The mainland's dominant mobile-phone operator, China Telecom, says a major shareholder, Telpo Communications, has initiated legal action against partners of a Hong Kong law firm and directors of Calmar Telecom (China) for failure to repay a US$15 million loan facility.
However, China Telecom, the parent of Hong Kong-listed China Telecom (Hong Kong), said the proceedings would have no impact on its financial standing or operations.
Telpo - which indirectly holds 38.98 per cent of China Telecom - said yesterday it had started proceedings in the SAR High Court against partners at law firm Siao, Wen and Leung, Calmar Telecom and one of its former directors Liu Yan and existing director Deng Li Yiwei.
A Telpo spokesman said that early last year Telpo provided a secured lending facility to Calmar on general market commercial terms, under which certain shares were to be mortgaged in favour of Telpo.
Telpo has alleged that Calmar failed to repay the amounts, prompting it to start proceedings against Calmar and its directors to recover the funds.
The law firm partners, who acted for Telpo in connection with the transaction, are being sued for damages arising from negligence, breach of duty and contract.