Harland & Wolff, a renowned shipbuilder noted for constructing the Titanic, announced on Monday its plans to wind up or dispose of its peripheral operations. The firm is faced with a challenging financial situation that is compelling it to cut down staff, though the exact number of expected redundancies remains undisclosed. In a statement to stock market participants, the company hinted that shareholders would likely not see any return if it goes into administration.
The shipbuilder, nonetheless, hinted at a probable way to keep its four shipyards operational while fulfilling a contract with the UK Ministry of Defence, where it collaborates with Spain’s Navantia. It expressed an anticipated expectation for bids on these yards and hoped that a deal would be finalised within a few weeks.
Interim Executive Chairman, Russell Downs, an expert in company restructuring who took over last month, remarked that the shipyards could remain operational as discrete organisations even if the parent company goes into administration. He further suggested that the Plc had run its course and would likely not have a significant role in future operations.
The sectors expected to be impacted by the impending job cuts include the marine services business, the US and Australian branches, the Scilly Ferries business, and certain centralised support areas. Harland & Wolff, a firm with 163 years’ of history, operates out of four sites. Namely, its main yard in Belfast, two locations in Scotland, and Appledore situated southwest of England. The firm employs around 1,200 people across these locations.
Faced with stiff competition and failing to meet its credit line, the Belfast yard was denied a £200 million credit facility by the British government in July. Matt Roberts, a national officer at the GMB trade union, attributed these challenges to daunting ‘failures in industrial strategy and corporate mismanagement’. He reiterated the vital role played by Harland & Wolff yards in sectors such as renewables and shipbuilding and urged government intervention to prevent any private entity cherry-picking the elements to retain with regards to preferred yards or contracts.
Ever since July, the firm’s shares have been awaiting trade resumption, predicated on the finalisation of their 2023 accounts on a continuing business basis. The shipbuilding corporation vows to maintain its fundamental operations in its four shipyards, while also retaining its stake in the Islandmagee Gas Storage project.
It was reported last week that Harland & Wolff initiated an investigation into what appears to be a ‘misapplication’ of corporate funds exceeding £25 million. Mr. Downs revealed to the Financial Times that an impartial and dedicated forensic enquiry into these funds was now underway.
The inquiry’s focus is to scrutinise the apparent ‘misapplication’ of more than likely £25 million, along with expenditure on a much smaller scale…which seemingly brought little to no tangible commercial advantages.
Mr. Downs emphasised that the investigation was centred on ‘misapplication’ rather than ‘misappropriation’ of funds. The investigation will need to ascertain the full scope, if any, of any misconduct. He further added that customers who are investing against obligations with an expectation of money-channeling into certain areas feel their trust has been violated, given that the money seems to have been misused. Copyright The Financial Times Limited 2024 / Reuters. All Rights Reserved Thomson Reuters 2024.