SHAH ALAM: Waiting for you. In an earlier post, a reader asked about the progress of the LCS. To be honest I have no idea but thanks to Boustead Heavy Industries Corporation (BHIC) we now know that actually nothing much is going on until the government decides what to do next. This has been the stance of the government for the last three years though. The last report on the LCSOptions Two and Three for LCS.
Anyhow in its report to Bursa, BHIC has this to say about the project.
Second Generation Patrol Vessel with Littoral Combat Ships (“LCS”) Capability As at 31 December 2020, the Group has net amount due from its associate, BNS of RM269.8 million. On 16 December 2011, BNS received a letter of award from the Government of Malaysia (“GOM”) for the supply of 6 LCS for RMN at a ceiling price of RM9.0 billion.
The formal contract with GOM was signed on 17 July 2014. In 2019, the Minister of Defence at that time made a statement in the Parliament on the delay in delivering the LCS. It was announced that BNS has requested a variation order to complete the project.
Subsequently, series of discussions and negotiations were held between GOM and BNS. Based on the progress of these deliberations, as at 31 December 2020, the Group is of the view that a satisfactory resolution will be reached with the GOM.
Accordingly, the Group had only provided an additional expected credit loss of RM18.5 million during the financial year in respect of the receivables of RM253.5 million based on BNS’s expectation of a satisfactory resolution between BNS and GOM.Subsequently in March 2021, BNS had submitted a formal proposal on the way forward for the LCS project which is pending approval by the GOM.
So as you can read from above we are still waiting for the government to make a decision which they have been trying to do since 2019.
Anyhow in the same Bursa announcement, BHIC stated that the Kuala Lumpur High Court has fixed 29 April to hear BNS application to strike out MTU Sdn Bhd winding up order against the shipyard.
BNS was served with winding up petition on 3 July 2020 by Plaintiff. By the Petition, MTU alleges that BNS is indebted to them for the total sum of RM56.0 million for the equipment supplied and services provided to BNS. On 11 August 2020, BNS has then filed an interlocutory application to Stay/Strike Out the Winding Up Petition filed by MSM on a few grounds. On 29 March 2021, the Judge has allowed for BNS’s Application to Strike Out the Petition.
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— Malaysian Defence