In a business update, the company said they have concluded the company “is insolvent on a balance sheet basis per its last audited accounts and most recent management accounts”.
“Accordingly, contingency planning for the making of an administration order and appointment of administrators from Teneo is underway for the company. This process will likely commence this week.”
The update says it anticipates the subsidiary companies that hold the shipyards are likely to be bought by “interested parties”.
The administration only applies to the holding company, and not to the group’s subsidiaries.
The update says the group’s “outlook has been challenging given a very high level of overdue sums owed to creditors and material losses across its business activities.”
The government refused to guarantee a £200m loan to the company from UK Export Finance earlier in the summer, something the company says left it “in a difficult financial position”.
The company added the “core operations undertaken by the four yards” will “continue to trade as usual”.
It added that redundancies are anticipated for staff who work for the parent entity.
Harland and Wolff Group Holdings PLC operates four shipyards across NI and GB, as well as an interest in the Islandmagee gas storage project.
The board of the company has seen notable changes in the past few months, with the company’s chief financial officer Arun Rahman resigning with immediate effect last week.
His departure came around a month after the plc announced that non-executive directors Malcolm Groat, Sir Jonathon Band and Katya Zotova had resigned from the board with immediate effect.
Harland and Wolff further announced that it had appointed PwC and Simmons and Simmons LLP to conduct an independent investigation of the “misapplication of remittances in excess of £25m.”
The Financial Times first reported on this investigation over the weekend, and quoted interim chair Russel Downs as saying the investigation was not into “misappropriation” of funds.
Commenting on Monday’s business update, Russell Downs, the interim executive chair of the company, said: “The Group faces a very challenging time given the overhang of significant historic losses and its failure to secure long term financing.
“Good progress has been made to test the market for investor appetite.
“The board has reluctantly concluded that the company’s own future as an AIM-listed company will likely come to an end in the near future, but that the core operations undertaken by the four yards and Islandmagee will continue to trade as usual.
“It is 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.
“This will clearly be very unwelcome news for shareholders who have shown significant commitment to the business over the last five years.
“The board, the senior management and rest of the team are committed to deliver the best outcome for the four yards and communities they serve to ensure their continued operation into the long term under new ownership.”
News Catch Up: Monday 16th September
