Titanic shipyard to go into administration

Shipbuilding company Harland & Wolff has confirmed that its business will be placed into administration for the second time in five years.

Insolvency practitioners Teneo are being appointed to act as administrators and some “non-core” staff are also being laid off.

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

Its main yard is in Belfast, best known for the construction of the Titanic, and other works are located 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 operating companies that run the yard are expected to continue trading.

However, shareholders would see the value of their investment in the business completely eroded.

In a statement, the company said that its non-core operations were being closed.

This process had already begun before sailing commenced with the discontinuation of the Scilly Islands ferry service.

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 saving 14 jobs.

On Monday, some non-key staff and others in support roles were told they were losing their jobs.

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

On Saturday, the company's executive chairman, Russell Downs, said the yards “have a bright future, whether together or separately.”

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

“We have a strong business case for the work they do now and the work they expect to do in the future.

“They need financing in the near future, but they will generate cash in the future.”

Rothschild Bank is running the sale process and the company said a number of parties had approached it expressing interest in buying some or all of the yards, with the deadline for the first round of bids due to expire shortly.

Spain's state-owned shipbuilder Navantia is believed to be interested in the Belfast operation.

Navantia is the lead partner in the Fleet Solid Support (FSS) programme, which is to see the construction of three logistics vessels for the Royal Navy, for which Harland & Wolff is the subcontractor.

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

Mr Downes told the BBC he hoped to have one or more deals in place by the end of October.

The company has also revealed more details about an investigation into alleged 'misuse' of funds under previous management.

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

It said Mr Downes had taken the step in response to concerns raised by clients “regarding the alleged misuse of funds in excess of £25m and certain other lesser value matters, such as the distribution of funds with little or no corporate benefit”.

The company's former chief executive John Woods told the Financial Times that allegations of misusing funds were “ridiculous”.

GMB union national officer Matt Roberts said: “Workers, their families and the whole community are now facing chaos in their lives due to persistent failures in industrial strategy and corporate mismanagement.”

Mr Roberts said the four Harland & Wolff yards were “essential to our future sovereign capabilities in areas such as renewable energy and shipbuilding”.

He said, “The government must now act to ensure that no private company is given the freedom to decide which parts it wants to retain, which yards or contracts it wants to save.”

Speaking on Monday, Mr Downes said: “It is important to recognise that this is extremely difficult news for those employees of the company directly affected and will also have an impact on many others across the group.”

He added: “We will work to support our employees during this transition. Unfortunately, extremely difficult decisions have had to be made to safeguard the future of our four yards.”

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