Fortescue denies writ claim

Fortescue Metals Group has rejected a claim for damages from its third largest shareholder in relation to a 2006 loan agreement.

In a statement to the Australian Securities Exchange, FMG said Leucadia National Corporation served it with the writ on Wednesday.

The writ seeks to stop FMG from issuing additional subordinated notes under an existing Note Deed Poll.

Fortescue said it had raised the possibility of issuing further subordinated notes but had not taken any steps to do so.

"It is noteworthy that in its legal proceedings Leucadia seeks rectification of the agreements it entered into with Fortescue, this being essentially a request to have the Court re-write aspects of the written legal agreement in Leucadia's favour," the statement said.

Under the original deal reached in August 2006 Leucadia is entitled to four per cent of the revenue, net of government royalties, invoiced from the iron ore produced from FMG's Cloud Break and Christmas Creek mine areas.

"If Leucadia considered Fortescue was not entitled to issue further Notes, it should have explained to Fortescue its interpretation of the Note Deed Poll and Subscription Agreement," the FMG statement said.

"However without explanation of its position, Leucadia took the step of launching pre-emptive litigation.

"Fortescue further believes that in circumstances where no notes have been issued, the claim for damages is misconceived."

Leucadia is seeking damages under the the Australian Trade Practices Act 1974, the Corporations Act 2001, Australian Securities and Investments Commission Act 2001 and Fair Trading Act 1987 against chief executive Andrew Forrest and FMG for "misleading and deceptive conduct."