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Harland & Wolff has agreed a new $25m (£19.5m) loan which it says will support the "ongoing stabilisation" of the business.

Last month the shipbuilder had an application for a £200m government loan guarantee rejected after ministers decided it would be too risky for taxpayers.

The firm says it is closing its Isles of Scilly ferry service with immediate effect.

The service had not begun operations and had a provisional starting date of 20 August.

Harland & Wolff chairman Malcolm Groat said the "tough decision" was regretable but the company needed to focus on growing "the core business across our four delivery centres".

The company employs about 1,500 people in the UK.

Its main site is in Belfast and it also has yards at Appledore in the west of England and at Methil and Arnish in Scotland.

It has been heavily loss making and its shares are currently suspended after it failed to file audited accounts on time.

After the firm’s loan guarantee bid was rejected its chief executive John Wood took a leave of absence.

On Thursday, the firm said it had "terminated his employment" and the business is now being run by its new executive chairman, the restructuring expert Russell Downs.

It said Mr Wood had made an "invaluable contribution" to the business and it "wished him the very best in his future endeavours".

The new loan will give the company some breathing space but its future remains uncertain.

Harland & Wolff’s lender, Riverstone, charges it a relatively high rate of interest and it was seeking the government guarantee so it could borrow from a conventional bank at lower interest cost.

The company has hired the Rothchilds bank to "assess strategic options" which could mean it is looking for a new owner.

The company’s key contract is its part in the consortium which in 2022 won a major contract to build three Royal Navy support ships.