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

Clause 1 of the Option Agreement contained certain definitions including the following:

“Option Shares: the 1,184,673 ordinary shares of £0.0001 each in the capital of the Company, representing 49 per cent. of the entire issued share capital of the Company, beneficially owned by and registered in the name of SGHL at the date of this Agreement.

Put Option: the right of SGHL to require Wanda to acquire the Option Shares as set out in clause 2.1.

Put Option Period: the period during which the Put Option can be exercised, being (i) the period commencing on 31 December 2020 and ending on 31 December 2023 or (ii) (subject to due notice being given to SGHL in accordance with this Agreement), 42 days before the date of a Quotation and ending on the date of the Quotation.

Quotation: the admission of, or the grant of permission to dealings by the public generally in, any class or part of the share capital of any Quotation Entity to any securities exchange or dealing facility in any country in the world.

Quotation Advisor: the lead third party investment bank acting on an arm's length basis in relation to a Quotation.

Quotation Entity: Wanda Kids Culture Development Company Limited or any holding company of Wanda Kids Culture Development Company Limited or any other entity which acquires the business of either Wanda Kids Culture Development Company Limited or the Company (whether directly or indirectly and whether via share sale, asset sale, merger or otherwise) and which in each case is the subject of the Quotation.

Quotation Percentage: Agreed EBITDA divided by the EBITDA of the Quotation Entity using the same basis of calculation as that for the Agreed EBITDA and assuming 100% ownership of the Company and expressed as a percentage.

Quotation Shares: shares of the same class and ranking pro rata and pari passu inall respects with all other shares of the entity the subject of the Quotation.”

Clause 2 of the Option Agreement provided as follows:

“2.1

Wanda hereby grants to SGHL the right (exercisable during the Put Option Period) to require Wanda to buy all (but not some only) of the Option Shares at a price per share equal to the Sale Price.

2.2

The consideration for the exercise of the Put Option shall be payable, at the sole discretion of SGHL, either as (a) cash in US Dollars to an account nominated by SGHL or (b) where law and regulation permits, the issue and allotment of Quotation Shares in the Quotation Entity representing 49% of the Quotation Percentage (or, at SGHL's option, a mix and match part cash, part shares basis with a corresponding reduction in the percentage received by SGHL of the Quotation Percentage) (the “SGHL Put Election”).

2.3

The Put Option shall be exercisable by notice in writing to Wanda (with a copy to the Company) at any time during the Put Option Period. If at the expiry of the Put Option Period the Put Option shall not have been so exercised it shall lapse.

2.4

Completion of the sale and purchase of the Option Shares following the exercise of the Put Option shall take place as soon as possible after, and in any event not later than 28 days after, the determination of the Sale Price. Completion shall take place at the registered office of the Company or at such other place as the Shareholders shall agree at which time SGHL shall deliver to Wanda a duly executed transfer or transfers of the Option Shares (accompanied by the relevant share certificate, or an indemnity in respect of any lost share certificate(s) in a form reasonably satisfactory to Wanda, against payment of the Sale Price).

2.5

If SGHL shall not, on the date for completion of the exercise of the Put Option, execute and deliver transfers in respect of the Option Shares held by it and deliver the certificate(s) in respect of the same (or a suitable indemnity in lieu thereof), then the Company shall be entitled to, and shall, execute or authorise and instruct such person as it thinks fit to execute, the necessary transfer(s) and indemnities for lost share certificates on SGHL's behalf and, against receipt by the Company (on trust for SGHL) of the consideration payable for the relevant Option Shares, deliver such transfer(s) and certificate(s) or indemnities to Wanda and register Wanda as the holder thereof and, after such registration, the validity of such proceedings shall not be questioned by any person.

2.6

Wanda will, and shall procure that the Company and any relevant Group entity of Wanda will, give to SGHL not less than 42 days' notice of any proposed application for a Quotation, in any such case giving SGHL such details of the Quotation as SGHL may reasonably require, and will procure that the Quotation does not take place until SGHL has a minimum of 42 days in which to exercise the Put Option.

2.7

Wanda will and/or will procure that the Company or Quotation Entity will (as applicable) apply to the relevant exchange or body for the admission of and grant of permission to deal in any shares allotted pursuant to any exercise of the SGHL Put Election in the relevant exchange and Wanda will and/or will procure that the Company or Quotation Entity will (as applicable) use its best endeavours to obtain such grant of permission and admission not later than 14 days after receipt of any notice of the SGHL Put Election. In the event that a Quotation takes place while the Option remains exercisable in whole or in part Wanda will and/or will procure that the Company or Quotation Entity will (as applicable) apply to the relevant exchange for the shares allotted pursuant to any exercise of the SGHL Put Election to be admitted to trading.”

Wanda contends that, on its true construction, clause 2.7 of the Option Agreement rendered Wanda’s obligation to perform and complete the Put Option (and thus to pay the Sale Price) conditional upon the grant of the required regulatory approvals from certain governmental authorities in the PRC (“Regulatory Approval”). Regulatory Approval for performance of the Put Option was never (and, on Wanda’s case, could never have been) obtained. It follows that Wanda’s obligation to pay the Sale Price has not accrued as a debt and that, for the same reason, there has been no breach of the obligation to pay the Sale Price, and Wanda owes no extant obligation to perform the option that could be specifically enforced.

CPC contends that the ordinary and natural meaning of the words in clause 2.7 does not support that construction. CPC says that the clause is clearly concerned only with the procedural obligation to apply for permission to deal in shares if CPC were to elect to receive shares (rather than cash) in Wanda Kids Culture Development Company Limited (or another holding company of Wanda) as consideration for the Option Shares (as is evident by the words “any shares allotted pursuant to any exercise of the SGHL Put Election”). Under clause 2.2, that election is expressed to be at CPC’s “sole discretion”, and CPC duly elected to receive cash, not shares.