Hipgnosis to supply potential bidders £20m as ‘price safety’
- Board preventing for firm’s survival after traders voted for discontinuation
- Company is in dispute with its funding adviser Hipgnosis Songs Management
Embattled music investor Hipgnosis Songs Fund is about to supply as much as £20million to lure potential takeover bidders.
The music rights fund, which owns catalogues from the likes of Shakira and Neil Young, will provide the cost as a type of ‘price safety’, it stated on Thursday.
Its board is battling to safe the long-term way forward for the corporate and defend the worth of its belongings, amid an ongoing dispute with its funding adviser over an alleged battle of curiosity.
In October, Hipgnosis noticed traders reject a $440million deal to promote 29 music catalogues, vote to oust its chairman and name for an finish to its continuation as a closed-ended funding firm.
Hipgnosis Songs fund owns the rights to music catalogues together with Shakira and Neil Young
This prompted a strategic assessment below a refreshed board that may see a reorganisation of the belief or a wind-up inside six months.
The board of Hipgnosis, which noticed the worth of its belongings droop final 12 months, can be in dispute with the fund’s funding adviser Hipgnosis Songs Management (HSM).
The rejected October asset sell-off would have seen Hipgnosis Songs Capital, a restricted partnership not directly managed by HSM in partnership with Blackstone, grow to be the proprietor of the belongings.
HSM additionally owns a ‘name possibility’, which supplies it the appropriate to buy all the Hipgnosis portfolio if the fund needs to be wound-up.
Hipgnosis stated: ‘Shareholders have instructed the board that the decision possibility constitutes a cloth battle of curiosity for the funding adviser and acts as a major deterrent to any third-party potential offerors who may search to amass the corporate or its belongings.
‘The board believes that the funding adviser’s name possibility subsequently depresses the potential worth of the corporate by limiting sure potential alternatives for shareholder worth creation.’
It is subsequently attempting to encourage a sale to guard its belongings from falling into HSM’s arms and traders nursing heavy losses.
Hipgnosis stated the £20million provide might lure potential bidders by offering ‘important safety’ in opposition to their due diligence and acquisition prices, and ‘be sure that they aren’t deterred’ from making a proposal ‘because of the phrases of the Investment Adviser’s Call Option’.
It stated: ‘The proposal will present higher potential alternatives to maximise worth for Shareholders.
‘Specifically in relation to the proposal, the newly constituted board has consulted with a number of of the corporate’s largest shareholders, holding in mixture greater than 35 per cent of the issued share capital and all whom have indicated their help for the proposal.
‘The strategic assessment is ongoing, and the board isn’t actively in search of a number of potential gives for the corporate.’
Investors will vote on the proposal at a rare common assembly.
Chair Robert Naylor added: ‘Investors in Hipgnosis Songs Fund overwhelmingly voted for change after they rejected the continuation of the corporate and the proposed sale of sure music belongings.
‘From our shareholder session, core to the requirement for change is addressing the decision possibility held by our funding adviser, Hipgnosis Songs Management.
‘This not solely acts as a structural battle between the pursuits of our shareholders and the funding adviser, but in addition creates a major deterrent to potential bidders for the corporate’s belongings thereby miserable the worth of the corporate.
‘It is in opposition to this backdrop that we’re proposing to alter our articles to permit potential bidders to place ahead their proposals for the corporate’s belongings, with important price safety, if supported by a board suggestion to shareholders.
‘We are happy, having mentioned this proposal with lots of our largest shareholders, that they’re supportive of the board’s efforts to unlock the complete worth from the corporate’s belongings.
‘The newly constituted board believes it’s important to attempt to stage the enjoying area so shareholder worth could be maximised.’
