Malaysian operator MHS – via their parent company Boustead Holdings -have commenced legal proceedings in the value of 42,760.810.68 Ringgits – which translates today as 10,564,880 US Dollars

Here is the text of the announcement:

Pursuant to paragraph 9.04 (g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, Boustead Holdings Berhad (“Company”) wishes to announce that its 51% subsidiary, MHS Aviation Berhad (“MHS”) had on 1 st September 2016, issued a Notice of Arbitration against Petronas Carigali Sdn Bhd (“PCSB”) in connection with a contract dated 29 June 2011 made between MHS and PCSB for the Provision of Rotary Wing Aircraft, Equipment and Services (for Heavy Type Aircraft – EC225) (the “Contract”) . The Notice of Arbitration was served on PCSB on 1 st September 2016. Under the Contract, Rules of the Kuala Lumpur Regional Centre For Arbitration shall apply to this Arbitration.

By the said Contract, MHS was engaged by PCSB to provide PCSB with five (5) EC225 helicopters for use in PCSB’s oil and gas exploration and production operations. The use of all five helicopters was, however, suspended by PCSB unilaterally following two forced landings in the North Sea in May and October 2012 involving EC225 helicopters that were unconnected to the parties in the present case.

MHS views this suspension of service as a breach of contract by PCSB and is claiming in the Arbitration for the following:

1) Damages in the sum RM42,760.810.68;

2) General damages;

3) Such further or other sum in damages as may be deemed fit by the Arbitral Tribunal appointed pursuant to this Notice of Arbitration;

4) A declaration that PCSB is liable to pay MHS the Monthly Standby Rate during the period the Emergency Airworthiness Directive issued by European Aviation Safety Agency (“EASA”) remains legally applicable to Malaysian registered EC225 helicopters by virtue of Department of Civil Aviation (“DCA”) regulations/directives;

5) A declaration that PCSB is liable to pay MHS the Monthly Standing Charge once MHS’s EC225 helicopters are legally permitted to operate pursuant to the applicable DCA regulations/directives;

6) Interest on the awarded sum at such rate and for such period deemed fit and appropriate by the Arbitral Tribunal appointed pursuant to this Notice of Arbitration;

7) Costs;

8) Such further or other orders deemed fit by the Arbitral Tribunal appointed pursuant to this Notice of Arbitration.

This Arbitration is part of the Company’s on-going recovery actions to protect and preserve MHS’ rights and monetary claims for various works and services provided in respect of contracts entered into by MHS.

In consultation with the Company’s solicitors, the Board is of the view that MHS has good claims in this matter. However, the Arbitration is expected to materially affect the operational and financial position of MHS. As for the Boustead Group, the Arbitration will not have a material impact on the operational and financial position for the financial year ending 31 December 2016.