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

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

Lifting of Foreign Ownership Limits Signals Sea Change in Vietnam's Capital Markets

Jul 28 2015 | 3:01pm ET

The lifting of restrictions on foreign ownership limits in Vietnam later this year...

 

Editor's Note