KUALA LUMPUR, Aug 21 — Boustead Heavy Industries Corporation Bhd (BHIC) is selling the group’s entire 20.77 per cent stake in loss-making Boustead Naval Shipyard Sdn Bhd (BNS) to Ocean Sunshine Bhd, an indirect unit of Minister of Finance (Inc), for RM1.

The disposal of the 27 million shares, held by BHIC’s indirect wholly-owned subsidiary Perstim Industries Sdn Bhd, is to facilitate the government’s decision to acquire 100 per cent of BNS shares in order to ensure the completion of the littoral combat ship (LCS) project, the defence contractor said in a filing with Bursa Malaysia today.

BHIC’s parent company, Boustead Holdings Bhd, currently owns 68.85 per cent equity interest in BNS, while the Armed Forces Fund Board, which controls the Boustead group, holds the remaining 10.38 per cent stake.

BNS, which is involved in the construction, repair and maintenance of naval ships, recorded losses after tax of RM150.12 million and net liabilities of RM848.45 million for the financial year ended Dec 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.

In its announcement, BHIC said that besides facilitating the government’s decision to take over BNS, the proposed disposal is also part of the group’s operational and organisational restructuring exercise to streamline and re-align entities within the company and its relevant subsidiaries.

The company added that this is while ensuring that BNS is able to complete the construction and delivery of the LCS to the RMN within the stipulated timeframe pursuant to the LCS contract.

Furthermore, BHIC said, the introduction of Ocean Sunshine as a new strategic shareholder is in line with BNS’ plans to strengthen its business and operations in relation to the construction, repair and maintenance of naval ships and commercial shipbuilding.

Subject to all relevant approvals being obtained, the proposed disposal is expected to be completed by the fourth quarter of 2023. — Bernama