On October nineteenth, after its shares plummeted to a document low following the abrupt cancellation of a deliberate dividend, Hipgnosis Songs Fund (HSF) launched a strategic evaluation. Now, the troubled enterprise has revealed new particulars about this evaluation in addition to plans to nominate a distinct auditor.
Merck Mercuriadis-founded Hipgnosis Songs Fund offered an replace on the strategic evaluation yesterday, weeks after pausing dividends and making a variety of staffing adjustments. Extra broadly, these November developments have adopted a number of years of operational difficulties and a late-October shareholder vote towards the fund’s continuation.
And it’s with the fund’s future very a lot within the air that HSF has disclosed the initially talked about data. Starting on the strategic evaluation aspect, Hipgnosis Songs Fund’s board, chaired by the previous board head of Spherical Hill’s personal songs fund, is making ready “to nominate unbiased advisers to conduct due diligence on” HSF’s property, in accordance with the related launch.
Stated due diligence is predicted to supply “a robust information base from which the Board will begin a means of figuring out and bringing ahead different proposals for the way forward for the Firm,” the announcement message proceeds.
Moreover, HSF’s board has referred to as on the corporate’s Blackstone-powered funding adviser, Hipgnosis Music Administration (HSM), to suggest “different phrases for his or her future funding advisory preparations.”
Briefly, HSM has continued to gather sizable advisory charges despite the fact that it’s been years since HSF closed a catalog deal. Final month, amid the beforehand highlighted investor pushback, Hipgnosis Songs Fund stated it’d determined towards chopping HSM free as a result of doing so would represent “an occasion of default” beneath its credit score facility except lenders had authorized a brand new adviser beforehand.
“The Funding Advisory Settlement may be terminated, apart from for trigger, by the Firm on not lower than 12 months’ discover, with a further one-time termination charge equal to 1 yr’s advisory charge calculated on NAV as on the termination date,” HSF relayed of the far-from-ideal pact with HSM, a part of which belongs to Mercuriadis.
Additionally ruffling Hipgnosis Songs Fund stakeholders’ feathers was (and is) a “name choice” by means of which HSM can purportedly “purchase the Firm’s [HSF’s] portfolio on termination of its contract.”
Taking into consideration these and associated factors – it was a 3rd Hipgnosis entity, described as “a partnership between Hipgnosis Music Administration and funds managed and/or suggested by Blackstone,” that may have purchased 29 HSF catalogs had traders authorized the transaction – it’ll be attention-grabbing to see what the “different proposals” embody.
Shifting to the audit entrance, HSF has acknowledged an ongoing “audit tender course of” for the fiscal yr ending on March thirty first, 2024. PricewaterhouseCoopers has served as HSF’s auditor since 2019 however received’t throw its hat within the ring for the tender course of, per HSF, which intends to substantiate the successor “sooner or later.”
Lastly, with its annual report having briefly addressed litigation towards Mercuriadis and others stemming from the long-shuttered Hipgnosis Music Restricted, HSF has reiterated that it, the veteran music supervisor, and HSM deny the concerned “claims and intend to vigorously defend them.”
When the market closed at this time, HSF shares had been value about 71 pence every. Earlier this week, a number of of the fund’s administrators in addition to the aforementioned chairman revealed that they’d purchased a cumulative 327,000 shares within the enterprise.