KUALA LUMPUR (May 3): Boustead Heavy Industries Corp Bhd’s (BHIC) planned disposal of its 20.77% stake in Lumut Naval Shipyard Sdn Bhd (Lunas) to the Ministry of Finance (Inc)-owned Ocean Sunshine Bhd has turned unconditional after shareholders of BHIC endorsed the RM1 deal.

With the shareholders' approval, all conditions precedent as set out in the share sale agreement (SSA) in relation to the stake disposal in Lunas — formerly Boustead Naval Shipyard Sdn Bhd (BNS) — have been fulfilled, BHIC said in its filing.

An intercompany trade receivables settlement agreement (ITRSA) has also been executed on April 30, its filing showed.

Under the ITRSA, BHIC received a repayment sum of RM49.7 million, as a result of Lunas’ RM384.43 million net debt write-off.

The latest development follows a total of six postponements from its original deadline to April 30, from Oct 3, 2023.

At the time, BHIC said that the extensions were mutually agreed with MOF, and that additional time was needed to fulfill the conditions precedent.

Prior to the debt write-off, the original plan was for BHIC to recoup the entire debt of RM383.94 million owed by Lunas.  

BHIC is 64.99%-owned by Boustead Holdings, which is in turn wholly-owned by LTAT following a privatisation exercise last year.

The disposal by BHIC of its stake in Lunas is part of the government’s plan to assume full control of the littoral combat ship (LCS) project, which saw delays and cost overruns to RM11.22 billion, from RM9.12 billion. 

This is despite the project being downsized to just five LCS, from the six initially planned.

Other conditions of the Lunas stake sale include obtaining the necessary written consent from Lunas’ lenders and BHIC’s financiers or creditors.

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

MOF, via Ocean Sunshine, had earlier acquired the remaining 79.23% in Lunas from Boustead Holdings and LTAT.

In the fourth quarter ended Dec 31, 2023 (4QFY2023), BHIC booked an allowance for expected credit losses of RM261.4 million owed by Lunas, resulting in a higher net loss of RM256.72 million, compared to RM26.48 million over the same period a year earlier.

Owing to the weak quarterly results, BHIC’s net loss also widened to RM263.88 million for the full year of FY2023, from RM19.92 million a year ago.

On Friday, BHIC’s shares price closed down 1.5 sen or 3.1% to 47 sen, giving the company a market capitalisation of RM265 million.