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Govt-owned firm acquires Boustead's naval shipyard stake for RM1 | Scoop
The LCS scandal comes at a time when the navy is increasingly dependent on older models of ships and the modernisation of assets is needed. – Pic courtesy of RMN, August 21, 2023
News

Govt-owned firm acquires Boustead’s naval shipyard stake for RM1

Takeover aims to rescue troubled LCS project, ensure timely delivery of naval frigates

Scoop Reporters
Updated
11:06 PM MYT

 

KUALA LUMPUR – The Boustead group has transferred its 20% ownership stake in its naval shipyard subsidiary to a government-controlled entity for a symbolic RM1 to aid the rescue of the country’s troubled littoral combat ship (LCS) program.

According to Bernama, Boustead Heavy Industries Corporation Bhd (BHIC) has finalised the sale of its entire 20.77% stake in Boustead Naval Shipyard Sdn Bhd (BNS), a loss-making entity, to Ocean Sunshine Bhd, an indirect subsidiary of the Finance Ministry, for the nominal sum.

This sale of 27 million shares, held by BHIC’s indirect wholly-owned subsidiary Perstim Industries Sdn Bhd, is aimed at securing the successful completion of the LCS project, BHIC confirmed in its filing with Bursa Malaysia today.

The move also aligns with the government’s strategy to acquire full ownership of BNS shares. 

Presently, BHIC’s parent firm, Boustead Holdings Bhd, retains a 68.85% equity stake in BNS. Meanwhile, the remaining 10.38% share is held by the Armed Forces Fund Board, which governs the Boustead group.

BNS, known for its participation in naval ship construction, repair, and maintenance, faced substantial losses of RM150.12 million and carried net liabilities of RM848.45 million for the fiscal year ending December 31, 2022.

On May 26, Defence Minister Datuk Seri Mohamad Hasan announced that the Finance Ministry has established a special purpose vehicle to take over BNS.

“This is necessary for us to achieve our intention to continue the construction of the LCS as required by the Royal Malaysian Navy (RMN) and the Malaysian Armed Forces,” he was reported as saying.

Moreover, the government disclosed plans for an extra RM2 billion in funds and a reduction in ships from six to five.

The delivery timeline has also been extended, with the lead ship KD Maharaja Lela now due in 2026 and the final ship, KD Tok Janggut, expected in 2029.

In addition to facilitating the government’s assumption of BNS, BHIC noted that the proposed divestiture also forms part of the group’s broader operational and organisational restructuring. 

This initiative aims to rationalise and realign entities within the company and its relevant subsidiaries.

The company emphasised its commitment in enabling BNS to finalise the construction and deliver the LCS to the RMN within the stipulated time frame as per the LCS contract.

The proposed divestiture is anticipated to conclude by the fourth quarter of 2023. – August 21, 2023

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