KUALA LUMPUR (April 1): Boustead Heavy Industries Corp Bhd’s (BHIC) planned disposal of its 20.77% stake in the troubled Boustead Naval Shipyard Sdn Bhd (BNS, now known as Lumut Naval Shipyard Sdn Bhd) to the Ministry of Finance (MOF) for RM1 has been extended for another month to April 30.

According to BHIC in a bourse filing on Monday, the sixth extension, mutually agreed upon by the company and MOF, affords the parties additional time required to fulfil the conditions precedent for the deal. 

“For avoidance of doubt, all other terms and conditions of the SSA (share sale agreement) remain unchanged,” it added. 

Cumulatively, the deal between BHIC and the MOF has been extended by nearly seven months since the initial deadline for the fulfilment of conditions precedent of Oct 3, 2023.

The initial deadline of Oct 3, 2023 was first extended to Nov 1, and subsequently to Dec 1, then to Dec 31, followed by Jan 31, 2024, and most recently to the previous deadline of March 31.

The disposal by BHIC, which is 73.16% owned by the Armed Forces Fund Board (LTAT), of its stake in BNS is part of the government’s plan to assume full control of the RM9.13 billion littoral combat ship (LCS) project, which BNS failed to deliver on time and at the initially budgeted cost. 

According to BHIC’s previous disclosure, the divestment is contingent on four conditions precedent, one of which involves the execution of a conditional agreement for inter-company trade receivables reorganisation between BHIC and BNS. 

The agreement aims to settle the repayment of RM383.94 million or any other sum owed by BNS to BHIC.   

Other conditions include obtaining the necessary written consent from BNS’ lenders and BHIC’s financiers or creditors. 

The deal is also subject to the completion of a due diligence review and the satisfaction of the MOF through the undertaking and completion of all required remedial actions. 

The MOF, via Ocean Sunshine Bhd, owns the remaining 79.23% of BNS. 

It is understood that the government-linked company acquired a 68.85% stake in the shipbuilder from Boustead Holdings Bhd and another 10.38% stake from LTAT. 

Shares in BHIC last traded at 45.5 sen last Friday, valuing the company at RM256.75 million. 

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BHIC's disposal of stake in Boustead Naval Shipyard for RM1 to MOF gets fifth extension to fulfil conditions