Hipgnosis Songs Fund is proposing that the governing Articles of the company are amended, to enshrine the payment of a fee, at the board’s discretion, of up to £20m (in aggregate) by the company to any prospective bidders who approach the board seeking to make an acquisition of the company’s assets on terms that the board thinks it can recommend to shareholders.
The new board is conducting a strategic review, looking at all options for the future of the company, with the aim of maximising value for shareholders. It talked to shareholders holding more than 60% of the shares. One of the key themes of these consultations was shareholders’ concern around the investment adviser’s “call option”, which gives it the right to purchase the portfolio upon termination of the investment advisory agreement. Shareholders have told the board that the call option constitutes a material conflict of interest for the investment adviser and acts as a significant deterrent to any third-party potential offerors who might otherwise seek to acquire the company or its assets. The board believes that the option depresses the potential value of the company.
The discretionary fee could be used to help offset the expenses incurred by a bidder who tried to acquire the company but ultimately failed because of the call option.
The board therefore proposes that the Articles of the company are amended, by way of a special resolution, to:
- enshrine the payment of a fee of up to £20 million (in aggregate) by the Company, at the Board’s discretion, to any prospective offeror(s) who may approach the Board seeking to make an acquisition of one or more of its subsidiaries which own the majority of the Company’s music assets, and/or all or some of the Company’s assets, on terms recommendable by the Board to Shareholders; and
- the extent permissible by UK Takeover Code issued by the Panel on Takeovers and Mergers, as amended from time to time, authorise the payment(s) and/or reimbursement(s) by the Company of up to a maximum aggregate amount of £20 million to bona fide prospective offeror(s) for the entire issued share capital of the Company on terms recommendable by the Board to Shareholders
Shareholders, holding in aggregate more than 35% of the issued share capital have indicated their support for the proposal. The strategic review is ongoing, and the board is not actively seeking one or more potential offers for the company.
SONG : Hipgnosis dangles £20m carrot for prospective bidders