Titanic shipbuilder warns Scottish yards and 500 jobs are at risk

Such a move would deal a major blow to the company’s turnaround strategy under chief executive John Wood, who has sought to build up a pipeline of work from multiple industries to spread risk more evenly.

The contingency plan has emerged as talks about the company’s fate continue in Whitehall, with the hope of a resolution in the coming weeks now dashed by the impending general election on July 4.

Harland & Wolff, which Mr Wood’s company bought out of administration in 2019, currently runs facilities in Belfast and Appledore in Devon, as well as the Arnish and Methil sites in Scotland.

The Scottish yards are largely focused on making components for wind turbines, as well as barges, with the company hoping to benefit from a slew of offshore energy work in the North and Irish seas.

But a source said managers have admitted those sites would be likely to close if the company fails to secure the government loan guarantee. They employ about one-third of its total workforce.

Harland & Wolff is pinning its hopes on securing £200m of new loans that would be 100pc underwritten by UK taxpayers, with the company unable to land this debt without state backing.

The loan guarantee – which is being sought from government agency UK Export Finance – is unusual because most agreements of this kind only cover 80pc of the total borrowings.

In an email to employees last week, seen by the Telegraph, Mr Wood said the taxpayer support was a key component of his company’s efforts to refinance its high-interest borrowings.

He also admitted that talks with the Government had dragged on for longer than expected but said that he remained “confident in a positive outcome”.

Mr Wood added: “We know that all Harland & Wolff’s yards needed (and continue to need) significant investment to make them match fit.

“The challenges Harland & Wolff faces today are typical of those experienced since its inception, particularly the substantial funding required to rebuild shipyards across Northern Ireland, England, and Scotland.

“Refinancing at this point in our journey has always been planned, and the [loan guarantee] is a crucial part of this strategy.”