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Hipgnosis Songs Fund Initiates Strategic Review

James L. Flint

• October 19, 2023

Hipgnosis Songs Fund has recently announced that it will be commencing a strategic review to explore various options aimed at maximizing shareholder value. As part of this review, the company will be evaluating future management arrangements and considering all possible courses of action.

This decision comes after extensive engagement with shareholders, particularly in light of the upcoming continuation resolution and the resolution to sell a number of catalogs on October 26th. Despite these developments, Hipgnosis Songs Fund continues to advocate for voting in favor of the resolutions.

In September, Hipgnosis Songs Fund unveiled its plan to sell 29 catalogs to Hipgnosis Songs Capital for $440 million, as well as a portfolio of noncore songs for $25 million. The proceeds from these sales were intended to facilitate a share buyback program and reduce debt, ultimately bolstering the company's share price.

Given the ongoing strategic review, Hipgnosis Songs Fund has examined potential amendments to its investment advisory agreement. While terminating the agreement was considered, it was deemed unfavorable for shareholders due to the potential event of default under the company's revolving credit line if a new investment advisor is not approved by lenders.

In relation to the investment advisory agreement, Hipgnosis Songs Fund has requested the removal of a clause pertaining to the call option enabling the acquisition of the company's portfolio upon termination of the contract. Unfortunately, the investment advisor has rejected this proposal.

Furthermore, Hipgnosis Songs Fund has initiated the search for a new chairperson following Chairman Andrew Sutch's announcement in late September of his intention to step down. To address recent developments, the company has withdrawn its interim dividend proposal due to significantly lower retroactive royalty payments.

In summary, Hipgnosis Songs Fund's strategic review marks an important step towards optimizing shareholder value. By considering various options for the future and evaluating management arrangements, the company aims to further enhance its position in the music investment industry.