Johannesburg - Golden Lions Rugby Union (GLRU) president Kevin de Klerk says the statement issued on Tuesday from their former partners Guma TAC was "filled with many half truths" and says the union had never been unwilling to pay back any money.
"They are entitled to pursue any kind of action, but it is their modus operandi trying to discredit us through the media," he said.
"We will defend such actions and we will let the legal process decide."
The Guma TAC group on Tuesday initiated legal proceedings to recover their loan following the souring of their relationship with the embattled Golden Lions Rugby Union.
"We confirm that today we have initiated legal proceedings to recover our loan from the Golden Lions," the Guma TAC group said in a statement.
Guma TAC, which is jointly owned by Robert Gumede and Ivor Ichikowitz, cut ties with the GLRU in June 2011, shortly before it was to have purchased a 49.9 percent stake in the union.
Guma TAC said in a document leaked to the media last year that the GLRU owed the company more than R14 million in loans.
At the time, Gumede and Ichikowitz accused the Lions' executive of keeping the potential investors in the dark, preventing them from playing an active role in the union.
Guma TAC said on Tuesday the GLRU had faced "huge" financial challenges and could not pay salaries before negotiations to form an equity partnership came to an end.
"We provided the Lions with millions of rands to enable Kevin De Klerk’s management to pay the salaries of the Lions' players and staff for both the months of December 2010 and January 2011," it said in the statement.
"Had the Lions failed to pay the players' salaries over this period, it would have led to the breach of players' contracts, which would have led to an exodus of key players, if not all.
"Furthermore, the loans enabled the Lions to sign top international players like Butch James and Lionel Mapoe and to pay the 24 amateur feeder GLRU clubs their GLRU grants."
Guma TAC said it had also funded the salary of Lions' conditioning coach Wayne Taylor, which was allegedly several months in arrears.
It said the GLRU had denied taking a loan from its former potential equity partner.
"This behaviour is a continuation of the bad faith which the Lions' executive... displayed in the negotiations regarding our rescue and investment in the Lions."
Guma TAC denied media reports that their lawyers had been in discussion with GLRU legal representatives regarding an arbitration agreement.
"It hurts us to have to turn to the courts to recover money that was loaned in good faith at a time when the Lions' bankers refused to extend further credit facilities and the Lions’ president, Kevin de Klerk, turned to us in desperation to advance funds to pay, among other commitments, the Lions' players and staff."
De Klerk said the union had been in discussion with Guma's lawyers before the claims were made.
"It smacks of lack of understanding they have about the sport of rugby and ethos of the game. They are the ones that moved out," De Klerk said.