Mega Brands boosted by court decision

The firm could could recover $880,000 following a legal tussle with a Chinese supplier.
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It was awarded $1.3 million by the court because of a breach of contract by Blue Box International, but Mega Brands was also ordered to pay $420,000 for product that had been delivered.

Hong Kong-based Blue Box was one of a dozen Chinese suppliers that made toys for the Canadian company.

Its legal battle with Mega Brands resulted from a 2004 agreement to produce several toys, notably My Pirate Ship.

The supplier was unable to fill orders which were increased because of the popularity of the toy. Delivery delays caused Mega Brands to lose sales during the key holiday season.

Although it missed the Christmas period, the products were eventually sold in 2005. Justice Claudine Roy ruled Mega Brands must pay for the toys.

Meanwhile, The Toronto Stock Exchange said it is reviewing shares in the firmfor a possible delisting.

The TSX said it has been given 120 days to meet the exchange’s listing requirements. It gave no further details.

Earlier this month the firm announced a recapitalisation plan to help it recover from a series of product recalls which led to millions in losses.

The company said it was selling about 284.7 million new shares and 234.6 million convertible warrants. The plan will reduce debt by about $300 million.

Mega Brands said in a separate statement that at the end of the review it expects to be in compliance with the exchange's listing requirements.

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