Relevant Document:
Unaudited FY’23 Results
Belfast shipbuilder Harland & Wolff is in final talks with credit funds managed by Riverstone to secure an emergency debt facility that will rank super senior to the company’s existing debt, sources told Reorg. The company has engaged Rothschild, which has been exploring options to raise capital, they added.
Harland & Wolff already
has a $115 million facility that bears interest at around 14% (SOFR+9%) and is
due on Dec. 31. The facility was increased by $15 million earlier this year. The loan is provided by Riverstone Credit Opportunities Income, or RCOI, and other funds managed by RCOI's investment manager, Riverstone Investment Group.
The new debt facility will include the recent $15 million increase of the existing $115 million facility, sources said.
Discussions to raise new debt came after the U.K. government
refused to provide Harland & Wolff with a £200 million export development guarantee, or EDG, facility, or with any emergency liquidity financing citing a “very substantial risk that taxpayer money would be lost.”
As a result, RCOI immediately cut the value of its share of the $115 million loan to Harland & Wolff by 20% to $14.6 million, sources said. RCOI will not be participating in the new super senior facility that is being negotiated with the company, they added.
The new capital will fund the company’s near-term working capital needs after it secured part of a £1.6 billion Royal Navy contract for three new ships. Part of the deal requires a change in the company’s senior management and the addition of nonexecutive directors to its board, sources added.
Harland & Wolff’s revenue in 2023 grew to £86.9 million from £27.8 million a year earlier, according to unaudited 2023 financial results released on July 1. Its operating loss narrowed to £24.7 million from an operating loss of £58.5 million in 2022.
The company's interest burden increased to £18.4 million in 2023 from £12.3 million in 2022. The company upsized its credit facility with Riverstone Credit Partners through 2023 and the first quarter of 2024 from $35 million to $115 million as of the end of June.
The company has been in discussions with the U.K. Export Finance since the third quarter of 2022 for the proposed £200 million facility, according to its accounts and expected the U.K. government to reach a decision after the general election on July 4.
“Should there be any material delays to securing the facility post the General Election, the Company's ability to execute new and large contracts would be adversely affected,” it said in the report.