Melnyk pulls legal challenge against Biovail and its CEO

Pharmaceutical company Biovail Corp. said Thursday its founder and former chair Eugene Melnyk had withdrawn a legal challenge against the firm and its top executive.

In a March 20 filing, Melnyk asked the Ontario Superior Court of Justice to declare that the company and Douglas Squires, its interim chair and CEO, had improperly solicited proxies for the firm's annual meeting on June 25.

Melnyk claimed Squires violated federal laws on March 13 by talking to reporters and analysts about Melnyk's plans to install a new board of directors.

A hearing on Melnyk's challenge had been slated for April 14.

"Biovail's consistent position has been that the application was without merit," the company said Thursday in a release.

Melnyk confirmed his application had been withdrawn. In a release, he said the two sides agreed to the discontinuance without costs.

He also saida dissident proxy circularwill be sent to Biovail shareholdersfor the upcoming annual meeting.

In recent months, Melnyk,owner of the Ottawa Senators professional hockey club, has made noise about possibly attempting to regain control of Biovail. He has issued statements about wanting a new slate of directors for Biovail, saying he was disappointed with current management.

Melnyk still holds more than 11 per cent of shares of Biovail. He stepped down as chair of the company last year.

Biovail shares rose 31 cents, or 2.8 per cent, to $11.34 on the TSX on Thursday.

Some charges settled

Late last month, regulators in Ontario and the United States filed charges against Biovail Corp., Melnyk and three other current and former executives.

The Ontario Securities Commission and the U.S. Securities and Exchange Commission accused the company and the executives of fraudulent accounting and making misleading statements.

Biovail has already settled the SEC's charges without admitting or denying the allegations, and will pay a $10-million US penalty. The company also agreed to an examination of its accounting by an independent consultant.

Melnyk vowed to contest the charges laid by the regulators.