Hipgnosis Sells Multiple Catalogs To Reduce Debt And Shore Up Share Price

LONDON (CelebrityAccess) — Hipgnosis Songs Fund announced plans for the sale of 29 of its acquired music catalogs to fund a share buyback program and pay down debt in a bid to bolster the company’s share price.
The deal, worth $440 million, according to Hipgnosis, includes the catalogs of artists such as Rick James, Nelly, Barry Manilow, Kaiser Chiefs, Shakira, L.A. Reid, and Sean Garrett, among others and were sold to an unlisted partnership between Hipgnosis Songs Capital and a private equity fund managed or advised by Blackstone.
According to Hipgnosis, proceeds from the sale will be used to buy back up to $180 million worth of shares and to make payments on the company’s revolving credit facility to the tune of $250 million.
Merck Mercuriadis, CEO and Founder of Hipgnosis Song Management and Founder of Hipgnosis Songs Fund said:
“Earlier this year we initiated consultations with shareholders, in contemplation of the Continuation Vote and our concerns that the true value of our iconic songs was not being reflected in our share price. It was clear that shareholders shared our belief in the continuing long-term opportunity of Hipgnosis Songs Fund and wished to see a significant share buy back programme and reduction of our leverage in order to deliver a re-rating in the share price.
“The transactions announced today allow us to execute on that strategy and reflect our determination to deliver immediate shareholder value and enhance the Company’s position to deliver long-term exceptional returns and capital growth through our investment strategy of ‘buying, holding and actively managing’ a major portfolio of iconic songs as they benefit from the continued growth of streaming.
“I’m delighted that through this transaction with Hipgnosis Songs Capital, not only are we able to execute the strategy of share buy backs and reducing leverage but also give clear transactional evidence, alongside other recent transactions in the market, of the current realisable value of the Company’s catalogues to help investors understand and have confidence in the Company’s asset value. The purchase price of the sale of catalogues to Hipgnosis Songs Capital realizes a total return of 44%, which validates our investment strategy despite the current economic challenges.