Trading in China's largest van maker Brilliance China Automotive Holdings resumed yesterday after the company and its main shareholder issued a statement responding to legal action launched in Bermuda.

But the company's share price fell 6.91 percent in the early hours of trading in Hong Kong as investors reacted to the legal statement which said that there was no merit to the Bermuda legal cause.

In December, a major stake of shares in Brilliance was sold to the Liaoning provincial government's Huachen Automotive Group Holdings Co. Ltd. for HK$144.6 million (US$18.5 million).

The action surrounds whether or not the 39.45 percent stake owned by the Chinese Financial Education Development Foundation were actually held by the Foundation on trust, and were therefore not theirs to sell.

A writ filed on January 21 in Bermuda's Supreme Court alleges that the shares were held on trust for a company, Broadsino Finance Co. Ltd., controlled by the former chairman of Brilliance, Yang Rong.

Broadsino obtained an ex-parte order blocking registration of any transfer of shares to Huachen, or if any transfers have already been registered, any further dealings in those shares.

However yesterday's statement said that neither Brilliance nor the Foundation have been formally served as defendants in the action and on advice from Bermuda counsel, they are not obliged to take or refrain from any action.

Huachen also made an offer to all existing shareholders, as required by Hong Kong exchange rules, to buy Brilliance shares at HK$0.10.

The offer will proceed in accordance with the terms and conditions contained in the offer document, which was dispatched on January 9, the company said.