Harland & Wolff, the British shipbuilder best known for building the Titanic, is suffering a further blow when the shipyard’s chief executive announced his resignation after failing to secure financial support from the British government. Harland & Wolff has long been plagued by a serious financial crisis.
Harland & Wolff boss announces resignation as financial aid falls through
The government has decided to reject the release of a desperately sought £200 million ($257 million) Export Development Guarantee (EDG) to Harland & Wolff, meaning that Harland & Wolff is set to be placed in administration yet again, it has been confirmed by Harland & Wolff. Following the UK government’s refusal to lend a helping hand, Harland & Wolff’s chief executive John Wood announced his resignation with immediate effect over concerns about the shipyard’s future.
Meanwhile, as Harland & Wolff failed to meet the June 30, 2024 deadline to announce its 2023 results, trading in the shipbuilder’s shares on the London Stock Exchange’s Alternative Investment Market (AIM) has been forced to be suspended.
In order to alleviate its current difficulties, Harland & Wolff said it is accelerating the negotiation process with Riverstone Credit Management to secure alternative financing and has engaged Rothschild & Co to study “strategic options”. The shipbuilder added: “It is expected that the alternative financing will be finalized in the coming days.”
However, rumors have been circulating that the CEO of a U.S.-based restructuring investment firm is interested in buying Harland & Wolff’s Belfast shipyard. Previously, there was news that the Miami-based Flacks Group founder and director Michael Flacks (Michael Flacks) is interested in the shipyard into the North Atlantic ship repair base, but this plan has not yet been realized.
Seeking A Recapitalization, Russell Downs Takes Office
Russell Downs, a former partner and restructuring specialist at accounting firm PwC, will take over as CEO on an interim basis following the departure of John Wood, according to a press release from Harland & Wolff. The shipbuilder said, “With a proven track record of delivering significant value to stakeholders and success in complex refinancing, Russell Downs is ideally suited to take on the role of CEO as the company’s board of directors seeks to complete a recapitalization aimed at providing the company with a sustainable financial footing over the medium to long term.”
In response, Russell Downs said, “I am delighted to be taking on this position as the company’s leadership team transitions and addresses the increased challenges and speculation ahead. I am very aware that all stakeholders in the business have a significant responsibility to ensure the long-term future of the business and I am honored to have been given the task of finding a solution. Over the coming weeks I will be consulting tirelessly with employees, managements, customers, suppliers, unions, government agencies and other stakeholders.”
In addition to Russell Downs, Alan Fort, who currently works for Celsa UK (a steel manufacturer), has been proposed to join the Harland & Wolff board as a non-executive director. The other board members, including CFO Arun Raman and non-executive director Malcom Groat, will remain in place.
With a history of more than 150 years, Harland & Wolff is one of the oldest shipyards in the shipbuilding industry and is best known for building the Titanic. Publicly available information shows that Titanic began construction at Harland & Wolff on March 31, 1909, was launched on May 31, 1911, and completed on April 2, 1912 for sea trials. Titanic was the world’s largest and most luxurious cruise ship at that time.
Harland & Wolff is known to have suffered several tough times and several closures.In the summer of 2019, the shipyard declared bankruptcy and entered administration. It then emerged from bankruptcy under new management and worked to revitalize the business. Currently, Harland & Wolff employs about 1,500 people, of which about 600 are located at the Belfast shipyard, with two other smaller shipyards located in Scotland and England.
Although Harland & Wolff has worked to revitalize its business in recent years, the effect has been minimal, with most of the current projects in hand being offshore contracts and ship repair contracts. For example, Harland & Wolff entered into a SeaRose FPSO mid-life upgrade contract with Canada’s Cenovus Energy in October 2023, valued at approximately £61 million (then about $78.38 million), which took three months to complete and deliver, and was awarded an April 2024 approximately £3 million (then about $3.85 million) offshore contract for the manufacture of six subsea structures.
After losing 200 million pounds worth of financial assistance from the government, Harland & Wolff will face more difficulties in its future development, and will perhaps face bankruptcy and reorganization once again. Like many other Western countries, the British shipbuilding industry has long been in decline. The refusal to provide financial assistance to Harland & Wolff is not only contrary to the revitalization plan and the National Shipbuilding Strategy put forward by the previous British government, but also implies that the depressed status of the British shipbuilding industry is still difficult to change.
