Harland & Wolff: Titanic builder’s week from hell
Can someone put Harland & Wolff out of its misery? Rather than ramming full throttle into an iceberg, the shipyard that built the Titanic’s fall from grace has consisted more of a steady stream of increasingly troubling announcements.
That all came to a head on Friday, when the Belfast-based company confirmed, following a week of denial, that it would not receive a critical £200m loan guarantee from the new Labour government, alongside the departure of controversial chief executive John Wood.
Now administrators have reportedly been lined up in case an interim rescue deal cannot be reached with it Wall Street lender Riverstone Credit partners. Harland is looking for an emergency £20m loan, apparently contingent on Wood’s exit.
What next, then?
Leading the talks is new interim boss Russell Downs, an experienced accountant who worked on the collapse of Lehman Brothers bank.
The extent of Harland & Wolff’s financial difficulty is not fully understood, given the AIM-listed company failed to publish its most recent audited accounts in early July, leading to the suspension of shares. Its unaudited accounts show an operating loss of £24.7m.
According to the FT, chief financial officer Arun Raman has encouraged directors to reassure employees the company will not be put into administration.
But a breakdown in talks with Riverstone would very likely lead to Harland & Wolff being split up and put up for sale. Reports have suggested vulture funds including Miami’s Flacks Group are already circling in case the group files for bankruptcy.
The Unite Union has said it will do “whatever it takes” to defend its members and the shipbuilding sector, with the future of the firm’s £1.6bn contract to build ships for the Royal Navy a key concern.
Around 1,500 jobs are at risk across its sites in the UK and long-term shareholders have got in touch with City PM to voice their fears over the last week.
Even if a deal is reached, reports suggest major top brass changes will likely follow Wood’s exit, with the new government concerned over the quality of the current management team. The departure of Wood, who consistently sought to play down concerns in the months leading up to the current mess, can only be a good thing.
No one can predict the future, and Harland & Wolff was able to narrowly avoid collapse in 2019 when it was rescued as part of a £6m deal led by its former boss.
Among an array of industrial crises facing the new government, the crisis at Belfast’s famous shipyard is a key early test.