The future of Harland & Wolff’s historic shipyard is in jeopardy after a $25 million emergency bailout, raising concerns that Royal Navy ships could soon be built overseas.
The Belfast-based company, best known for building the Titanic, has scrapped plans to restart ferry services between Cornwall and the Isles of Scilly, choosing instead to focus on its core operations across four major UK shipyards.
Harland & Wolff, which owns shipyards in Belfast, Appledore in Devon, and Mythel and Arnish in Scotland, has announced its decision to wind down non-core operations after securing crucial funding from Riverstone, a Wall Street credit investment firm. “It is with regret that we have taken the difficult decision to terminate the fast ferry project, but we need to focus our energies and resources on continuing to grow our core business across our four delivery centres,” the company said.
News of the rescue plan came as CEO John Wood resigned immediately. Harland & Wolff secured $100 million in high-interest loans at 14% from a US asset manager, and Rothschild & Co. was brought in to explore strategic options for the company.
Despite these efforts, Harland & Wolff’s financial instability has raised doubts about its ability to fulfil a £1.6bn contract with the Ministry of Defence to build three warships. This raises the possibility that the ships will be built by a Spanish shipyard, which would be the first time in the history of the Royal Navy that warships have been built abroad.
Malcolm Grote, Chairman of Harland & Wolff, expressed his gratitude to our lenders, saying: “We are grateful to our lenders for their continued commitment of funding to support the stability of the Harland & Wolff Group and its long-term strategic objectives. We look forward to working with the highly experienced team at Rothschild & Co to help us achieve this goal.”
Last month, the incoming Labour government refused to support a taxpayer-funded bailout of the shipbuilder, whose shares were suspended on Aim, the secondary stock market, after being bought out of administration five years ago.