Colorado Supreme Court Takes Up Veolia-Antero Lawsuit, Clouding Midstream's Outlook
The Colorado Supreme Court has granted Veolia's petition for certiorari, potentially impacting the ongoing lawsuit and Antero Midstream's financial outlook. The court, led by Judge Patrick Murphy, will now consider whether the economic loss rule bars a fraud claim in contractual relationships.
Antero Midstream's share value has been reduced to $19.70 per share due to increased uncertainty surrounding the Veolia lawsuit. Despite this, the company's longer-term outlook remains solid, with potential for modest negative impact in 2026 if the Supreme Court reverses the lower court damages award.
Antero Midstream recently issued $650 million in 5.75% unsecured notes due 2033, receiving $642 million in net proceeds after expenses. The company used these funds to redeem its $650 million in 5.75% unsecured notes due 2027 at 100% of principal plus accrued but unpaid interest.
The Colorado Supreme Court grants only 6% of petitions for certiorari, indicating a significant possibility of the lower court decision being reversed. If the petition had been denied, Antero Midstream would have received approximately $300 million. Following this development, Antero Midstream's rating has been changed from 'Buy' to 'Neutral' in the near term.
The Colorado Supreme Court's decision to grant Veolia's petition for certiorari introduces uncertainty for Antero Midstream. While the company's longer-term outlook remains positive, investors should monitor the lawsuit's progress and its potential impact on the company's financials.
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