A crucial £1.6 billion Ministry of Defence contract awarded to Harland & Wolff Group Holdings PLC (AIM: HARL) is reportedly at risk of failing due to uncertainties about the company’s future.
Should this be confirmed, it would represent a significant setback for Harland & Wolff, the historic shipbuilder that operates the famed Belfast shipyard where the Titanic was constructed.
After entering administration in 2019, Harland & Wolff’s prospects improved significantly towards the end of 2022 when it was selected as the preferred bidder for the substantial Ministry of Defence contract to build three vessels that would supply munitions, stores, and provisions to Royal Navy aircraft carriers, destroyers, and frigates.
John Wood, CEO of Harland and Wolff, hailed the contract as “a truly defining moment” when it was announced.
However, The Telegraph reports that the government might withdraw the contract, potentially allowing competitors such as BAE Systems, Babcock, and A&P Group to step in.
This troubling development follows a report from The Times indicating that Harland & Wolff’s £200 million bid for government funding was turned down, a claim that Wood refuted in an interview with the BBC, stating, “Our application has not been rejected and continues to be a work in progress. I expect to be providing a fuller update on our refinancing plans in the next few weeks.”
On Wednesday, a defence source from the government mentioned that discussions about the loan guarantee for Harland are still in progress, and the company has refuted claims that the deal is off.
The defence source also noted that if Harland were to fail, it is highly unlikely that any warships would be constructed abroad. They further stated, “Regardless of the process’s outcome, even in the worst-case scenario, we believe this shipyard has a viable future given the numerous ships ordered.”
These developments represent a setback for Defence Secretary Grant Shapps, who recently proclaimed a “golden age of shipbuilding” in Britain.
Shares of AIM-listed Harland & Wolff dropped 10% in early trading on Friday but look to be recovering some lost ground.
