Spain’s Navantia is in exclusive talks to take control of Harland & Wolff as soon as next month, according to reports.
The state-owned shipbuilder was the lead company in the consortium last year awarded the £1.6 billion fleet solid support (FSS) ship programme for the UK’s Ministry of Defence (MoD).
As a member of the Team Resolute consortium, Harland & Wolff was subcontracted by Navantia for work valued at between £700 million and £800m.
The Spanish company has always been considered the lead contender to acquire Harland & Wolff’s Belfast shipyard, which is viewed as integral to the MoD contract.
The original plan for the FSS work involved the fabrication of sections of the ships in Harland & Wolff’s Appledore shipyard in Devon and in Navantia’s yard in Cádiz, with final assembly taking place in Belfast.
According to the Sunday Telegraph, Navantia is involved in exclusive talks to take control of all four of Harland & Wolff’s shipyards, which were kept out of the ongoing administration of Harland & Wolff Group Holdings being overseen by Teneo.
Alongside the Belfast and Appledore yards, Harland & Wolff also owns the Arnish yard on the Isle of Lewis, and Methil in Fife. Between them, the four sites employ around 1,000 people.
The Telegraph reports Navantia could take control in November.
But the deal remains subject to ongoing negotiations with Riverstone Holdings, the New York-based lender owed around $140 million by Harland & Wolff.
The deal could see Riverstone take an initial hit on the debt owed, but recoup its money back in instalments over time.
Harland & Wolff’s chairman, the restructuring expect Russell Downs, told The Telegraph: The core activities of the group’s four yards continue to trade with support of all stakeholders and we will provide an update on our strategic process when it’s timely to do so.”
The paper also reported that Navantia is providing temporary funding to Harland & Wolff to ensure it can prepare for the FSS contract work.
Harland & Wolff’s current financial woes followed a period of significant spending to ramp up its workforce and production capability.
The company reported £113m in losses across 2022 and 2023 and became reliant on a high interest loan from Riverstone
Its failure to secure a UK Government guarantee for £200m of new lending to refinance its debts left the shipbuilder with little room to manoeuvre, sparking the current crisis.