CL-2024-000186 - [2025] EWHC 1895 (Comm)

By a share purchase agreement dated 18 April 2017 (the “SPA”), Wanda Kidsland (Hong Kong) Co. Ltd (“Wanda Kidsland”, a different entity to Wanda) agreed to purchase from a company called Silvergate Group Holdings Limited (“SGHL”) 51% of the entire issued share capital of Vampire Squid Productions Limited (“VSP”) for US$38,250,000 (with SGHL retaining the remaining 49%). VSP is an entertainment company that holds certain intellectual property rights, including rights to the children’s television programme “Octonauts”.

The SPA provided that on completion of the share sale, the parties would execute an “Option Agreement” (as defined in clause 1 of the SPA) in relation to SGHL’s retained shareholding in VSP. At some point between the signing of the SPA on 18 April 2017 and the execution of the Option Agreement on 16 October 2017, Wanda Kidsland transferred its shares in VSP to Wanda.

Clause 11.1 of the SPA provided that the Buyer warranted that “it has full power and authority and has obtained all necessary consents to enter into and perform the obligations expressed to be assumed by it under the Transaction Documents.” Clause 1 defined “Transaction Documents” as including the Option Agreement.

The Option Agreement was subsequently entered into on 16 October 2017 between SGHL, Wanda and VSP. The Option Agreement provided that the Put Option for the remaining shares (which amounted to 1,184,673 ordinary shares of £0.0001) would be exercisable upon notice by SGHL, with completion taking place as soon as possible after, and in any event not later than 28 days from the determination of the Sale Price. Clause 4 of the Option Agreement provided a mechanism for determining the Sale Price, under which the price per option share would be calculated by dividing the greater of (i) US$100,000,000 or (ii) 12 times the Agreed EBITDA by the total number of shares in issue (2,417,710) or such other multiple of Agreed EBITDA as Wanda and SGHL agreed in good faith. .

In practice, this meant that the minimum total Sale Price for the 49% shareholding was US$49,000,000, representing 49% of the minimum company valuation of US$100,000,000. However, the Sale Price could be higher depending on the Agreed EBITDA, which was to be calculated pursuant to clauses 4.3 and 4.4 of the Option Agreement.

Under the contractual mechanism for the calculation of the Sale Price, VSP would provide the initial EBITDA calculation; Wanda or SGHL could then raise objections to specific items, and if the dispute persisted, an Independent Accountant jointly appointed by the parties would determine the final figure. If the parties failed to agree on the appointment, the Independent Accountant would be appointed by the President of the Institute of Chartered Accountants in England and Wales on the application of either Shareholder.

In August 2021 SGHL assigned all rights, title, interest and benefit of the Option Agreement to CPC.

On 27 October 2021, CPC exercised the Put Option in writing and VSP provided an EBITDA calculation the same day. The letter dated 27 October 2021 stated as follows:

“This Letter is the notice of exercise of the Put Option, as provided for in clause 2.3 of the Put and Call Agreement and we hereby give you notice that we are exercising the Put Option in respect of all of the Option Shares at a price per share equal to the Sale Price, calculated based on the 12 months ending at the month-end prior to the exercise, being 1 October 2020 to 30 September 2021.

Completion of the sale and purchase of the Option Shares pursuant to this exercise of the Put Option shall take place as soon as possible and, in any event, not later than 28 days from determination of the Sale Price. Completion of the sale and purchase of the Option Shares is conditional on receipt of relevant regulatory approvals.

The Company will calculate the EBITDA and will deliver the EBITDA calculation to the Shareholders pursuant to clause 4.2 of the Put and Call Agreement.”

Wanda subsequently disputed the calculation. When no agreement could be reached, efforts were made to appoint an Independent Accountant, but they were not successful.

By a letter dated 11 January 2024 CPC agreed to accept the contractual “floor price” of US$49,000,000 in order to bring the dispute over valuation to an end. That letter notified Wanda that completion of the sale and purchase of the Option Shares would occur on or before 8 February 2024.

While clause 2.4 of the Option Agreement provided for completion at VSP’s London office, CPC offered an alternative arrangement to accommodate Wanda: payment of US$49,000,000 into CPC’s account at JP Morgan Chase’s London branch, against which CPC would deliver the Option Shares with all necessary documentation. If Wanda declined this alternative, completion would take place at VSP’s office on 8 February 2024.

On 8 February 2024, CPC attended VSP’s London office to complete the sale by delivering a duly executed transfer upon payment. Wanda did not attend and has not paid the US$49,000,000 purchase price.

CPC therefore brought the present claim against Wanda.