InfraStrata buys Harland and Wolff assets out of administration

Strategic infrastructure investor InfraStrata has signed heads of terms to purchase the principal assets of Harland and Wolff Heavy Industries and Harland and Wolff Group from administrator BDO NI, it announced on Tuesday, for a total consideration of £6m.

The AIM-traded firm said the assets comprised a multi-purpose fabrication facility, quaysides and docking facilities in the port of Belfast, which it said were “ideally suited” for the energy infrastructure industry and the company's projects.

It said the strategic acquisition would enable InfraStrata to bring a large part of the fabrication requirements for its Islandmagee Gas Storage Project and proposed FSRU project in-house.

By utilising the assets, the company anticipated reducing the capital cost of each of its projects by between 10% and 15%, and the construction timelines were expected to be reduced by between three and five months.

It said 100% of the 79 employees who did not opt for voluntary redundancy earlier in the year would be retained immediately following completion of the acquisition.

The InfraStrata board said it planned to “significantly increase” the size of the workforce by several hundred over the next five years, as it progressed the development of its infrastructure projects.

It explained that the number of employees at the Islandmagee Gas Storage Project would also scale to 400 during construction. and would employ around 60 personnel when in operation.

A new management team for the facility was expected to be employed by the end of 2019, in addition to bringing on-board the experience of those employees who were previously employed, with the assets set to be run independently to InfraStrata's other projects.

The “highly-skilled” workforce presented the firm with an opportunity to create secondary revenue streams through the provision of services to the energy, maritime and defence sectors, should such opportunities arise in the future.

InfraStrata explained that exclusivity over the assets had been secured, and with a £0.5m cash deposit payment to the administrator, BDO NI, to be made “imminently” from a new loan facility.

The acquisition remained subject to, among other things, final contract and funding by 31 October, or 31 December if the backstop date came into force.

The £5.5m balance of the acquisition consideration would be payable in two tranches - £3.3m by 31 October, or the backstop date, and £2.2m by 30 April, which was proposed to be funded by a debt and equity mix.

InfraStrata said it was already in advanced discussions with asset-backed lenders and financial institutions to put in place medium to long term debt structures.

It said it intended to start utilising the assets in November under a licencing arrangement with the administrators, should the acquisition not complete by 31 October and the backstop date applied.

The company said it would use the assets in preparation for key enabling works for the Islandmagee Gas Storage Project, scheduled for proposed construction starting in the first quarter of 2020.

“Harland and Wolff is a landmark asset and its reputation as one of the finest multi-purpose fabrication facilities in Europe is testament to its highly skilled team in Belfast,” said InfraStrata chief executive officer John Wood.

“This acquisition is a function of deep operational synergies between the various business segments of the company with Harland and Wolff underpinning the construction economics of the Islandmagee Gas Storage Project and other future projects.

“We are delighted to be able to retain 100% of personnel who did not opt to take voluntary redundancy earlier this year.”

Wood said the Islandmagee Gas Storage Project would benefit “greatly” from the workforce’s expertise in the energy sector, both technically and economically, adding that it looked forward to growing the workforce “significantly” in the coming years.

“While our core priority will be to deliver our flagship project in Islandmagee, we believe there are opportunities to welcome potential new clients due to the diverse skill set at the facility.

“This acquisition will clearly provide substantial advantages through vertical integration in addition to demonstrating our commitment to the Northern Irish economy, particularly in the post-Brexit era.”