Hipgnosis Songs Fund (HSF) has delayed the publication of its half-year financials on account of a possible disconnect between the concerned catalogs’ appraised worth and precise market price.
The publicly traded songs fund, which had been scheduled to publish at the moment its financials for the six months ended September thirtieth, formally introduced the delay and its underlying “considerations” this morning.
In response to the troubled entity, which final week added a veteran activist investor to its board, the IP valuation “obtained from its unbiased valuer is materially larger than the valuation implied by proposed and up to date transactions within the sector.”
Amongst these proposed and up to date transactions, the announcement proceeds, are the investor-rejected sale of 29 catalogs to Hipgnosis Songs Capital for $417.5 million (“internet consideration,” that’s, a determine effectively beneath the initially recognized price ticket of $440 million) in addition to the more moderen and seemingly closed sale of “non-core belongings” to Kobalt for $23.1 million.
On account of the discrepancies, HSF’s Robert Naylor-chaired board “sought recommendation” from its Blackstone-powered funding adviser, Hipgnosis Track Administration, “on their opinion on the unbiased valuer’s valuation,” per the textual content.
“Hipgnosis Track Administration Restricted finally offered an opinion, which was closely caveated, such that the Board has considerations as to the valuation of the Firm’s belongings in its interim outcomes,” continues HSF’s far-from-ideal account of the state of affairs.
Now, HSF “expects” to publish the earnings report someday earlier than December thirty first. After all, it’s unclear precisely what one other 12 or so days will do to enhance the valuation conundrum, about which we’ve reported for a number of years. Means again in January of 2021, as an illustration, a Stifel analyst downgraded Hipgnosis inventory on account of considerations regarding its valuation methodologies and cashflow.
And in December of 2022, new considerations but had been raised as Hipgnosis Songs Fund refused to decrease its catalog valuation amid (amongst different issues) financial uncertainty, rising charges, and an IP-sales slowdown.
In any occasion, Merck Mercuriadis’ aforementioned Hipgnosis Track Administration (HSM) promptly fired off an official response to HSF’s performance-analysis delay.
“Hipgnosis Track Administration has fulfilled its duties to the Firm with respect to each the unbiased valuation and preparation of the interim leads to a well timed and environment friendly method,” maintained HSM.
“However the choice of the Firm’s Board to delay publication of the interim monetary statements, the Funding Adviser will proceed to work in a constructive method to assist the pursuits of the Firm and its shareholders,” the entity concluded.
Whereas time will reveal the distinctive state of affairs’s exact final result, it goes with out saying that current occasions paint an especially discouraging image for Hipgnosis Songs Fund, its buyers, and Mercuriadis; the latter particular person, the fund, and HSM alike are additionally grappling with litigation levied by the liquidators of a long-defunct Hipgnosis entity.
When this piece was revealed, Hipgnosis inventory was buying and selling for slightly below 68 pence per share, representing a two p.c dip and a market cap of roughly $1.06 billion, or effectively beneath the appraised worth of HSF’s IP.