Titanic shipyard takes out $70m high-interest loan amid cash crunch

Riverstone Credit Partners, the lending business of private equity firm Riverstone, loaned the company $35 million up front, with an additional $35 million available. The loans attract 9% interest, plus an overnight lending rate based on US government borrowings, bringing the headline rate to 10.41%.

Riverstone has the right to buy up to 10.4 million shares of Harland & Wolff, or around 6% of the company, at a price of 14.25 pence each. This is currently higher than the 11.74 pence the shares are trading at, but the option will become much more valuable if the share price rises.

The loan expires in September next year, but the shipyard can extend it for up to 18 months for a fee of up to 2.5%.

The loan is secured by “substantially all of the company’s assets, including land, property, plant, machinery and receivables”, which includes its £55million ship overhaul project minesweeper for the Lithuanian Navy, although the ship itself is owned by Lithuania. .

The company is currently experiencing a growth spurt, he said. By the end of next year, he wants sales to reach £100million and plans to break even.

The shipyard is a candidate to build the future replacement for HMY Britannia, the new royal flagship nicknamed “Britain’s Air Force One” by its supporters.

Earlier this summer, Harland & Wolff was scammed by HMRC over an unpaid tax bill, which resulted in a request to close part of its business. The petition was withdrawn and H&W blamed a problem with its accounting system.

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