Harland & Wolff, the century-old British shipbuilder famous for building the “Titanic,” announced that it will enter bankruptcy administration this week because it has failed to find new sources of financing.
Harland & Wolff said that the company’s request for a £200 million loan from the UK government’s export credit agency (UK Export Finance, UKEF) has been rejected, leaving it in financial difficulties. Currently, Riverstone, an existing Wall Street lender, has provided Harland & Wolff with about $25 million in additional funding, but this is not enough to get the company out of receivership.
In August, news broke that Harland & Wolff had reached an agreement with Riverstone to extend its credit line, which pays 14% interest, from £90 million to £110 million. At that time the company hoped to use the funds to ease its bankruptcy struggles, but the latest news shows that the amount of loans Riverstone has already provided falls far short of the agreed amount.
In this situation, Harland & Wolff has decided to accelerate the liquidation or exit at value of its non-core businesses, including the Scilly Ferries business, marine services and other non-income generating development activities. The company’s U.S. business will undergo a value transition, while its Australian business is at a standstill.Harland & Wolff’s core business consists of four docks and its interest in the Islandmagee gas storage project.
Harland & Wolff believes that, based on its most recent audited accounts and latest management accounts, the company is insolvent and therefore appointed Teneo’s administrators to put it into receivership. The company said, “It is unfortunate but an inevitable outcome that some of the company’s employees will be made redundant. Once the administrators are in place, it is likely that the remaining business carried out by the company will be transferred to other companies within the group.”
Harland & Wolff’s share trading on the London’s Alternative Investment Market was forced to be suspended after it failed to meet a June 30, 2024 deadline to announce its 2023 results. In July, two non-executive directors announced their resignations following the UK government’s refusal to provide it with a £200 million Export Development Guarantee (EDG), which was followed by the announcement of the resignation of the man in charge of Harland & Wolff and fears of mass layoffs. In September, Harland & Wolff CFO Arun Raman announced his resignation with immediate effect.
Harland & Wolff is currently managed by Russell Downs, a former partner and restructuring specialist at accountancy firm PwC. With the assistance of experts from Rothschild Bank, Russell Downs is leading a review of the company, which is likely to culminate in its sale.
