Navantia, the Spanish shipbuilder, is racing to finalise a takeover of the stricken shipyard-owner that built the Titanic amid urgent talks to reshape a major government contract.

Sky News has learnt that Navantia is attempting to negotiate more favourable terms for a deal to build three Fleet Solid Support ships (FSS) for the Royal Navy as part of a deal to buy Harland & Wolff (H&W).

H&W’s London-listed parent company collapsed into administration in September after seeing a plea for taxpayer support rejected.

A number of parties, including the FTSE-250 defence contractor Babcock International, expressed interest in a deal, but Navantia – which is already deeply involved in the FSS programme – has been regarded as the frontrunner for some time.

Navantia is understood to have been providing financing liquidity to H&W on a week-by-week basis since the company’s filing for administration, with this week’s payment said to have been due last Friday.

One source close to the Spanish company said the fate of more than 1,000 workers at H&W’s four UK shipyards now hinged on the government agreeing to renegotiate the FSS contract “on more realistic terms”.

The British and Spanish governments have also been engaged in discussions about the prospective deal, according to Whitehall sources.

It is likely to incorporate jobs guarantees if the UK government agrees to recut the FSS deal, they added.

If completed, a definitive deal could be announced as soon as the latter part of this week.

H&W’s four shipyards are in Belfast; Appledore, Devon; Arnish on the Isle of Lewis; and Methil, Fife.

Under the deal provisionally agreed in recent days, Navantia would acquire all four shipyards despite only having a current interest in the Belfast site.

The company had amassed roughly £150m in the form of a loan from Riverstone, a US-based credit fund.

It has endured a protracted period of management turmoil, with Russell Downs, an experienced turnaround executive, taking over as interim executive chairman in July.

Mr Downs said recently that he had ordered a probe into what he described as an apparent “misapplication” of more than £25m of corporate funds.

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Bankers at Rothschild have been running a sale process to gauge interest in the company and its assets since September.

Teneo is acting as administrator to the London-listed parent company, but it was unclear whether the four shipyards would be sold on a solvent basis or through a pre-pack administration.

Founded 163 years ago, Harland and Wolff built the most infamous passenger ship in maritime history, with The Titanic sinking on its maiden voyage across the Atlantic in 1912.

The Department for Business and Trade has been contacted for comment, while neither H&W nor Navantia could be reached for comment.