KUALA LUMPUR (Sept 2): Boustead Heavy Industries Bhd (BHIC), which is embroiled in the RM9 billion littoral combat ship (LCS) project fiasco, announced that the letter of awards to two main contractors in relation to the six vessels for the Royal Malaysian Navy (LCS Programme) have been voided.
In a bourse filing on Friday (Sept 2), BHIC said the two contractors — Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED) — had received a notice dated Aug 23, 2022, stating that the letters issued by its unit Boustead Naval Shipyard Sdn Bhd (BNS) to these companies under the programme were void.
“The board of BHIC is currently engaging professional advisers to assess available recourse in resolving this matter, following the receipt of the notice,” said the group, adding that the financial, legal and operational impact cannot be ascertained yet.
"The company will continue to engage all relevant stakeholders to give its full cooperation in ensuring that the progress of the LCS programme will not be impacted, in the best interest of national security," it said.
BNS had appointed the companies as the main contractors for the project. BHIC held the majority 51% stake in both companies, while Germany’s Rheinmetall Group held the remaining 49%.
Meanwhile, BNS is 20.77%-controlled by BHIC, 68.85% by Boustead Holdings Bhd, with armed forces fund Lembaga Tabung Angkatan Tentera (LTAT) holding 10.38%. Boustead Holdings, meanwhile, controls 65% of BHIC.
The principal activity of CAD is the manufacturing of electronic products, and maintenance of military and defence equipment.
Meanwhile, CED is a wholly-owned subsidiary of CAD. The principal activity of CED is to provide and undertake system design, infrastructure and facilities, project management, and integration works and services for the defence, commercial and industrial sectors, manufacturers, installers, maintainers, repairers of and dealers in electrical and electronic appliances and apparatus.
BNS’s principal activities are construction, repair and maintenance of naval ships, weapons and electronics, design and engineering, fabrication of steel structures and commercial shipbuilding.
The LCS project was awarded to BNS by the government through the Ministry of Defence in 2014. However, none has been built so far, despite the government having disbursed close to RM6 billion in payments to BNS.
Shares in BHIC closed up 5.5 sen or 15.49% at 41 sen on Friday, bringing it a market capitalisation of RM98 million.
RM9 bil LCS fiasco simplified