Energy Co. Sues Centerbridge Over Default Allegation

Mar 10 2011 | 11:36am ET

An energy company has sued Centerbridge Partners, alleging that the hedge fund's allegations of default have unfairly hurt its business.

Cheniere Energy took litigious issue with Centerbridge's statement, in a letter to its Sabine Pass unit, that Sabine Pass had violated generally accepted accounting principals in how it handle payments from Cheniere affiliates. That means the unit is in default under the terms of some of its debt, the hedge fund said.

Centerbridge said it is a major holder of Sabine Pass debt.

Cheniere denied the allegations, and went one better, accusing Centerbridge in Houston state court of defamation, business disparagement and tortious interference.

The company's lawsuit comes as another Texas power company, Energy Future Holdings, is battling default allegations leveled by hedge fund Aurelius Capital Management. EFH said that Aurelius' claims are "utterly meritless," but the default accusation has battered EFH debt prices.

EFH, the former TXU Corp., is owned by private equity giants Kohlberg Kravis Roberts and TPG Capital. Its $45 billion buyout by those firms has proven a disaster—KKR has written down its $8 billion in EFH equity by 80%—as the company struggles under the leverage loaded upon it by its p.e. masters.


In Depth

Humble in Hofstra...One Debate an Election Can Make

Sep 26 2016 | 10:20am ET

Tonight's U.S. Presidential debate, infamously coined the “Humbling in Hofstra...

Lifestyle

Vortic: Reimagining the Custom Wristwatch

Sep 27 2016 | 7:24pm ET

American watch manufacturer Vortic, which started out restoring antique pocket watch...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...