KUALA LUMPUR (Aug 30): Boustead Heavy Industries Corp Bhd (BHIC) has received a one-year extension for the supply and delivery of spares, maintenance, integrated logistic support and training for the Royal Malaysian Navy’s 17th Patrol Vessel Squadron.

In a filing with Bursa Malaysia yesterday, BHIC said its wholly-owned subsidiary BHIC Navaltech Sdn Bhd received and accepted an additional letter of award (LOA) dated Aug 7 this year from Boustead Naval Shipyard Sdn Bhd for the purpose of extending the obligations for another one year, effective from Mar 19, 2018.

BNS is 82%-owned by Boustead Holdings Bhd, which also owns 65% stake in BHIC. The sub-contract, which is a recurrent related party transaction, will contribute positively to BHIC's earnings for the financial year ending Dec 31, 2018 and 2019.

On March 19, 2015, BNS secured a RM96.3 million three-year contract from Ministry of Defence Malayisa (MinDef) for the supply and delivery of spares, maintenance, integrated logistic support and training for the said vessel. BNS then sub-contracted the job to BHIC Navaltech for RM94.37 million.

Following the extension, BHIC said as at Aug 17 this year, the unused value of the sub-contract was RM24.03 million.

“Apart from the extension of the sub-contract period, there are no significant differences between the substance of the sub-contract and the additional LOA, except the escalation of Boustead Naval Shipyard’s entitlement for contract management and administrative fee from 2% to 5% on BHIC Navaltech’s claim for sales of spares and from 2% to 3% on sales of services,” the filing read.

BHIC’s shares slid seven sen or 5.11% to close at RM1.30 yesterday, giving it a market capitalisation of RM323 million.