Harland & Wolff Group, the renowned 160-year-old Northern Ireland shipyard, has categorically denied reports in the British media that the government is poised to deny it a loan guarantee vital to the future of the business. There is. The company reassured shareholders and financial markets by calling the report, which was first published today in The Times of London and spread like wildfire in media outlets including the Financial Times, “misleading and inaccurate.” I tried.
The company reported in December last year that it had sought and received permission to proceed with negotiations on a proposed £200m guaranteed loan facility through UK Export Finance. Under the scheme, the government would provide a 100 per cent guarantee to UK commercial lending banks, effectively providing a bailout that would provide them with the working capital they need to stay in business.
The company said the combination of cash on its balance sheet and expected cash flows in 2024 provides sufficient funds to meet its working capital requirements until the new financing facility is completed. However, it requires third-party review and government approval. The company's auditors warned that the business faces “significant uncertainties” that will require new sources of funding and additional work.
The Times report, which has now been echoed by the BBC and the Financial Times, suggests that the Chancellor of the Exchequer, Jeremy Hunt, the government's chief finance minister, has decided to refuse the application. However, according to media reports, Defense Secretary Grant Shapps, the Department of Trade and Commerce and the Northern Ireland Office are all in favor of providing a loan guarantee. Yesterday, Prime Minister Shapps ushered in a new “golden age” for British shipbuilding, as part of a wider government policy to strengthen the Royal Navy and revitalize Britain's shipbuilding industry.
The BBC suggests the news shows deep rifts within the government over shipbuilding strategy. They reported that the Treasury opposed the policy.
The famous shipyard, which traces its roots back to 1861, is working to rebuild its business after falling into bankruptcy (UK bankruptcy law) in 2019. The current owner acquired the Northern Ireland property in 2019 and has since brought other facilities into their current form. 4 shipyards and manufacturing facilities. In 2023, the shipyard delivered its first new ship in 20 years, a garbage barge for the River Thames.
A feature of the initiative is that the UK government is participating in a £1.6bn contract to provide support ships to a group consisting of Harland & Wolff and Spain's Navancia. The Times claimed in its report that without the loan guarantee, H&W would go bankrupt and that Royal Navy ships would be built at the Navantia shipyard in Cadiz. Harland & Wolff has also won other contracts, including the recent renovation of a new cruise ship, Margaritaville at Sea, and the conversion of another cruise ship into a three-year live-in world cruise. The company has also won a medium-term extension contract for the SeaRose FPSO and is the preferred bidder for the Falkland Islands Port Replacement Project. They also recently announced an agreement to cooperate with Austal.
“We were disappointed to read this article (in the Times) and the reaction it provoked, given that we have grown our business to become a major player in the UK shipbuilding sector while spreading risk across multiple markets. ” replied the group's John Wood. “Our EDG application has not been denied and we will provide a detailed update on our refinancing plans in the coming weeks,” Harland & Wolff's CEO said in a statement filed with the stock exchange. I plan to do so.'' ”
Despite the company's assurance that it “remains satisfied with the progress of this application,” its stock price fell 30 percent after the Times article was published. The stock recovered later in the day, but was still down nearly 15% from its previous close.
Harland & Wolff says it is moving ahead with its five-year plan and predicts revenues of £200m by the end of 2024. He said 90 percent of the revenue has already been contracted for this year. The company said it is working to build profitability in 2025 with the goal of achieving EBITDA breakeven in FY24.
Other sources also expressed confidence in the company and the loan guarantee. A Northern Ireland MP told the BBC that the report was “misplaced” and that he was confident of widespread support for Harland and Wolff.
