PETALING JAYA: BOUSTEAD HEAVY INDUSTRIES CORP Bhd (BHIC) could take a hit in the event the company fails in its appeal against a liquidated damages claim by the Defence Ministry.
The Defence Ministry is seeking a liquidated damages compensation totalling RM147.7mil from Boustead DCNS Naval Corporation Sdn Bhd (BDNC), an entity linked to the Main Market-listed BHIC.
In a filing with Bursa Malaysia, BHIC announced that the liquidated damages claim was related to a breach of obligations under the in-service support for the Royal Malaysian Navy Scorpene submarines contract.
Note that the contract was awarded earlier in 2010 by the Malaysian government via the Defence Ministry.
“The board of BHIC is (of) the opinion that BDNC has adequate basis to defend and to appeal against the claim,” said the maritime, defence and energy solutions provider in a filing to the stock exchange.
BDNC is a joint venture company between BHIC Defence Technologies Sdn Bhd, a wholly owned subsidiary of BHIC, and DCNS SA.
To note, BHIC controls a stake of 60% in BDNC via BHIC Defence Technologies.
BHIC has indicated that the liquidated damages claim is anticipated to have a material financial and operational impact on the group for the financial year ending Dec 31, 2017.
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