Titanic shipyard to go into administration

Shipbuilding company Harland and Wolff has confirmed the business is to be placed into administration for the second time in five years.

Insolvency practitioners Teneo are being lined up to act as administrators and some “non-core” staff are being made redundant.

However, the company’s board said there was a “credible pathway” for its four shipyards to continue trading under new ownership.

Its main yard is in Belfast, best known for building the Titanic, with other operations at Appledore in England and Methil and Arnish in Scotland.

The company said the administration process would be confined to the holding company, Harland & Wolff Group Holdings plc, and the operational companies which run the yards are expected to continue trading.

However, shareholders will see the value of their investments in the business entirely wiped out.

The firm said its non-core operations are being wound down.

That process had already started with the closure of its Scilly Isles ferry service before sailing had even begun.

Other non-core operations include a small business in the US and a marine services business which is to be sold in the hope of preserving 14 jobs.

A small number of non-core staff and others in support roles were told Monday they were losing their jobs.

The company warned that “a further reduction in headcount in our core activities may be necessary” depending on the progress of the sales process.

On Saturday, the firm’s executive chairman, Russell Downs, said the yards “together or separately have a credible future”.

“We have strong leadership in all of our yards,” he said.

“We have a strong business case around the work they are currently doing and the work they expect to do in the future.

“They have a funding need in the near term but into the future they will be generating cash.”

Rothschild bank is running the sales process and the company said a number of parties had contacted it to express an interest in acquiring some or all of the yards with a first-round bid deadline due shortly.

It is understood that Spain’s state-owned shipbuilder Navantia is interested in the Belfast operation.

Navantia is the major partner in the Fleet Solid Support (FSS) programme to build three Royal Navy logistics vessels with Harland and Wolff as subcontractor.

Sky News has reported that Babcock International, the UK defence contractor, is also a potential bidder for the Belfast business.

Mr Downs told the BBC he hoped to be able to conclude a deal or deals by the end of October.

The company has also given more details of an investigation into the alleged “misapplication” of funds under previous management.

Accountants PwC and law firm Simmons and Simmons have been appointed to conduct the investigation.

It said Mr Downs took the step in response to concerns raised by customers over “the alleged misapplication of remittances in excess of £25m and certain other lower value matters, such as the disbursement of funds for little or no corporate benefit”.

The company’s former chief executive, John Woods, told the Financial Times that the allegation of misapplication of funds was “ridiculous”.

GMB union national officer Matt Roberts said “workers, their families and whole communities now face their lives being thrown into chaos due to chronic failures in industrial strategy and corporate mismanagement”.

Mr Roberts said the four Harland and Wolff yards were “needed for our future sovereign capabilities in sectors like renewables and shipbuilding”.

“The government must now act to ensure no private company is allowed to cherry pick what parts are retained, in terms of which yards or contracts they wish to save,” he said.

Speaking on Monday, Mr Downs said it was “important to recognise that this is extremely difficult news for the company’s staff directly affected and will impact many others within group”.

“We will work to support our staff through this transition. Unfortunately, extremely difficult decisions have had to be taken to preserve the future of our four yards,” he continued.

“This will clearly be very unwelcome news for shareholders who have shown significant commitment to the business over the last five years.”