Harland & Wolff, the owner of the Belfast shipyard that built the Titanic, has announced that it would be entering into administration this week after failing to find new funding.
Harland & Wolff said that the rejection of the company’s request for a £200m facility from the UK government’s export credit agency UKEF left the company in a difficult financial position. Additional funding of around $25m was made available by current lender Riverstone but it was not enough to escape administration.
The board decided to wind down non-core operations on an expedited basis or exit for value. This includes the Scilly Ferries business, Marine Services, and other developmental activities which are not generating revenue. The company’s US business will be transitioned for value while its Australian business is dormant. Its core operations comprise its four yards and its interests in the Islandmagee Gas Storage project.
The company concluded that it is insolvent on a balance sheet basis per its last audited accounts and most recent management accounts. Accordingly, the appointment of administrators from Teneo is underway.
“Appropriate plans are in place for a number of the group’s employees who are employed by the company with the unfortunate but inevitable consequence of redundancies. The administrators, once in office, are likely to transition the remaining activities undertaken by the company to other companies in the group,” Harland & Wolff said.
As of July, the company had around 1,600 people employed, most of them in its core businesses. This is a far cry from the company’s peak power when it employed around 20,000 people. It does hope that the companies operating its shipyards will be bought so for now those core operations will continue to trade as usual.
“Each of the group’s shipyards are significant employers within the communities they serve, and we are working towards securing them a brighter future under a new strong and capable sponsor,” Harland & Wolff added.
As far as shareholders of the company are concerned, they will most likely lose their money, but the upside is that as many as 20 companies are mulling buying parts of the business in a sale carried out by investment bank Rothschild. Local media are reporting that Babcock is also one of the potential bidders. The first-round bid deadline is due shortly.
This will be the second time in five years that Harland & Wolff has gone into administration. In 2019, the oil services company InfraStrata bought the yards out of administration before taking on the historic Harland & Wolff name and switching to shipbuilding.
In July, the CEO of an American restructuring investment firm claimed he would like to buy out the Belfast site. Michael Flacks, founder and director of Miami-based Flacks Group, had revealed plans to convert the yard into a North Atlantic ship repair business but that has not come to fruition.
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