Harland & Wolff is in talks with its Wall Street lender about securing an emergency loan to shore up its financial position as the struggling Titanic shipbuilder fights for its survival.
Crisis talks are taking place between the company and Riverstone Credit Partners over a potential £20 million (€23.8 million) extension of its existing $115 million (€105 million) credit facility with the Wall Street lender, according to two people close to the situation.
The potential financing is expected to trigger a shake-up of the board and herald the departure of H&W chief executive John Wood, the people added.
The discussions have become more urgent since it emerged that the UK’s new Labour government is poised to turn down a request from H&W for a £200 million loan guarantee to help it secure fresh funding from a group of commercial banks at a lower interest rate.
The previous Conservative government had been in negotiations over the guarantee for more than a year, but had never made a final decision after the Treasury raised objections.
At stake are 1,500 jobs across four sites in Belfast, Appledore in Devon and Methil and Arnish in Scotland, prompting major concerns from some of Britain’s unions.
There is some unhappiness in the new Labour government about what they see as the underperforming H&W management, which is led by Wood.
Wood ran energy company InfraStrata, and led the £6 million rescue of H&W in 2019 after it collapsed into administration, with the hope of turning the business around. “We have really done what we said we were going to do and revive shipbuilding and ship repair in Belfast and other sites in the UK,” he told the FT last month. The company had won part of a £1.6 billion contract to build new Royal Navy ships.
The company said market analysts had forecast revenues of £200 million this financial year.
However, Aim-listed H&W had its shares suspended at the start of July when it failed to publish audited accounts. Its unaudited accounts suggested an operating loss of £24.71 million for the last financial year.
H&W’s chief financial officer said at the time that its “financing costs” were high and warned it was “crucial” to secure the loan guarantee “as soon as possible”.
After the FT disclosed that the new government was minded not to approve the £200 million loan guarantee, the company put out a statement saying the article was “speculative”.
“The company has not received any decision from government in relation to its application and the company continues to provide information and updates on a regular basis to facilitate government in its decision-making process,” it told investors.
The company had no immediate comment on Thursday. Riverstone declined to comment. – Copyright The Financial Times Limited 2024
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