Fresh lawsuit against China Resources Power looms

Minority shareholders of China Resources Power Holdings (CRP) plan a fresh lawsuit against the firm's directors if they can raise sufficient funds, sources close to the case told the .

The sources said these shareholders - who withdrew their lawsuit in January - are negotiating the amount of court fees payable by them for the previous round of court hearings, and do not rule out initiating a new lawsuit against the directors if they can raise sufficient funds.

These shareholders had alleged the directors had breached fiduciary duties in the acquisition of major coal mines and related assets in 2010. But even if the suit is not relaunched, investors will look to CRP's management in coming months for answers on whether a joint venture led by it will complete the troubled acquisition of 80 per cent of three coal mines and related assets for 7.9 billion yuan (HK$9.9 billion) from Shanxi Jinye Coking Coal.

The joint venture, known as China Resources Taiyuan, was formed in mid-2010 for the acquisition. It also agreed to assume 1.37 billion yuan of debt owed by companies owning the assets, according to court documents.

It is 49 per cent owned by CRP's indirectly held subsidiary Shanxi China Resources Liansheng Energy Investment (CR Liansheng), 31 per cent by Citic Trust - a unit of state-owned conglomerate Citic Group - and 20 per cent by Shanxi Jinye, owned by businessman Zhang Xinmin.

The venture had paid 4.2 billion yuan, court documents showed, implying 3.7 billion yuan remained outstanding. The acquisition could not be completed due to delays by the Shanxi government in renewing expired mining rights for the three mines.

The minority shareholders argued in the lawsuit that the joint venture - led by CRP - should have sought to cancel the deal earlier and claim a 20 per cent penalty payment as allowed under the terms of the acquisition agreement.