Towards the backdrop of ongoing investor criticism, stock-price struggles, and a quick-approaching continuation vote, Hipgnosis Songs Fund (LON: SONG) is reportedly trying to eject its founder and most generally identified government, Merck Mercuriadis.
This latest consideration within the well-documented operational woes of Hipgnosis Songs Fund was only in the near past emphasised in a Guardian piece, with different noteworthy particulars highlighted in UK-based publications together with the Instances.
We’ve coated the publicly traded entity’s newest hurdles intimately this week, after execs on Monday nixed a deliberate dividend, citing an adjustment in calculations associated to retroactive-royalty funds.
Mentioned dividend had been set to reach at about the identical time as two notably high-stakes votes for Hipgnosis: One to promote 29 catalogs to Blackstone-powered Hipgnosis Songs Capital (with the proceeds anticipated to pay down debt and purchase again shares), the opposite to maintain on working as an funding fund into at the very least early 2026.
Although stakeholders (a number of of whom have commented on the topics within the media) appeared skeptical of the catalogs sale, it initially appeared that they had been leaning in direction of supporting Hipgnosis Songs Fund’s continuation vote – if solely to forestall its invaluable music IP from being liquidated at a doubtlessly steep low cost.
However HSF shares plummeted to a document low within the wake of the dividend catastrophe, and with investor confidence presumably shaken in consequence, Hipgnosis Songs Fund yesterday launched a “strategic evaluate” that may ostensibly look to optimize shareholder worth with “a evaluate of the long run administration preparations” and extra.
As a part of the latter, Hipgnosis Songs Fund disclosed that it had “appointed an government search agency” to discover a substitute for chairman Andrew Sutch “on the earliest alternative.” As of late September, Sutch had been poised to step down “as soon as an appropriate substitute is discovered and, in any occasion, at or earlier than the Firm’s annual common assembly in 2024.”
And as talked about on the outset, the administration evaluate would possibly set in movement greater than Sutch’s expedited departure, as some retailers are reporting that Merck Mercuriadis is battling to remain in energy.
Lengthy the face not solely of Hipgnosis however latest years’ music-IP valuation growth – which has introduced with it various deep-pocketed buyers – Mercuriadis doubles as CEO of HSF’s “funding adviser,” Hipgnosis Track Administration (HSM). Just like the above-noted Hipgnosis Songs Capital, HSM is powered by Blackstone. (His daughter Rosa serves as HSM’s chief artistic, advertising, and tradition officer.)
Upon detailing the strategic evaluate, HSF relayed that it’d weighed terminating the underlying funding adviser settlement – with the beforehand described Blackstone- and Mercuriadis-owned enterprise, that’s. Nonetheless, doing so with out having one other adviser authorised by lenders beforehand would represent an “occasion of default” beneath its present credit score facility, in line with the corporate.
Moreover, the Fund additionally indicated that it’d tried to axe a part of the funding adviser settlement enabling mentioned adviser “to amass the Firm’s portfolio on termination of its contract.” After all, HSM went forward and opted towards consenting to the pivot – thereby leaving the door open to scooping up the tune rights at hand.
Whereas time will inform whether or not Mercuriadis ceases to be concerned with Hipgnosis Songs Fund, it goes with out saying that latest months’ – and days’ – developments are lower than ultimate.
The beforehand famous investor votes are slated to happen at a pair of conferences subsequent Thursday, and considerably, sure top-10 shareholders are actually signaling that they received’t vote in favor of HSF’s continuation regardless of the strategic evaluate.
“‘I can’t consider anybody worse certified to carry a strategic evaluate than this board,’” Asset Worth Buyers government director Tom Treanor spelled out when talking with the Instances, additional describing the evaluate as “‘determined stuff.’”
Lastly, Jefferies analysts have reportedly described the evaluate as “‘a last-ditch and in the end unsuccessful try to sway shareholders.’” Throughout immediately’s buying and selling hours, HSF inventory turned in a roughly two p.c enchancment, ending at 77.5 pence (at the moment $0.94) per share.