Shipyard Sale Expected as Harland & Wolff is Insolvent, Sets Administration
For the second time in five years, the parent company of famed shipbuilder Harland & Wolff is heading for administration with the board confirming the publicly-traded parent company is insolvent and planning asset sales. Operations at the group’s four shipyards, including the historic yard in Belfast, Northern Ireland, are expected to continue while the group moves to wind down non-core businesses.
"The group faces a very challenging time given the overhang of significant historic losses and its failure to secure long-term financing,” said Russell Downs, Chief Executive of Harland & Wolff Group. “Good progress has been made to test the market for investor appetite. The board has reluctantly concluded that the company's own future as an AIM-listed company will likely come to an end in the near future, but that the core operations undertaken by the four yards and Islandmagee will continue to trade as usual.”
InfraStrata, a mid-range energy company with an interest in the Islandmagee gas storage project, acquired the Belfast shipyard in 2019 as part of the prior administration. The yard had not built a new ship in many years but they worked to assemble a new business model including buying the dormant Appledore Shipyard in England and two smaller facilities in Scotland. The group incurred large losses as they invested in the business and struggled to find new work for the yards.
The breakthrough came as part of the consortium led by Navantia which won a UK government contract to build three support ships for the Royal Navy. Extensive investment was being made to scale up for that work and modernize the shipyard infrastructure. The group was counting on refinancing with a government-guaranteed loan package but the new government of Prime Minister Keir Starmer formally rejected the application in July setting off the current financial crisis.
The group obtained additional financing from its private lender Riverstone Credit Partners but says “there was no evidence of any other potential funding available to support the business at that time.” They reported the company is currently in discussions with several parties to secure interim funding to support the business but that there is a material funding need.
“The board has concluded that the company is insolvent on a balance sheet basis… contingent planning for making an administration order … is underway. This process will likely commence this week.”
Working with Rothschild they report “a number of parties have expressed an interest in acquiring some or all of the group’s subsidiaries and a first-round bid deadline is due shortly. The board is of the view that there is a credible pathway to continue core operations built around a four-yard operation.”
There however has been a suspension of ongoing payments with the company reporting there are “allegations of misapplication of remittances in excess of £25 million.” An independent investigation is being started which they expect to transfer to the administrators. The company had previously been unable to complete its 2023 audit and publish last year’s finalized results.
Non-core activities are being ended with Scilly Ferries expected to enter insolvent liquidation while they are looking for an accelerated sale of the Marine Services business. Assets in the U.S., the company writes will be “transitioned for value.” Layoffs are expected initially at the group level although they warn a further reduction in headcount may be necessary.
The four shipyards are continuing their work including they are aiming to restart preparation for the Royal Navy contract. An update on the Sea Rose FPSO has completed significant work and Appledore is converting a Royal Navy vessel that is being given to the Lithuanian Navy. The Arnish and Methil yards are building Thames river barges and other projects.