Boustead: Any settlement between BNS and CAD, CED will be a commercial agreement with suppliers

KUALA LUMPUR (April 18): Boustead Holdings Bhd said any settlement reached between its subsidiary Boustead Naval Shipyard Sdn Bhd (BNS) and Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED), in relation to the RM9.13 billion contract to build littoral combat ships (LCS) for the Malaysian Navy, is going to be part of BNS' commercial arrangement with its suppliers.

The group was responding to The Edge Weekly’s news article titled Boustead Naval Shipyard to reach settlement with CAD and CED, according to the term sheet that was published this week, which reported BNS paying CAD roughly RM464.33 million (based on the prevailing exchange rate last Thursday) as settlement.

“We wish to clarify that any legal agreement or settlement reached between Boustead Holdings’ subsidiary BNS and CAD/CED is part of BNS commercial arrangement with its suppliers,” Boustead said in bourse filing on Tuesday (April 18).

“The company will release the necessary announcements in a timely manner to Bursa Malaysia Securities Bhd should there be any material information which falls under the Main Market Listing Requirements," added Boustead, which is being privatised by parent Lembaga Tabung Angkatan Tentera (LTAT).

On Monday, it announced LTAT was nearing completion of its privatisation after its purchase of over 75% of Boustead's shares on the open market and an independent advisor's recommendation for minority shareholders to accept the offer.

Kenanga Investment Bank Bhd said the conditional voluntary takeover offer by LTAT to acquire the remaining shares in Boustead Holdings Bhd at 85.5 sen per share is "not fair but reasonable”.

In an earlier interview, Datuk Ahmad Nazim Abd Rahman, LTAT’s CEO, said the privatisation will help accelerate the restructuring of the Boustead group that has largely been negative with the spotlight on expensive acquisitions, huge impairments and the mismanagement of contracts.

BNS sued over terminations of CAD and CED as intermediaries

In October last year, CAD and CED sued BNS for outstanding payments and a declaration that the contracts are not void two months after BNS terminated the letters of award (LOA) in August 2022.

CAD, which wholly owns CED, is a 51:49 joint venture between BNS and German defence outfit Rheinmetall Air Defence AG.

The two contractors are the recipients of 12 LOAs from BNS for the procurement, engineering, integration and supply of equipment and weaponry for the six LCS.

It is understood that BNS had terminated CAD and CED as intermediaries of the project as the termination would allow BNS to negotiate directly with the relevant original equipment manufacturers (OEMs).

The terminations came amid allegations of misconduct, illegality and fraudulent dealings in relation to the LOAs issued to the contractors, in the wake of the Public Accounts Committee's (PAC) report on the LCS project's delays and cost overruns.