A fast ferry service to the Isles of Scilly has been axed before carrying a single fare-paying passenger, as the struggling operator Harland & Wolff winds down all “non-core” businesses.
The stricken Belfast-based shipyard company that built the Titanic announced the closure of its Scilly Ferries subsidiary on Thursday as it confirmed details of a rescue funding deal with its lenders, led by a US investment firm.
In a statement to the stock market, Harland & Wolff said it was winding down all non-core businesses to focus on its four main shipyards in Belfast, Appledore, Methil and Arnish.
The Atlantic Wolff fast catamaran, which was to be used on the Scilly Ferries service from Penzance, will be returned to its Dutch manufacturer, Damen Group. The much-delayed new ferry sailings were scheduled to begin in May but the high-speed vessel arrived in Cornwall only earlier in July and never entered revenue-earning service.
Customers with reservations on the Atlantic Wolff will be contacted directly, the company said.
Harland & Wolff said launching the Scilly Ferries operation was “overly ambitious, given the current circumstances” of its financial difficulties.
The company’s interim executive chair, Russell Downs, who was parachuted in by lenders earlier in July to take over from John Wood, said the Scilly Ferries shutdown would be “difficult news for those affected immediately and for the community it was intended to support”.
Downs, a former chief executive of Harland & Wolff, added: “It is important to note that this is an isolated and unique situation within the group, which continues to deliver its business as usual, serving its ship repair fabrication and ship building customers.”
Harland & Wolff Marine Services, which provides carriage of freight between the mainland and the Isles of Scilly, as well as workboats for projects across the UK and Europe, will continue its operations unaffected.
The company also confirmed details of a new loan agreement with its lenders, led by the US asset manager Riverstone.
Harland & Wolff had been hoping to secure a £200m loan guarantee from the taxpayer and had been in discussions over a bailout with the previous Conservative government.
But the new Labour administration has confirmed it will not provide any state backing to secure the future of Harland & Wolff, leaving the company reliant on funding from its private lenders.
after newsletter promotion
Under a deal with creditors, including Riverstone, the company will increase its existing loan facility by $25m (£20m) to $140m “in order to improve and stabilise the liquidity position of the company and its subsidiaries”.
Financial advisers from Rothschild & Co have been appointed to explore options for the future of the group, which some insiders have suggested could involve a breakup and sale of assets.
Malcolm Groat, the chair of Harland & Wolff, said: “We are grateful to our lenders in continuing their funding commitment to support Harland & Wolff Group’s ongoing stabilisation and long-term strategy objectives.
“We also look forward to working with the very experienced team from Rothschild & Co to help us achieve that objective.”
Groat thanked Wood, who led a previous rescue of the company in 2019 but is leaving under conditions imposed by the lenders.