Harland & Wolff’s rescue operation raises concerns about the future of Royal Navy warships

The future of the historic Harland & Wolff shipyard is in jeopardy after a $25 million emergency bailout, sparking fears that Royal Navy ships could soon be built abroad.

The Belfast-based company, known for building the Titanic, has scrapped the planned restart of ferry services between Cornwall and the Isles of Scilly, choosing to focus on its core operations at four major shipyards in Britain.

Harland & Wolff, which has shipyards in Belfast, Appledore in Devon, Methil and Arnish in Scotland, announced its decision to exit non-core operations after securing crucial funding from Wall Street credit investor Riverstone. The company said: “It is regrettable that we have made the difficult decision to discontinue the fast ferry service, but we must focus our energy and resources on continuing to grow the core business across our four delivery centres.”

The rescue news came with the immediate resignation of John Wood, the company’s CEO. Harland & Wolff is backed by $100 million in loans at a steep 14% interest rate from a US asset manager, and Rothschild & Co has been brought in to explore strategic options for the business.

Despite these efforts, Harland & Wolff’s financial instability is casting doubt on the Ministry of Defense’s ability to fulfill a £1.6 billion contract to build three military ships. This situation raises the possibility that these ships could be built by a Spanish shipyard, marking the first time in the history of the Royal Navy that warships would be built abroad.

Malcolm Groat, Chairman of Harland & Wolff, expressed his gratitude to their lenders, saying: “We are grateful to our lenders for their continued financing commitment in support of the Harland & Wolff Group’s stabilization and long-term strategy objectives. We also look forward to working with the highly experienced team at Rothschild & Co to help us achieve that goal.”

Last month the new Labor government refused to back a taxpayer-funded rescue package for the shipbuilder, whose shares on Aim, the junior stock market, were suspended after it was bought out of administration five years ago.