Harland and Wolff, the renowned shipbuilder, announced that it would not get a crucial £200 million government loan guarantee. The company, which had considered this guarantee vital for its financial stability, is now in discussions with its existing lender to secure new financing within days.
John Wood, the shipbuilder’s chief executive has taken an immediate leave of absence from his role. Russell Downs, a restructuring expert, has been appointed as Interim Executive Chairman to lead the board during this critical period.
The shipbuilder has also engaged an investment bank to assess strategic options, signaling that it may consider a sale. This move comes as the company struggles with significant losses, partly due to investments made in preparation for a major Royal Navy contract awarded in 2022. There are also unconfirmed reports that the company, which built the ill-fated Titanic, may be “broken up and sold off in bits.”
Gavin Robinson, MP for East Belfast, emphasized the need for clarity on the government’s intentions for the yard and called for reassurance regarding the future of its employees. The UK Business Secretary is expected to address Parliament on Monday regarding the shipbuilder’s situation.
The government’s decision not to provide the loan guarantee stems from concerns about the company’s financial losses. However, there is an expectation within government circles that a solution will be found to prevent the business from falling into administration.
Harland and Wolff, which was rescued from administration in 2019, has been seeking to refinance a high-interest £90 million loan from its current lender, Riverstone, and invest in its operations. The company had hoped to borrow from a consortium of UK banks with the government acting as a guarantor.
Last week, the company announced that the Falkland Islands government (FIG) has pulled out from talks about a £120 million contract to build a new floating dock at the British overseas territory. Harland and Wolff told its investors “Despite productive discussions, FIG and Harland & Wolff were unable to reach a mutually acceptable commercial position.”
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