Harland & Wolff Secure Lifeline from U.S. Lender as Reorganization Begins
The famed shipbuilding group Harland & Wolff announced it has entered into an arrangement with its existing lending to provide funding commitments to support the group’s “ongoing stabilization and long-term strategy objectives.” The shipbuilder of famous vessels including the RMS Titanic, was plunged into a financial crisis when the new British government decided not to proceed with a £200 million ($258 million) export development loan guarantee that would have provided for the refinancing of the company.
Riverstone, a U.S.-based private equity asset manager, agreed to provide the company a further $25 million bringing Harlnd & Wolff’s total commitments to $140 million. Terms of the expansion were not announced but the line was scheduled to come due at the end of 2024. Harland & Wolff had reported it was working with a syndicate of commercial banks to refinance the company at lower interest rates supported by the UK government loan guaranty.
The new facility is expected to give the troubled shipbuilder a temporary reprieve as it tries to craft a long-term strategy. Two weeks ago, after the government said it was not proceeding with the loan guaranty, the company reported its CEO John Wood was taking a leave of absence and that it was bringing in a new CEO who was a reorganization specialist. It also engaged Rothschild & Co. as its financial adviser to assess strategic options for the group, which are believed to include a possible sale.
Harland & Wolff announced today it has terminated the employment of John Wood effective July 31 and he has left the company’s board. Wood led the midstream natural gas company InfraStrata that purchased the Belfast yard from administration in 2019 and engineered the strategy to revitalize the group.
Recently, the group highlighted that its four shipyards were all functional for the first time and it was growing its orderbook, including cruise ship refurbishments. In its unaudited 2023 financial statements, the group reported £87 million ($112 million) in revenues while its operating loss narrowed to £24.7 million ($31.5 million) from £58.5 million ($74.8 million) in 2022. They were projecting £200 million ($255 million) in revenues for FY 2024.
Trading in the group’s stock also remains suspended after it failed to publish audited year-end results. The group said it was due to discussions with auditors over revenue recognition and that the audit would be completed by mid-July.
The group planned to start a ferry service to the Isles of Scilly (Scilly Ferries/X)
Interim CEO Russell Downs working with the board has begun the reorganization of the company. Today, they announced they have immediately terminated a planned ferry operation between Penzance and the Isle of Scilly. At the beginning of 2024, the company announced plans for Scilly Ferries after losing a bid to design and build vessels for the existing ferry company. It chartered a 400-passenger high-speed catamaran named Atlantic Wolff. The vessel recently arrived in Penzance for testing painted in Harland & Wolff’s yellow and black colors. They report the vessel will now be returned to Damen.
“It is regrettable that we have taken the tough decision to terminate the fast ferry, but we need to focus our energies and resources in continuing to grow the core business across our four delivery centers,” said Malcolm Groat, Chairman of Harland & Wolff. He added that the decision aligns with and brings the company back to its fundamental five markets and six services strategy.
Harland & Wolff in 2022 was part of a consortium led by Navantia that won a lucrative UK contract for three Royal Navy support ships. The group has been investing in upgrading its facilities with work expected to begin in 2025 on the project. In 2023, the shipyard in Belfast completed its first new construction, a Thames River barge, in 20 years.