China Netcom's purchase of Asia Global Crossing (AGC) assets has hit a hurdle after a petition was filed to wind up a subsidiary of the bankrupt undersea cable operator.
China Netcom chief financial officer Fan Xing Cha told the South China Morning Business Post the company was aware of the pending litigation from PCCW-Telstra joint venture Reach, but said it would not affect the ongoing transaction.
'We are not surprised by the legal action and it will not affect our deal,' Mr Fan said.
On Wednesday, Reach, a 50 per cent undersea cable joint venture between PCCW and Australia's Telstra, filed a petition in the High Court to wind up AGC subsidiary IXNet to recoup HK$56 million worth of service contracts.
The company is seeking compensation for cancellation fees, unpaid rental charges and interest arising from 34 separate contracts IXNet signed in relation to a circuit leasing arrangement in the past two years.
IXNet, which provided high-speed data services mostly to banks, had more than 700 customers in 38 countries. It was part of the AGC assets that China Netcom proposed to buy last month.
An AGC spokesman said it was reviewing the case but declined to comment further.
