Mindef claims damages from Boustead unit over submarines

bhicKUALA LUMPUR: Boustead Heavy Industries Corp Bhd’s (BHIC) indirect unit, Boustead DCNS Naval Corp Sdn Bhd (BDNC), has received a letter from the defence ministry claiming against BDNC liquidated damages amounting to RM53.2 million and €19.3 million.

The claim was for the breach of obligations under the in-service support for the Royal Malaysian Navy Scorpene Submarines Contract (ISS contract), it said in a filing to Bursa Malaysia today.

“BDNC is currently responding to the letter of claim. The board of BHIC is of the opinion that BDNC has adequate basis to defend and to appeal against the claim,” it said.

BDNC is a joint-venture company between BHIC’s subsidiary, BHIC Defence Technologies Sdn Bhd (60%) and DCNS SA (40%).

BHIC said the ISS contract was awarded to BDNC by the government, represented by the defence ministry, through a letter of award dated Aug 12, 2010.

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