Omni Bridgeway warns of writedown after Seqwater appeals $1bn Wivenhoe flood ruling

Omni Bridgeway has warned investors of a possible writedown after a Queensland dam operator successfully appealed the Wivenhoe flood decision.

The Wivenhoe Dam flood in 2011 damaged about 6500 homes. Picture: Mark Solomons

ASX-listed litigation funder, Omni Bridgeway, is warning investors of a possible writedown after one of Queensland’s state dam operators successfully appealed a near $1bn lawsuit over Brisbane’s devastating 2011 flood.

Queensland government-owned dam operator Seqwater appealed against a NSW Supreme Court decision, which had found it liable for half the damage from the Wivenhoe dam flood.

This has left victims with only half their expected $900m payout — or a $440m settlement that another operator SunWater and the Queensland government agreed to. The decision sparked a 5.7 per cent slide in Omni Bridgeway’s shares to $3.98 on Thursday.

The January 2011 flooding of the Brisbane River and its tributaries damaged about 6500 victims’ homes, triggering a class action.

The case represented about 4 per cent of Omni Bridgeway’s $528.4m in litigation investments and about 2.7 per cent of its consolidated net assets of $762.3m.

“This is a disappointing development in a highly complex case that has been in litigation for the better part of a decade and we will carefully consider the avenues for appeal to the High Court,” said Omni Bridgeway chief executive Andrew Saker.

“Unfortunately for all involved, the case against Seqwater may be far from resolved. Importantly, this decision has no impact on the settlement that has been agreed with the state and Sunwater and the distribution process to group members will proceed in parallel with any High Court considerations.”

Still, Mr Saker warned of a possible writedown, given the size of the investment.

“Following a detailed review of the judgment a decision will be taken regarding what level of

impairment may be necessary, if any, against this carrying value. Any asset impairment booked will be a non-cash item in line with IFRS accounting standards and will be expensed at the time of creation,” he said.

“The level of any impairment will be continually assessed and may be reversed as appropriate pending developments in the future.”

Mr Saker said while the costs of the appeal have been ordered in favour of Seqwater, no orders have been made yet with regard to Seqwater’s costs of the trial at first instance.

“Both sets of costs will be subject to the outcome of any High Court appeal which may be made. Ultimately, Omni Bridgeway expects that any costs payable to Seqwater will be met from the Partial Settlement.

“Omni Bridgeway’s previous estimate of potential income from the Seqwater component of this investment was stated to be subject to a number of assumptions, including that Seqwater’s appeals were dismissed in full.

“Omni Bridgeway will continue to review the judgment and its financial implications, including the estimated portfolio value and the estimated completion timing ascribed to this investment within our investment portfolio, and all relevant assumptions will be clarified in our investment portfolio update at September 30.”