Offering a £200 million bailout to teetering shipbuilder Harland & Wolff Group Holdings PLC (AIM:HARL) came with a "a very substantial risk that taxpayer money would be lost", the government has announced.
Harland & Wolff, operator of the iconic Belfast shipyard that once built the Titanic, was seeking the government as a guarantor in an emergency funding round to stave off collapse.
The government confirmed last Friday that it was not willing to back the loan, throwing the debt-ridden company’s future into doubt.
In a sign of imminent collapse, chief executive John Wood has taken a leave of absence while restructuring expert Russell Downs has joined as interim executive chairman.
In a written statement on Monday, business secretary Jonathan Reynolds said the decision to refuse rescue “was based on a comprehensive assessment of the company’s financial profile and the criteria set out in our risk policies”.
"The government believes, in this instance, that the market is best placed to resolve the commercial matters faced by Harland and Wolff,” said Reynolds.
Harland & Wolff now is reportedly in talks with lender Riverstone.
“I welcome potential new financing for Harland and Wolff and the appointment of new management and wish them all the best in their continued efforts to build up this business,” said Reynolds.
Harland & Wolff’s shares remain suspended after failing to publish its audited financial results in time.
Its financial woes stem from a series of cancelled contracts, including a £1.6 billion deal with the Ministry of Defence that was once called a “truly defining” moment for the shipbuilder.