In the context of a high-value contractual dispute in respect of the sale of shares in an eastern European satellite television company, the High Court has rejected the buyers’ plea that they were not obliged to pay a €4.19 million tranche of the agreed price on the basis that they had been misinformed as to the company’s prospects.
The buyers, who were backed by a private equity firm concentrating on the central and eastern European markets, had agreed to pay more than €5 million for the company which was one of the leading satellite television operators in Bulgaria. The first €850,000 tranche was paid, however a dispute arose in respect of payment of the €4.19 million balance.
In arguing that that sum was not payable, the buyers submitted that there had, on the seller’s part, been a number of breaches of warranties contained within the sale and purchase agreement. It was alleged, amongst other things, that the number of private subscribers to the company’s service had been significantly over-stated prior to the sale.
In dismissing the buyer’s arguments, and directing payment of the balance due under the agreement, the Court found that figures provided by the seller were more reliable and that the relevant subscriber numbers had been in excess of 80,000, as had been warranted.
The Court also rejected the buyer’s arguments that the agreement was invalidated by reason of the seller’s failure to disclose that subscriber numbers had been in steady decline for some time before the purchase and that the company had been affected by litigation, customs irregularities and difficulties with broken set-top boxes.