Harland & Wolff lines up administrators after £200m taxpayer bailout is rejected

Harland & Wolff has lined up administrators as vulture funds prepare to pick apart the sinking company behind the shipyard that built the Titanic.

Contingency plans are being drawn up by insolvency experts from Teneo in case a phalanx of financial advisers fail to thrash out an interim rescue deal.

Accountancy firm EY is advising officials from the Department for Business on its options, and accountants from Deloitte have been parachuted in to replace Grant Thornton in advising the Harland & Wolff board, according to City sources.

Whitehall sources insisted this weekend that civil servants were confident an interim deal could be struck that removes “the immediate risk of administration”. Whether a longer-term deal can be agreed remains to be seen, however.

Business secretary Jonathan Reynolds will update the House of Commons on the situation at Harland & Wolff tomorrow.

Hopes of Harland & Wolff securing a £200 million bailout from taxpayers were dashed last week as the new Labour administration rejected a request for government agency UK Export Finance to underwrite fresh funding from a US hedge fund.

Harland & Wolff chief executive John Wood resigned on Friday amid reports that Riverstone would not agree to interim funding if he remained in post. Talks this weekend are believed to centre on agreeing a £20 million facility from the American fund to tide the business over.

The shipbuilder already owes Riverstone $115 million on a loan that bosses have been trying to refinance with other lenders for nearly two years. Rothschild is advising the US fund.

The threat of administration has alerted vulture funds, which are ready to acquire all or part of the business if it collapses into bankruptcy. “I’d love to get my hands on it,” said Michael Flacks of distressed investor Flacks Group, which owns the American companies Pleuger and Aldrich, producers of pumps used in the maritime and energy sectors.

Government sources said that securing jobs at Harland & Wolff was a “major concern”. The company is said to employ about 1,500 people across sites in Belfast, Methil and Arnish in Scotland, and Appledore in Devon.

How many of these are UK jobs is questionable, however. The Sunday Times revealed earlier this month that Harland & Wolff had resorted to relying on large numbers of overseas workers employed through a third-party agency.

It is not the first time in recent history that Harland & Wolff has flirted with failure. In 2019, the business collapsed into administration only to be rescued in a £6 million turnaround led by Wood.

Wood saw an opportunity to break the stranglehold of its larger naval shipbuilding rivals, BAE Systems and Babcock. The revival culminated in the company being awarded part of a £1.6 billion Ministry of Defence contract for three vessels.

In the wake of Wood’s departure, restructuring expert Russell Downs was appointed as interim executive chairman on Friday. Downs oversaw parts of the bankruptcy of Lehman Brothers in Europe.

Harland & Wolff and the government declined to comment.

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