TORONTO -- London-based Allied-Lyons PLC launched what is believed to be Canada's largest corporate lawsuit Monday against the Reichmann family to force Reichmann-controlled Hiram Walker Resources Ltd. to fulfill a contract to sell its liquor business.
Allied-Lyons began legal action in Ontario Supreme Court to force Hiram Walker to proceed with an agreement reached earlier to sell the British company its distilling operation.
Allied-Lyons also sought $3.6 billion -- $5 billion in Canadian currency -- in damages from two Reichmann brothers, Reichmann-controlled Gulf Canada Corp. and Olympia & York Enterprises Ltd. and four members of a special committee of the Hiram board.
Analysts said the $3.6 billion is believed to be the largest award ever sought in Canadian corporate history.
In addition, the company sought an injunction to prevent the Reichmanns or their companies from interfering with Hiram Walker shares or assets of the spirits and wines division.
'While it is not in keeping with Allied's philosophy to conduct its business by litigation, it is wholly unreasonable to expect us to stand idly by while hostile attempts are made to frustrate our binding agreement to acquire the spirits and wine division of Hiram Walker,' said Allied-Lyons Chairman Derrick Holden-Brown.
In Calgary, Gulf spokesman Mike Ratuski said the company, which is 80 percent owned by the Reichmanns, had no immediate comment because lawyers still were studying the court filing.
Allied-Lyons has launched an aggressive publicity campaign in Canada in its fight with the Reichmanns for control of the distillery operation, whose liquor brands include Canadian Club whisky, Courvoisier cognac, and Kahlua and Tia Maria liqueurs.
The Reichmanns, who lost an earlier court fight to stop the sale of the distillery operation to Allied-Lyons, are appealing the ruling, this time joined by Hiram Walker, which they now control.
The Reichmanns, through Gulf and Olympia & York, won control of Hiram Walker for $2.2 billion in late April in a share offer on the Toronto and Montreal stock exchanges.
But the agreement to sell the distilling arm had been reached earlier when Hiram Walker management, trying to thwart a Reichmann takeover, said it would sell that operation to Allied-Lyons for $1.87 billion.
'Our agreement states quite clearly that both sides are to use their 'best efforts' to satisfy the pre-completion conditions,' Holden-Brown said. 'It is now very clear to Allied that, far from doing so, the new controllers of Hiram Walker Resources are totally ignoring both the spirit and the wording of the agreement in a blatant attempt to prevent completion.'
Holden-Brown added that in addition to the damages, Allied-Lyons will seek a further $2.9 billion if the court does not order the agreement fulfilled.