Following its AGM and EGM, the board of Hipgnosis Songs Fund announced that the company has failed to pass its continuation resolution. As a result, the board will put forward proposals for the reconstruction, reorganisation or winding-up of the company to shareholders for their approval within the next six months.
- 71.5% of those voting opposed the re-election of the chairman
- 83.2% of those voting opposed the continuation of the company
- 84.1% of those voting opposed the proposed disposal of part of the portfolio
[QD Comment: “Although a way forward needs to be found, the announcement brings some clarity following what has been a drawn out period of controversy for the fund including the resignation of its chair and the withdrawal of its dividend after a dramatic miscalculation of royalty payments, which we wrote about here. There have long been concerns around the reliability of both the company’s NAV and the stability of its cashflows, and several prominent investors have called for a vote against continuation, most recently, Asset Value Investors (AVI), whose fund, AVI Global Trust (AGT) owns a 5% share of SONG (you can read their open letter to fellow shareholders here).
We have also commented on a number of occasions our view that shareholders could be best served by voting against continuation, as we also felt that the ongoing operation of the fund was untenable under its current structure. We believe shareholders were right to vote against the proposed asset sale although there remain are question marks over how the company will meet its debt obligations and these need to be addressed. However, if this can be done, the outlook could be positive given the ongoing tailwinds driving the sector, particularly as streaming revenues continue to increase. Hopefully, for shareholders, there will be progress following this announcement that may offer an opportunity for them to realise the considerable potential value that remains in the fund, possibly through a portfolio sale at a better valuation or possibly through replacing the current management and operating the fund for the long term in a way that maximises income and shreholder value.”]
SONG : Hipgnosis Songs Fund fails continuation vote