Belfast Telegraph

Harland & Wolff administrator Michael Jennings: 'My aim was a sale that would keep jobs safe'

The Big Interview: Michael Jennings

Michael Jennings, partner at BDO
Michael Jennings, partner at BDO
Michael Jennings, partner at BDO
Michael Jennings, partner at BDO, in his office
Michael Jennings at the H&W shipyard
Workers at the H&W shipyard had campaigned for weeks to save their jobs
Margaret Canning

By Margaret Canning

As administrator for Harland and Wolff, Michael Jennings (48), a partner at business advisory firm BDO, played a key role in the successful sale of the shipyard which built Titanic.

A dramatic nine-week period from August to October in which H&W workers staged an emotive protest at the gates of their employer, calling for state intervention to rescue the business, had been watched around the globe.

At its peak the shipyard had employed 35,000 people, churning out 140 ships during the Second World War.

But unlike many narratives involving traditional UK industries, there has been a happy ending to H&W, with new owner InfraStrata plc taking possession and announcing the business's first deal under new ownership last week. The deal saved the jobs of 79 staff, many of whom had clocked up decades with a business where their fathers and grandfathers had also worked.

The workers, their trade unions and the administrators had worked in harmony to achieve the successful sale - a collaboration which Michael says he's extremely proud of.

He and his BDO colleague, managing partner Brian Murphy, were appointed administrators to Harland and Wolff in August, after already being engaged earlier in the year in an ultimately fruitless search to find a buyer.

Nor is he the first member of the family to be caught up in a big news story.

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His brother Aidan is Area Commander with the Northern Ireland Fire and Rescue Service and was closely involved with the service's efforts to contain the fire at Primark's Bank Buildings in the city centre last year.

For Michael, H&W isn't the first time he's been involved in securing the future of a famous Belfast business. His first job when joining what would later become accountancy firm BDO, at the age of 21, was to help senior colleagues with the receivership of the Europa Hotel.

"The first two or three years of my training, we were trading the Europa Hotel. That was brilliant, absolutely brilliant. It was great experience.

"It gives you the whole insight into all the different departments and how it works, food and beverage, and rooms. There was a big focus on getting the rooms occupied and keeping occupancy rates at appropriate levels to make it attractive, run it and cover your costs while it was in receivership."

There were two bombings of the hotel in that period - in 1991, just before Michael joined, then again in 1993. "It was pretty devastating when it was bombed as you had to start from scratch and get it all restored and back up and running again."

It was still bomb-damaged when it was acquired by Hastings Group, which has owned it ever since.

Another interesting period came in the credit crunch and property crash of 2007 onwards: "2008 and 2009 we might have had 150 or 200 jobs at any one time insolvency, land and property receiverships."

Insolvencies he worked on over that period include Red Sky and Tyrone Crystal. But none was quite as totemic for Northern Ireland as H&W. "We'd been working with them since September 2018 and then got contacted by directors and asked for some advice as they'd had cash flow problems and needed some advice around director's duties.

"Then there was a request around November 2018 to start a sales process so we tendered for that among a number of others. We marketed the company worldwide. There were quite a number of expressions of interest."

By January, BDO was seeking indicative offers and one frontrunner emerged - MJM Group in Newry.

"They did quite a lot of due diligence from April to June and at that stage we were trying to progress with the sale and that fell through."

Asked what happened, he says: "Their offer substantially changed and at the end of the day they didn't want to take the staff.

"Once that was communicated to senior management and staff then obviously that fell away. It wasn't an attractive offer."

Asked how much its offer was, he will only divulge that it was "substantially less than what InfraStrata paid" (£5.25m). "They wanted to just buy the assets so it wasn't appealing at all."

With that sale having fallen through, the company was "on the cusp of going into administration", which happened in early August.

Cash flow was also a problem - and he explains that normally, staff would be made redundant. But management, union and the administrators came up with an alternative. Instead of being made redundant, staff would be laid-off without pay - a move which would preserve their contracts of employment.

"That worked because staff and unions were happy that there was the prospect of a going-concern sale and, for us, we were maintaining the skill set."

Michael takes a cool-headed approach to the ups and downs. "For something as important to NI as the shipyard, we were going to try our hardest to see if we could get a solution that worked.

"It's been incredible how many people have spoken to us over the last four or five months who really have goodwill for the shipyard and want to see it survive and prosper. It's a 90-acre site in the harbour and has such a knock-on effect on the economy. Hopefully that new buyer will significantly increase employment numbers.

"From my perspective, I wanted to see a going-concern sale, the jobs saved and the prospect of growth."

He said that BDO had come to know the business, staff and unions well during the period of trying to find a buyer.

"There were various things quoted at the time, that the administrators would need an injunction to get access but there was never an issue.

"Our interests were aligned with those of the staff and unions. We obviously wanted to get a going-concern sale and so did they, and that was probably a good opportunity for them to promote that and make sure there was plenty of interest."

And even though BDO had tried to find a buyer earlier in the year, the administration still managed to draw new interest - including the ultimately successful InfraStrata.

As well as global media interest, the process also drew political interest from MPs, councillors and the Secretary of State. And unions also urged the Prime Minister Boris Johnson to intervene.

Michael says he had never before worked on anything that had attracted that level of interest. "This just appealed across the spectrum and for everybody it was very important."

Interest came from as far away as the US and China but only InfraStrata committed to signing a heads of agreement and paying a deposit.

"They were on site in August and five weeks later had signed heads of agreement and paid the £0.5m deposit. That allowed us to get the workers back on so the temporary lay-off unpaid stopped and everyone came back on site."

Problems in H&W had been evident for some time, particularly due to a huge deficit in its pension fund. That has now gone into the Pension Protection Fund as a result of the administration.

Financial troubles ending in the bankruptcy of its former owner, Fred Olsen Energy, also led to trouble.

"Historically Fred Olsen was a large owner with substantial wealth so if the shipyard needed funding that would have been available in the past, but the fact that Fred Olsen was in an insolvency process, [it] wasn't there any more so there was no support from the parent.

"So you had a significant pension deficit and a funding requirement and no parental support."

While the deal with InfraStrata had been as good as in the bag, at the time of our interview on Wednesday he was looking ahead to a completion on Thursday - which passed successfully with the transfer of £3.3m. "You always feel more confident when the funds are transferred."

Michael grew up the oldest of seven children in Lisburn, with 13 years between Michael and his youngest siblings: "It was brilliant growing up as one of seven. There was never a dull moment."

His father Harry, who worked in construction, died two years ago. But his mum Deirdre is proud of her seven children - and of Michael's role in the H&W story: "She's quite proud and she's been keeping an eye on when H&W's been coming onto BBC Newsline."

His daughter, Sarah, is 13 and a pupil at Wallace High School in Lisburn. Michael's hobbies include sport and TV - including fantasy TV series Game Of Thrones, which was filmed in Northern Ireland, including at Titanic Studios just next to H&W's famous cranes, Samson & Goliath. "It's very interesting to look through the boardroom window of H&W you can see the set of Game Of Thrones. We were up the cranes last week and could look onto Kings' Landing [part of the Game Of Thrones set]."

Belfast Telegraph