Boustead in new JV with defence firm Rheinmetall AG - Business News | The Star Online


Boustead in new JV with defence firm Rheinmetall AG

Boustead's concept model of a second generation patrol vessel.

Boustead's concept model of a second generation patrol vessel.

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) and German defence firm Rheinmetall AG plan to set up a new joint venture (JV) engaged in project management, contract administration and related services for the Malaysian defence industry.

BHIC told Bursa Malaysia that its wholly owned sub-subsidiary BHIC Defence Technologies Sdn Bhd (BHICDT) would hold a 60% stake in the JV company while Rheinmetall Air Defence AG’s unit RD Investment AG (RDI) will own the rest.

BHIC’s previous JV with Rheinmetall Air Defence - Contraves Advanced Devices Sdn Bhd (CAD) - is an electronic systems manufacturing and service company.

In April 2013, CAD was awarded 10-year, RM514.99mil contracts to supply towed array sonar and surveillance radar for the Royal Malaysian Navy’s six second generation patrol vessels or littoral combat ships (LCS).

In September that year, Rheinmetall Air Defence transferred all of its 49% equity in CAD to its wholly owned subsidiary, RDI.

Under a share and business restructuring agreement, BHIC and Rheinmetall agreed that BHICDT would have management and leadership for the LCS combat system equipment procurement and integration business (with the exemption of certain specific business affairs). The parties agreed to form a new JV company for this.

RDI, via CAD, will retain the management and leadership of the electronic and additive manufacturing, integration and training services business for defence, industrial and aerospace markets.

CAD will continue to implement the contracts awarded to them under the Royal Malaysian Navy LCS programme, namely providing the fire control system and combat management system.

The new JV company, meanwhile, will handle the LCS programme’s transfer of technology obligations to be fulfilled by DCNS SA, France, which is the design authority for the LCS as well as the combat management system.

The business of the JV company would be conducted in its best interests in accordance with good and sound commercial profit-making principles, BHIC said.

“The board believes that the investment will strengthen BHIC Group’s existing relationship with RDI, which may open up other future potential business collaborations, on a win-win basis for both companies particularly in the Malaysian defence industry,” BHIC said.