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British shipbuilder Harland & Wolff said on Monday it had appointed Teneo to wind up its “insolvent” holding company, five years after it was rescued from administration.
But the AIM-listed company famous for building the Titanic said bids for the group's four yards in Britain were being finalised and a sale was expected to be agreed within weeks.
“Contingency planning is being done to make an administration order for the company and appoint administrators from Teneo. This process will likely begin this week,” it said. It saw “no prospect of a return for shareholders” and an unspecified number of jobs would be lost.
The 163-year-old shipbuilder has been struggling to stay afloat since Britain's new Labour government in July rejected its request for a 200 million pound emergency loan guarantee because of improper use of public money.
However, H&W said it saw a “credible path” to continuing operations at its flagship Belfast yard and three other yards in Britain, the Islandmagee gas storage project in Northern Ireland and fulfilling a Ministry of Defence contract in which it is a partner in a consortium led by Spain’s Navantia.
The company said bids for the yards are due to be submitted this week and it hopes to close the deal in the coming weeks.
The number of bidders was expected to be limited for security reasons, but defence industry sources said a mix of British and international strategic bidders, including Spain's Navantia, were in the running. They said it was unlikely the yards would be sold together.
Former Chief Executive Officer John Wood, who rescued the company from administration in 2019 before exiting at the end of July, is in talks with financial backers to make a bid, according to people familiar with the situation.
Unite, the union representing the majority of workers at H&W's yards in Belfast and Appledore in south-west England, said its preferred option was to “secure a single buyer for all the company's yards”. It said the buyer should be a company with a history of shipbuilding, not “a private equity organisation looking for short-term gain”.
Irish regional secretary Susan Fitzgerald said the “Government must be prepared to intervene” if the right buyer could not be found.
The company employs around 1,200 people across all its plants. The holding company is expected to lose 60 jobs. Unaudited results published in July showed an operating loss of 24.7 million pounds in 2023, narrowing from a loss of 58.5 million pounds in 2022.
“The incoming administration will obviously be very unwelcome news for shareholders who have shown significant commitment to the business over the last five years,” interim executive chairman Russell Downes said.
Monday's statement confirmed a Financial Times report that the company is now under investigation for “misuse” of more than £25m of funds.
Following the loan guarantee hurdle, H&W's US lender Riverstone Credit Partners extended a $25 million loan, but no further financing was forthcoming and the company said “trading remains challenging given the significant number of overdue creditors.”
GMB union national officer Matt Roberts said workers' lives were being thrown into chaos by persistent failures in industrial strategy and corporate mismanagement.
“Except for these important yards—and important [Ministry of Defence] “It is not enough to leave the contract at the mercy of the market, with all its promises for UK shipbuilding. The government must provide the support and oversight to help the market reach the solutions we need,” he said.
A spokesperson said the UK Government was clear that “currently, the market is best placed to address these challenges” but it was working closely with all parties to protect operations and jobs.
Wood and Navantia did not immediately respond to requests for comment.