Royal IHC has reached an outline agreement with banks, the government and HAL, reports Dutch newspaper FD. IHC plans to sell IQIP to HAL to pay off its debts with the banks and secure refinancing. It marks a second rescue of the Dutch shipbuilder.
In October, IHC announced a new restructuring round that resulted in 251 jobs being cut and the yard in Krimpen aan den IJssel to be temporarily closed down. A month later, FD revealed that the shipbuilder put profit-making subsidiary IQIP up for sale to lower its debt load. Investment company HAL has now emerged as the possible buyer.
IQIP is a supplier of solutions for installation and foundation projects in the offshore wind and renewables, decommissoning, oil and gas, and coastal and civil markets. The company supplies, among others, lifting tools, pile grippers, pipe cutters, skidding systems, pile upending tools and the Hydrohammer, which is used for pile driving. The company is firmly in the black.
Also read: Royal IHC to sell IQIP to lower debt load
Royal IHC has been struggling for several years now. In April 2020, the shipyard had to be rescued from bankruptcy by the Dutch government, banks and a group of companies, including HAL, with bridging loans and credit guarantees amounting to hundreds of millions of euros.
This was followed by a major restructuring in November 2020. This resulted in 300 jobs being cut in the Netherlands, 300 abroad and 500 among the contingent workforce. In addition, several activities and business units were divested, such as engineering companies Vuyk and KCI, IHC Hitech, and the company’s tunnelling business. Its participation in Rotterdam Offshore Group was also divested.
At the beginning of October another restructuring round was announced due to a lack of new large shipbuilding and ship repair orders.
Outlook for IHC
When the restructuring was announced in October, IHC said it was in discussions about possible large orders, but that nothing was concrete yet. Construction of smaller ships and installations continues, but this is not enough to keep the company afloat.
Selling IQIP is expected to result in a financial injection for IHC of EUR 300-350 million. With this, the shipbuilder can pay off its debts with the banks. Three of the nine banks involved have yet to sign off on the proposed deal. However, a spokesperson tells FD the deal with a majority of the banks provides sufficient financial security. The refinancing also allows IHC to complete two large orders for Boskalis, with more large orders possibly on the way, according to FD.
The Dutch shipbuilder also has its hopes set on the new Dutch submarines to replace the Walrus class that it wants to build together with French Naval Group. However, as the Dutch government announced previously, the winner of this multi-billion project will be announced no sooner than at the end of 2023. In addition to IHC, Swedish Saab-Kockums in a partnership with Damen Shipyards and German Thyssenkrupp also hope to win this contract.
Picture by M.M. Minderhoud.