Riverstone Credit Opportunities Income (RCOI ) has cut the value of its loan to Harland & Wolff by 20% and is reassessing the quarterly dividend after the UK government said it would not act as guarantor to the shipbuilder for a £200m loan it needs to refinance its borrowings.

The £63m debt fund wrote down its Harland & Wolff loan from $18.3m to $14.6m over the second quarter, adding that as a significant portion of earnings was expected to come from a possible refinancing, the board was evaluating the appropriate dividend level.

The 9.5%-yielding debt fund also said it would not participate in Riverstone Credit’s new debt facility as it is in the process of winding down, while the loan had already hit its portfolio concentration limit of 20%.

The write-down knocked net asset value, with the portfolio of sustainably-linked floating rate loans’ valuation dropping 3.8% from 106 cents to 102 cents as at the end of June.

On Friday, the AIM-listed builder of the Titanic said it was talking to Riverstone Credit to secure alternative new debt facilities beyond the current $115m facility that charges 14% interest and matures in December. Chief executive John Wood also resigned.

The company, which suspended its shares earlier this month after delays publishing the annual results, needs cash to support its working capital needs after being handed part of a £1.6bn Royal Navy contract for three new ships. These alternative financing arrangements are expected to close within the next few days, it said.

The company said it was talking to key stakeholders, including the government, around existing and future contracts and the long-term capitalisation plan for the business. As part of this longer-term planning, it has engaged Rothschild to assess its strategic options for the group.

Harland & Wolff borrowed money from Riverstone to fund its wind turbine business in 2022. In line with Riverstone’s sustainable or green loans, the interest it pays on the loan is linked to an apprenticeship programme to expand recruitment in local communities.

Shares in the debt fund have plunged 17% since Friday to 78 cents since Friday, putting them on a 14% discount to the updated net asset value. The shares have traded below net asset value for much of the five years since its launch in May 2019.