Aimia Inc. (AIM.TO) announced it is taking legal action in Ontario against Mittleman Brothers LLC, its largest shareholder, citing “unlawful and destructive interference” and “self-interested proposals to seize control of the company and its assets.”

The loyalty program provider said it is seeking compensation for breaches of a standstill agreement that was reached in March 2018, a declaration that Mittleman has breached the agreement, and a court order preventing Mittleman from taking further steps to remove or replace directors elected at its most recent annual general meeting.

According to a statement of claim filed with the Ontario Superior Court of Justice, Aimia is claiming $50 million in damages for the various breaches.

"It is highly regrettable that the board has been forced to take this action against Mittleman, despite our good faith in appointing two of their directors last year and entering a standstill agreement,” said Bill McEwan, the chairman of Aimia’s board of directors, in a release Monday.

“The blatant violations of the agreement and the misrepresentations and misleading statements by Mittleman must be stopped in the interest of all shareholders and to allow the company to continue executing its strategy to create value.”

Mittleman Chief Investment Officer Christopher Mittleman called Aimia’s claims “preposterous,” in an emailed statement.

“[A]s Aimia’s largest shareholder, with a 23 [per cent] stake, our interests are highly aligned with the company’s. To argue that we would deliberately take action to the detriment of our largest position by far is preposterous,” he wrote.

He further stated that Aimia is misrepresenting Mittleman by labeling it a “hedge fund.”

“Mittleman Brothers is not a “hedge fund” as Aimia’s board has incorrectly claimed among numerous other inaccuracies in their press release of this morning, and the vast majority of our assets under management reside in separately managed accounts,” he wrote.

“It would be logistically impossible for an investment manager structured as we are to buy-out an entire company.”

Earlier this month in a television interview with BNN Bloomberg, the chief investment officer of New York-based Mittleman, called for better oversight at the loyalty program provider and laid the groundwork for changes in the boardroom, after some shareholders expressed outrage over how they were treated at the company’s annual general meeting last month.

The following week, Aimia announced two new independent directors, a decision Mittleman, which controls almost one-quarter of the company’s shares, said it was not consulted on.  

Aimia said the decision to take legal action against its top shareholder “is not taken lightly” and comes after “significant deliberation regarding Mittleman's underlying intentions.”  

Mittleman shot back, caliming in his statement that "the claims are baseless; we will vigorously defend and we will publicly respond more fully soon."