By Joe Hoppe
Hipgnosis Songs Fund said it has decided to start a strategic review, considering all options for the future with aim of maximizing shareholder value, including a review of future management arrangements.
The London-listed music investor said Thursday the decision follows extensive engagement in recent weeks with shareholders, given the upcoming continuation resolution and resolution to sell a number of catalogs set for Oct. 26. It said it continues to recommend voting in favor of the resolutions.
In mid-September, it said it planned to sell 29 catalogs to Hipgnosis Songs Capital for $440 million and a portfolio of noncore songs for $25 million to fund a share buyback program and reduce debt, as part of a plan to boost its share price.
In light of the review, the company has looked at making changes to the investment advisory agreement. It said it considered serving notice to end the agreement, but decided it wasn’t in shareholder interests to do so, as it would be an event of default under its revolving credit line if a new investment advisor isn’t approved by lenders.
Hipgnosis said it has asked its investment adviser to remove a clause in the agreement, related to the call option entitling it to acquire the company’s portfolio on termination of its contract, which it said the investment adviser has declined to accept.
The company said it has started the process to find a new chair for the company, after Chairman Andrew Sutch said in late September that he intends to step down. On Monday, the company said it had withdrawn the interim dividend proposal on the back of significantly lower retroactive royalty payments.
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