilding company has been engaged in financial discussions with government officials and ministers for over 12 months, aiming to secure a loan guarantee to aid in obtaining new capital from various commercial banks. The new arrangement would offer a more favourable interest rate than the existing credit facility with Riverstone that will expire in December. However, trade unions had expressed their concerns regarding the potential job losses if the firm did not succeed in landing the new finance. Across its four locations – Belfast, Appledore, Methil, and Arnish – H&W provides employment to around 1,500 people.
In 2019, Mr Wood orchestrated a £6 million bailout of the Titanic shipbuilding company, saving it from bankruptcy. His reformation plans seemed to be on track, with the company securing a vital £1.6 billion contract from Spain’s Navantia-led consortium to construct new vessels for the Royal Navy.
Regrettably, the firm announced on Thursday that its much-anticipated fast ferry service between Penzance and the Isles of Scilly would be postponed to prioritise its core operations. The new service, advocated by Mr Wood under the name ‘Scilly Ferries’, was meant to begin operations on August 20th, after several launch date delays.
Malcolm Groat, H&W’s chairman, expressed his apologies to the Isles of Scilly’s locals and those directly affected by the inconvenience and uncertainty resulting from this decision. He assured that the organisation, despite having accepted bookings for the new service up until a few weeks ago, would collaborate with customers and other involved parties to ensure a seamless transition out of the business. © The Financial Times Limited 2024