The company that operates newsstands in the Toronto's transit system is threatening to sue if the TTC revokes a controversial lease extension.

In a strongly worded letter Monday, lawyers for Tobmar Investments International Inc, parent company of Gateway Newsstands, warned that they are ready to seek an injunction and reserve the right to pursue damages.

"We never expected to be in this position," Noah Aychental, Tobmar senior vice president, said in a telephone interview. "We have a contract with the TTC that has been approved twice."

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Gateway has long operated small stores in the transit system and recently negotiated a contract extension. This raised the ire of Mayor Rob Ford, who said the deal should have been opened up to competition. Sam Davis, head of rival firm International News, has publicly stated that he would have offered a better deal to the transit service. TTC Chair Karen Stintz, who had initially defended the deal, agreed to a review by a third party, which recommended revoking it and seeking proposals from more than one company.

At the monthly commission meeting Monday, Ms. Stintz tabled a notice of motion that could see the issue discussed at the next meeting, on March 27. At that meeting, a two-thirds vote by commissioners will be needed to re-open the debate and then a second vote would be required to get staff to issue a request for proposals.

Councillor Doug Ford, a vocal critic of the plan to extend the contract with Gateway, was pleased Monday with the change of tack.

"It's a no-brainer," he told reporters, adding later: "They are doing the right thing for the taxpayers of Toronto. You have to go out for an RFP, make it transparent, especially on a $50-million contract. "

Ms. Stintz warned that the decision could cost the cash-strapped TTC several million, though others have noted that a contract with another company could be worth more money. She also confirmed that they have received the legal letter from Tobmar, saying that their own lawyers are examining the situation.

"The whole issue has become issue has become quite political, unfortunately, so I think we do need to move forward with an RFP and I hope that we get on with it and we can close this issue off once and for all," Ms. Stintz told reporters before the meeting began. "I think that the commission made the best decision that we could with the information that we had. And so now we have new information and we're going to move forward."

With a report from Elizabeth Church