SHAH ALAM: Boustead subsidiary hit with another claim. Boustead Heavy Industries Corporation (BHIC) Bhd’s subsidiary company – Boustead DCNS Naval Corporation Sdn. Bhd. (BDNC) has received another claim from the Defence Ministry over its ISS contract for the Perdana-Menteri class submarines. The claim is made against the extended ISS contract announced in October, 2015.
The announcement from BHIC.
The Company wishes to announce that on 29 May 2020, Boustead DCNS Naval Corporation Sdn. Bhd. (BDNC) received a letter from the Ministry of Defence (MINDEF) claiming Liquidated Damages amounting to RM11,647,812.00 and EUR6,461,195.09 (RM31.3) for the breach of obligations under the first supplemental contract of the In-Service Support for two (2) units of Prime Minister-Class for the Royal Malaysian Navy Submarines Contract (Extended ISS Contract).
BDNC is a joint venture company between BHIC Defence Technologies Sdn. Bhd. (60%), a wholly owned subsidiary of BHIC and Naval Group (40%).
The Extended ISS Contract was awarded to BDNC by MINDEF through the Additional Letter of Acceptance dated 29 September 2015. The announcement was made on 15 October 2015.
The Board of BHIC is of the opinion that BDNC has adequate bases to defend and appeal against the Claim.
BDNC is currently responding to the demand.
The Claim is not expected to have any material financial impact on BHIC Group for the financial year ending 31 December 2020.
BHIC Group has recognised share of losses of interest in BDNC when applying the equity method up to its interest in the joint venture.
This announcement is dated 5 June 2020.
In 2017, BHIC announced that the Defence Ministry also made similar claim against it. This was for the original ISS contract. From Malaysian Defence post in 2017.
In a filing to the Bursa Malaysia on July 11, BHIC says Boustead DCNS, received a letter of claim from the ministry on July 10 for compensation amounting to RM53.2mil and 19.3 million euros (RM94.5mil) for an undisclosed breach of contract for the in-service support (ISS) for KD Tunku Abdul Rahman and KD Tun Razak submarines.
In its latest Bursa filing, BHIC said it was still appealing against this old claim and as mentioned in the new announcement it is also appealing against the latest one.
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