H&W Shareholders Concerned Over Potential 'Pre-Pack' Administration

A faction of Harland & Wolff (H&W) shareholders is expressing concern that the company might be headed for a "pre-pack" administration. This process would involve the shipbuilder entering administration, with its trading assets being sold immediately to a pre-arranged buyer. Although this could minimise operational disruptions, it would likely result in the total loss of value for existing shareholders.

The company has confirmed that a review is underway but has declined to comment on any specific "options or interested parties" at this stage. Moreover, H&W has announced its inability to finalise its 2023 accounts on a going concern basis, leading to a suspension of efforts to complete its unpublished accounts. Instead, management’s focus has shifted towards the review process, which is being led by Rothschild bank.

Russell Downs, Harland & Wolff’s executive chairman, stated: "We remain focused on collaborating with interested parties and key stakeholders to navigate through this period of uncertainty, preserving the underlying value of the shipyards."

Shareholder Concerns

A group of shareholders, representing approximately 30% of the company’s shares, has formed a "shareholders collective." This group is calling for an extraordinary general meeting to ensure that shareholders are involved in any decisions regarding the company’s future. They are particularly concerned that a pre-pack administration could lead to the company being broken up and jobs being lost.

The collective has also reached out to Clive Palmer, an Australian mining tycoon who holds a 3% stake in Harland & Wolff. Palmer, who has long harboured plans to build a "Titanic II"—with the original Titanic having been constructed at H&W’s Belfast yard—has indicated that he shares the collective’s objectives.

Last week, Palmer announced his "interest" in making a $200 million (£156.7 million) financial contribution, in addition to a potential contract worth up to $1 billion (£783 million) to build Titanic II. However, it remains unclear whether this contribution would take the form of a loan or an increase in his shareholding.

Trading in Harland & Wolff shares has been suspended since the beginning of July after the company missed a deadline to publish independently audited accounts. Earlier this month, the company secured a new $25 million (£19.5 million) loan from its US lender, intended to support the "ongoing stabilisation" of the business, which has been heavily loss-making.

Additionally, Harland & Wolff has engaged Rothschild bank to "assess strategic options," which could indicate that the company is seeking a new owner.

Harland & Wolff currently employs around 1,500 people across the UK, with its main site in Belfast and additional yards in Appledore, Devon, and Methil and Arnish in Scotland.

^{Photo by Frans van Heerden}