The Court of Appeal last week confirmed the High Court’s first instance decision that a side letter between a Mr Barbudev, founder of a Bulgarian cable TV company, and a Warburg Pincus acquisition vehicle – by which Mr Barbudev would be given the right to invest in up to 10% of the acquisition vehicle following its purchase of his company – was no more than an “agreement to agree” and so not legally enforceable.
The case is interesting from a legal perspective as it sees the Court of Appeal closely construe the terms of the Freshfields-drafted side letter (reproduced in full in the judgment) to see whether the side letter intended to create legal relations and whether it was merely an “agreement to agree” or an enforceable contract, and from a commercial perspective for the light it casts on the deal-making practices of the private equity house.
