MELBOURNE A unit of Hong Kong's CLP Holdings Ltd is being sued by one of Australia's largest fund managers for up to A$967 million ($718 million) in damages over the sale of a gas storage facility.
Lochard Energy, owned by a consortium led by Queensland Investment Corp (QIC), is seeking damages of A$967 million or A$780 million, alleging that CLP unit EnergyAustralia misled bidders about the maximum rates at which gas could be delivered from the Iona storage site.
EnergyAustralia and CLP deny any wrongdoing.
Lochard bought the Iona facility in the state of Victoria for A$1.78 billion in December 2015. The plant is the only major gas storage facility in southeastern Australia, a region facing soaring gas prices and a potential supply shortfall within the next 18 months that has alarmed the federal government.
In its statement of claim, Lochard said EnergyAustralia executives were aware there were constraints on the facility's gas delivery rates and that it had operated below the rate set out in the sale documents.
"EA Investments knew, or ought to have known, that the Withdrawal Constraint and the Undisclosed Matters were significant and would be material to bidders looking to acquire the Iona Facility and would significantly impact the price that those bidders would offer," the claim says.
EnergyAustralia said it would vigorously defend the claims, and CLP said its view was that "a material outflow of economic benefits from the CLP Group is unlikely".
EnergyAustralia said it has worked closely with Lochard Energy ever since the plant was sold and would continue to do so, despite the court case, to ensure reliable and affordable supplies of gas.
"We do, however, wish to stress our absolute confidence in our position on this matter and make clear that the phrase 'vigorously defend' is not a cliché," EnergyAustralia said in an emailed statement.
The company declined to comment further as the matter is now before the Supreme Court of Victoria.
CLP's shares fell 1.1 percent in a broader market that was up 0.3 percent.
Lochard had no comment beyond the statement of claim.
($1 = 1.3473 Australian dollars)
(Reporting by Sonali Paul; Editing by Miral Fahmy)