Cyberplex Inc said its debt-laden unit Tsavo Media is required to pay Yahoo Inc $4.8 million for what the U.S. search company called "low quality traffic" from ads on Tsavo-run websites last year.
Shares of Cyberplex, a provider of online marketing and technology services, fell 40 percent to a lifetime low of 4.5 Canadian cents on Monday on the Toronto Stock Exchange.
Cyberplex also said it was looking at strategic alternatives for the unit and that its President Ted Hastings, who joined the company when it acquired Tsavo in 2010, resigned.
The Canadian company said it remains in talks with Yahoo but expects Yahoo to charge back the amount, citing its right to do so under the terms of their deal.
Yahoo puts ads and links on Tsavo Media's websites using its network of advertisers, who, in turn, get traffic from these websites.
Cyberplex had bought Tsavo to create one of the largest online advertising companies in Canada, but has since struggled to pay back the unit's lenders, led by American Capital Ltd.
"We are very frustrated by the timing of these events after spending almost one year rebuilding the Tsavo organization while negotiating a settlement with American Capital," said Cyberplex's Chief Executive Geoffrey Rotstein.
(Reporting by Aftab Ahmed in Bangalore; Editing by Sreejiraj Eluvangal, Viraj Nair)