Harland & Wolff has secured a $25 million (€23.2m) loan facility, handing the struggling Belfast shipbuilder a temporary lifeline after the UK government rejected its request for a £200 million finance guarantee in July. The Titanic-maker said on Thursday that it had reached a deal with its existing Wall Street lender Riverstone, expanding the company’s credit facility, on which it pays 14 per cent interest, from $115 million to $140 million.
H&W also confirmed that it had terminated the employment of former chief executive John Wood, who has left with immediate effect. On July 19th the company said Mr Wood was “taking a leave of absence” from his role. Mr Wood’s departure had been expected as a condition of a new $25 million loan, which H&W said would “improve and stabilise the liquidity position of the company and its subsidiaries”.
The shipbuilder has engaged Rothschild & Co as financial adviser to assess its strategic options as expectations grow that the business could be broken up. Russell Downs, who joined last month as interim executive chairman, is an experienced restructuring expert. The 163-year-old company also announced it was abandoning plans to provide passenger services between Penzance and the Isles of Scilly in order to focus on its core shipbuilding business.
Shares in Aim-listed H&W have been suspended since the start of July after it failed to produce audited accounts. Its unaudited results showed an operating loss of £24.7 million for 2023, and H&W had said it was aiming to publish the audited results later in July.
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The Financial Times revealed last month that the UK government was poised to turn down H&W’s request for a £200 million loan guarantee after deciding that it would be an inappropriate use of public funds. The shipbuilder had been in talks with ministers and officials for more than a year about the loan guarantee to help it secure fresh funding from a group of commercial banks at a lower interest rate than the credit facility with Riverstone, which matures at the end of December.
Unions had warned about the potential impact on jobs if the company failed to secure new financing. H&W employs about 1,500 people across four sites – at Belfast, Appledore in Devon, and Methil and Arnish in Scotland.
Mr Wood led a £6 million rescue of the Titanic shipbuilder from administration in 2019, and had touted progress in turning the company around. It had won a £1.6 billion contract to build new royal navy ships as part of a consortium led by Spain’s Navantia.
On Thursday the company said it was pulling its planned fast ferry service between the Isles of Scilly and Penzance to focus on its main business. Championed by Mr Wood, Scilly Ferries was due to begin sailings on August 20th after multiple delays to its launch date. H&W chairman Malcolm Groat apologised to those affected directly as well as residents on the Isles of Scilly for the “inconvenience and uncertainty caused”.
The company, which had been taking bookings on the new service until a few weeks ago, said it would work with passengers and “other counterparties to ensure a smooth transition out of this business”. – Copyright The Financial Times Limited 2024
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