KUALA LUMPUR (July 11): The Defence Ministry is claiming nearly RM148 million in damages from Boustead Heavy Industries Corporation Bhd (BHIC) over the breach of an obligation under the in-service support for the Royal Malaysian Navy Scorpene submarines contract.

The contract was awarded to BHIC's unit Boustead DCNS Naval Corporation Sdn Bhd (BDNC) in August 2010.

In a filing to Bursa Malaysia, BHIC said BDNC has received a letter from the ministry claiming RM53.2 million and a further €19.3 million (RM94.52 million) in damages.

BDNC is a joint venture company between BHIC Defence Technologies Sdn Bhd (60%) — a wholly-owned subsidiary of BHIC — and French naval group DCNS S.A. (40%).

Boustead said BDNC is currently responding to the letter of claim from the ministry.

"The board of BHIC is of the opinion that BDNC has adequate basis to defend and to appeal against the claim," it said.

The claim is expected to have material financial and operational impact on the BHIC Group for the year ending Dec 31, 2017, it added.

BHIC is about 65% owned by Boustead Holdings Bhd with Lembaga Tabung Angkatan Tentera (LTAT) holding a direct interest of about 8%. Boustead Holdings in turn is controlled by LTAT, which holds a stake of about 60%.