EIG Rejects Ontario Offer of $82M To Settle Suit

Jun 1 2012 | 1:00pm ET

Washington, D.C.-based hedge fund EIG Management has rejected an offer of $82.3 million from the Ontario Power Authority to settle a lawsuit.

The lawsuit stems from the Ontario government’s decision to cancel construction of a gas-fired power plant in Mississauga due to opposition from local residents, reports the Globe & Mail. EIG is suing the Ontario government (in Ontario) for $300 million but has also launched a lawsuit in New York against three related companies—Eastern Power and two companies with variations on the name Greenfield South.

The hedge fund, which was financing the plant through notes on which Greenfield was paying 14%, wants $300 million from the province and $237 million from Greenfield. The OPA, which contracted Greenfield to build the plant, offered $82.3 million, on the grounds that was the most EIG could claim as it has issued notes worth only $58 million to date.

But EIG rejected the power authority’s offer during a May 11 New York Supreme Court hearing saying the money it raised for the project was site-specific and could not be transferred to a new site, which the Ontario government says it is looking for.

Greenfield lawyer William Russell told the court that EIG has liens on “basically everything Greenfield has,” reports the G&M, including Greenfield’s money, its shares and all its equipment. The company says the liens mean it would be unable to transfer its equipment from the construction site in Mississauga to any eventual new site.

EIG’s lawyer Daniel Goldman told the court his client would accept the $82.3 million and argue about the difference but that the hedge fund would not give up its claim on Greenfield’s assets.


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