Belfast’s Harland and Wolff shipyard was heading into deepening crisis this week, as yard representatives continued negotiations aimed at resolving a £133m dispute with US offshore giant Global Marine over the cost of two drilling ships.
The yard faces a cashflow crisis after the Houston-based company refused to pay £133m in compensation for extra costs on the ships, over and above the original £365m contract agreed in March.
A Harland and Wolff spokesman said the company could only guarantee to pay its 1,800 workforce until the end of the month.
`If we are not able to come to an arrangement which ensures the ships can be completed and which leaves the company in a stable financial position, bankruptcy is a real possibility,’ he added.
The spokesman said the parties were still negotiating despite the end of head-to-head talks earlier this week between Global Marine chairman Bob Rose and Fred Olsen, chairman of the yard and its major shareholder, Fred Olsen Energy.
Government representatives have also joined the negotiations to resolve the crisis threatening one of Northern Ireland’s most prominent employers.
A refinancing package is believed to be under discussion, under which Fred Olsen Energy would double the yard’s share capital and Global Marine would release it from a £24m letter of credit liability.
Global Marine is also thought to have offered Harland and Wolff an unspecified sum towards the ships’ extra costs.
The dispute had seemed to be nearing resolution last month when Global Marine agreed to make a $31m interim payment to the yard. At that time Harland and Wolff and Global Marine issued a joint statement which said discussions had made `positive steps’.
In light of the dispute, Harland and Wolff is pressing the Government to change the way it pays a 9% shipbuilding subsidy under a directive from the European Community.
The yard’s spokesman said: `The subsidy is paid on the original contract price, not on the final cost, and does not cover additional work.’