Kingsgate Consolidated faces US$58.5M insurer lawsuit

• Political risk insurers have launched legal proceedings against Kingsgate Consolidated in the Supreme Court of New South Wales.
• The insurers are seeking up to US$58.5 million and $750,000, plus costs and interest.
• The dispute centres on allegations that Kingsgate breached a settlement agreement through unpaid dues and unauthorised decision-making.

Kingsgate Consolidated (ASX:KCN) faces a lawsuit from its political risk insurers in the Supreme Court of New South Wales over alleged settlement agreement breaches involving primary claims of up to US$58.5 million and $750,000.

The company had previously recorded a provision of $12,765,000 for the dispute in its audited financial report for the year ended June 30.

The insurers allege that Kingsgate Consolidated and Kingsgate Capital breached a settlement agreement by failing to make required payments and making unauthorised decisions regarding the TAFTA Arbitration.

In addition to the primary damages claim, the insurers have also raised various unquantified alternative claims against the entities.

Kingsgate Consolidated stated that it strongly denies the insurers' claims and intends to defend the proceedings.

Following the announcement, the Kingsgate Consolidated share price was down at $5.20.