LONDON (CelebrityAccess) — Hipgnosis Songs Fund, the UK-based music rights investment group, announced the launch of a strategic review as the fund attempts to rally flagging investor sentiment.
The review comes amid a potentially pivotal moment for the investment fund, as shareholders weigh a vote next week to approve the continuation of the trust, which looms next week.
Investors are likely to have a dim view of Hipgnosis’ future, following the announcement last week that the company had canceled dividends for the quarter after anticipated royalty payments took a haircut in the wake of the CRB III ruling in the U.S.
Investors have also objected to the proposed sale of a music rights portfolio for $440mn to a privately held sister fund operated by private equity giants Blackstone. The sale would help to bolster Hipgnosis’ flagging valuation, which has fallen by more than a third over the last two years.
In announcing plans for a strategic review, Hipgnosis revealed that it had weighed voting to terminate its agreement with its investment advisor Hipgnosis Song Management, but opted not to do so, concluding the move would lead to a default of debt covenants.
The move would also allow Hipgnosis Song Management, led by Hipgnosis founder Merck Mercuriadis and backed by Blackstone, to exercise a clause allowing them to acquire Hipgnosis’ portfolio on termination of its contract.
According to Hipgnosis, the company’s board asked Hipgnosis Song Management to waive that clause, but the investment advisor refused to do so.
“We continue to believe that HSM is uniquely positioned to deliver value to shareholders as a result of our deep relationship with the songwriters that make up the catalog and our song management expertise. We intend to continue to demonstrate this through our actions,” an HSM spokesperson told the Financial Times.
Hipgnosis Board said they continued to recommend voting in favor of continuing the trust, and continued to support the sale of $440 million in assets to the private Blackstone fund.
The board also announced they have launched a search for a new chair and has hired an executive search firm to identify a potential candidate.
