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Harland & Wolff negotiates with its Wall Street lender to secure an emergency loan to shore up its financial position, while the struggling Titanic shipbuilder fights for its survival.
Crisis talks are underway between the company and Riverstone Credit Partners over a potential £20m extension of its existing $115m credit facility with the Wall Street lender, according to two people close to the situation.
The potential funding is expected to cause a boardroom shake-up and herald the departure of H&W chief executive John Wood.
The company could be broken up and put up for sale if new financing is not agreed, the people added. Its leadership is in close contact with the UK government.
The discussions became more urgent as the Financial Times reported on Tuesday that Britain’s new Labor government was prepared to reject H&W’s request for a £200m loan guarantee to help it secure new financing from a group of commercial banks at a lower rate. rate.
The previous Conservative government negotiated the guarantee for more than a year but never made a final decision after the Treasury raised objections.
At stake are 1,500 jobs at four sites in Belfast, Appledore in Devon and Methil and Arnish in Scotland, which has raised concerns among some UK unions.
In an email to directors seen by the FT, CFO Arun Raman said the company was “in an advanced stage of raising and closing additional financing. . . and we should be in a position to make a statement soon”.
Raman urged directors to “reassure your staff and colleagues and anyone in the supply chain who raises questions” that the board is not putting the company into administration. He called such a narrative “totally false and incorrect”.
There is some unhappiness in the new Labor government about what they see as underperforming H&W management led by Wood.
Wood ran energy company InfraStrata and led the £6m rescue of H&W in 2019 after it collapsed into administration, with hopes of turning the business around.
“We have really done what we said we were going to do and revive shipbuilding and repair in Belfast and other places in the UK,” he told the FT last month. The company won part of a £1.6bn contract to build new Royal Navy ships.
It said market analysts had predicted sales of £200m this financial year. However, Aim-quoted H&W had its shares suspended in early July when it failed to publish audited accounts. Its unaudited accounts indicated an operating loss of £24.71m for the last financial year.
At the time, H&W’s finance director said its “funding costs” were high and warned it was “vital” to secure a loan guarantee “as soon as possible”.
After the FT revealed that the new government intended not to approve the £200m loan guarantee, the company issued a statement saying the article was “speculative”.
“The company has not received any decision from the government in relation to its application and the company continues to provide regular information and updates to facilitate the government’s decision-making process,” he told investors.
The company had no immediate comment on Thursday. Riverstone declined to comment.
However, the devolved government of Northern Ireland issued a statement.
“Economics Secretary Conor Murphy spoke to UK Foreign Secretary Hilary Benn today to express his support for the workforce at Harland & Wolff and to urge him to ensure that the interests of employees are protected,” a spokesman said.
Regional investment agency InvestNI “is in contact with the company and is monitoring developments,” the spokeswoman added.