The board of the Hipgnosis Songs Fund says it has been unable to find a better offer for the collection of hits it agreed to sell to a sister fund for $440 million (£359 million), as a crucial vote on its future approaches.
The fund known for buying up the rights to pop stars’ work last month revealed plans to offload songs by artists such as Nelly, Rick James and Shakira to another fund, owned by Blackstone and managed by a team led by Hipgnosis founder Merck Mercuriadis.
The Hipgnosis fund said it sold the songs to return cash to shareholders because its share price didn’t reflect the value of its portfolio. But the deal drew criticism from some shareholders, who raised questions over the price and the connections between the two funds.
That prompted the fund’s board to shop the songs around, contacting 17 different parties in search of a better offer. But today it said it has not received a binding offer, as possible bidders said they “could not justify paying a higher price” than the original deal.
Shareholders will vote on the deal on Thursday, alongside a vote on continuation of the fund itself. Relations with shareholders weren’t helped when Hipgnosis revealed earlier this month that it would have to pull its dividend, because a lower-than-expected windfall from a recent US Copyright Royalties Board decision on streaming royalties meant it couldn’t hand the money back to shareholders without breaching agreements with its lenders.
In an attempt to fight off a revolt, the fund launched a strategic review last week, which will look at a range of options including kicking out Mercuriadis.
Shares lost as much as 3.5% today to 72.8p. That values the fund at £878 million, or less than half of the most recent assessed value of its portfolio.
