ST Engineering secures contract with US Navy

Firm will construct S$1.1bln Fast Missile Craft for Egyptian Navy in partnership with US Navy.

ST Engineering announced 29 March that its US shipyard VT Halter Marine Inc (VT Halter Marine), has secured an undefinitised contract in excess of US$165m (about S$232.5m) with the US Navy for a fourth Fast Missile Craft (FMC) for the Egyptian Navy. This most recent contract brings the total value for the FMC project to approximately US$807m (about S$1.1b). Work on this fourth FMC will commence by mid 2011 and delivery is expected by end of 2013. VT Halter Marine has begun construction on the first FMC which it expects to deliver by mid 2012.

This contract is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.

ST Engineering announced on 1 December 2005 that it had secured the initial Phase I functional design contract for approximately US$29m. Two subsequent contract modifications were awarded in November 2006 and June 2007 respectively for procuring the FMC project's long lead items which added US$206.5m to the contract. Subsequent changes in the scope of work further increased the Phase I contract value to US$249.2m. With the award of Phase II of the FMC project in September 2008, the total contract value awarded to ST Engineering for the first three FMCs amounted to US$642m. This latest US$165m contract reflects non-recurring cost reductions from the first three vessels contracted earlier and government furnished equipment which was previously provided by VT Halter Marine.

The FMC is designed to perform coastal patrol, surveillance, interdiction, surface strike and naval battle group support for the 21st century. The vessels will allow the Republic of Egypt to maintain the security of its coastal regions for both itself and friendly countries, while denying access to the areas by any potential adversaries. Each vessel will be approximately 62m in length and will incorporate ship signature control technology. High speed and maneuverability are two of the ship's primary assets to fulfill these roles. The vessels will also incorporate numerous combat system assets and electronic sensors, equipping the vessels with capabilities in anti-aircraft, anti-surface and electronic warfare.

"VT Halter Marine is honoured to be awarded this additional contract by the US Navy to build the fourth state-of-the-art Fast Missile Craft. This is a glowing testament of our capabilities by an esteemed customer and speaks volume of the trust in this successful partnership - we are working towards the delivery of all four vessels to exceed the US Navy's expectations, " Chang Cheow Teck, President, ST Marine.