Harbin Brewery Group is suing SABMiller in Britain's High Court for $55 million, saying the money is owed under the terms of the original strategic-partnership agreement between the two companies.
The legal battle follows the break-up of the partnership in May, after SABMiller lost a shareholder struggle with United States rival Anheuser-Busch for control of the mainland brewery.
In June last year, SABMiller and Harbin Brewery-owned Advent formed a firm called Gardwell to buy a 29.64 per cent stake in Harbin for $641.2 million. SABMiller holds 95 per cent of Gardwell. Advent, which is owned by six Harbin directors - including chief executive Peter Lo - has the remainder.
Advent was guaranteed the right to sell its 5 per cent stake to SABMiller for $55 million after three years, subject to certain performance criteria. But the exercise date of this option was to be 'accelerated' and the price doubled to $110 million if SABMiller announced a general offer for Harbin shares or pulled out.
Complicating matters is a $55 million loan SABMiller extended to the six directors. The loan contract authorised SABMiller to claim the Gardwell stake in case of default.
When the battle with Anheuser began, SABMiller declared the loan to be in default and claimed Advent's 5 per cent stake in Gardwell.