Harland & Wolff CEO Leaves, Advisors Hired as UK Turns Down Bailout
Famed shipbuilding Harland & Wolff is reported to be in a financial crisis after the new Labor government of the UK officially notified the company it will not proceed with a proposed loan guaranty program to refinance the company. The failure to win the needed support triggered a series of events as the company said it engaged Rothschild & Co. to “assess strategic options for the group.”
John Wood the Chief Executive Officer of the company is officially being reported to taking a “leave of absence,” effective immediately. The Financial Times reports the executive who led the revival of the company after buying the Belfast shipyard out of administration in 2019 texted his resignation last night to the board. The newspaper says it was a condition of future financing from the current lenders.
A restructuring expert, Russell Downs, is set to become the Interim Executive Chairman of the group. He has 30 years of experience working at PwC. The company said he will “seek to complete a recapitalization intended to give the company a sustainable financial footing into the medium and long term.”
Harland & Wolff had applied last year to the then Conservative government for loan guarantees for a £200 million ($258 million) package to replace the current £89 million ($115 million) financing coming due in December 2024 from U.S.-based Riverstone Credit Management. The package was awaiting ministerial approval when the Conservative government launched the recent elections, although it is believed the government was already leaning toward turning down the application.
The Financial Times said the company reworked the application, something Harland & Wolff denied. Earlier this week they said talks were still underway with the government while emphasizing the progress made at reestablishing the business. Under Wood’s leadership, the energy infrastructure firm InfraStrata acquired the Belfast yard and later three in Scotland.
In its unaudited 2023 financial statements, the group reported £87 million ($112 million) in revenues and was decreasing its losses. The company is making significant investments ahead of its involvement in a Royal Navy auxiliary shipbuilding project due to launch in 2025. Its 2023 audit however was delayed due to discussions with accountants over revenue recognition issues and that caused trading in its stock to be suspended in July.
"I am very pleased to take on this role after a challenging period for the group as it transitions from one leadership team to another and deals with the increasing speculation over its future,” commented Russell Downs. “I will be working tirelessly in consultation with employees, management, customers, suppliers, unions, government agencies, and other stakeholder groups in the coming weeks."
Harland & Wolff said it is in “expedited discussions” with Riverstone to secure alternative debt facilities to support the near-term working capital needs of the group. In addition, the company said it is in “active dialogue” with key stakeholders including the UK Government around existing and future contracts.
The company also said that another executive, Alan Fort, who has a “long record in performance improvement,” would join the board as a non-executive director. He holds a similar position at steelmaker Celsa UK. The Spanish group underwent a financial reorganization in 2023.