Final month, Hipgnosis Songs Fund (LON: SONG) proposed a near $500 million selloff of a number of catalogs. Now, forward of two high-stakes investor conferences later in October, main shareholders are reportedly making ready to dam the transaction.
This newest less-than-ideal growth for Hipgnosis Songs Fund (HSF) got here to mild in a Monetary Instances report right this moment, shortly after Hipgnosis Songs Group CEO Kenny MacPherson was positioned on go away on account of newly levied sexual assault allegations.
To recap – Digital Music Information coated the initially talked about music-IP sale plans intimately after they emerged in mid-September – Hipgnosis Songs Fund scooped up all method of music catalogs between 2018 and 2021.
However its credit score line has lengthy been tapped out (stopping the acquisition of further tune rights), and shares have for a while been buying and selling at a serious low cost to the claimed worth of its belongings (barring new issuances).
In opposition to this backdrop and well-documented investor requires a partial divestment to unencumber capital, HSF three weeks again proposed offloading 29 catalogs, together with the rights to the work of Shakira, Barry Manilow, and L.A. Reid, to Blackstone-powered Hipgnosis Songs Capital (HSC) for $440 million.
Nonetheless, 20 days out from a scheduled vote on the proposal – and, individually, the operational destiny of HSF – at an annual common assembly and a unprecedented common assembly, sure stakeholders are reportedly expressing reservations about and planning to dam the sale.
The FT pointed to “vital investor opposition” to the urged selloff, with the floated price ticket driving a lot of the pushback. A “high 10 investor” communicated that the sale “‘may make sense’” if the concerned worth was 30 p.c larger and touched upon a perceived lack of transparency regarding transactional prices, in accordance with the report.
“‘I’d be shocked if it doesn’t get voted down,’” one other shareholder summed up of the doable $440 million sale, highlighting totally different traders’ purported opinions and the sizable low cost to web asset worth in comparison with the sale of Spherical Hill Music’s personal publicly traded tune fund. The latter introduced an 11.5 p.c low cost to NAV, whereas the HSF sale as outlined would have a reduction fee exceeding 24 p.c, per the FT.
Curiously, different traders indicated that they may vote in favor of HSF’s continuation in any occasion, citing confidence within the underlying belongings and a need to keep away from the fireplace sale that will arrive if the measure fails.
In the meantime, a unique get together may technically come ahead with a suggestion for greater than $440 million. However one “senior government” whose firm reportedly explored the opportunity of shopping for Hipgnosis belongings thought the result unlikely.
“‘There are very particular circumstances with Hipgnosis,’” the person relayed, “‘and the best way potential gross sales are being structured makes them unattractive.’”
Lastly, HSF in September additionally disclosed plans to promote $25 million price of “non-core” belongings obtained from the primary fund of Kobalt – albeit with out pinpointing a purchaser. In keeping with the FT, although, this potential purchaser is Kobalt itself.
Hipgnosis Songs Fund shares completed right this moment close to a 52-week low, reflecting a market cap of about £907 million (at present $1.11 billion). Per an announcement put out by the corporate to finish September, Andrew Sutch intends to step down as chair “as soon as an acceptable substitute is discovered and, in any occasion, at or earlier than the Firm’s annual common assembly in 2024,” and Andrew Wilkinson will “retire as a director earlier than the top of 2023.”