As a result of the failed continuation vote of Hipgnosis Songs Fund (SONG), where 83% of shareholder votes were cast against the resolution, the newly constituted board is continuing its strategic review looking at all options to be considered for the future of the company, with the aim of maximising value for shareholders. As announced on 11 December 2023, the company has appointed Shot Tower Capital, LLC to conduct due diligence on the company’s assets as part of this review, work which is ongoing.
Further to the strategic review, on 18 January 2024, the new board announced its proposal to amend the articles of the company, by way of a special resolution (which we discussed here), to enshrine the payment of a fee, at the board’s discretion, of up to £20 million (in aggregate) by the company to any prospective bidder(s) who approaches the board seeking to make an acquisition of the assets. The proposal is being recommended by the board to ensure that prospective offerors are not deterred from seeking to engage with the company regarding a recommendable offer as a result of the terms of the investment adviser’s call option.
The board has requested for the investment adviser, Hipgnosis Songs Management, which is majority owned by funds managed and/or advised by Blackstone, to unconditionally remove the call option from its investment advisory agreement with immediate effect to act in the best interests of shareholders as a whole. This request has so far been refused.
Furthermore, the board notes the statements made by two independent research reports, which assert that the 29 catalogues proposed to be sold to Hipgnosis Songs Capital, a fund also managed by the investment adviser, which is majority owned by funds managed and/or advised by Blackstone, were growing at materially higher rates to the overall portfolio and were therefore “cherry picked” for sale to Hipgnosis Songs Capital. The board is investigating whether this is the case, and if so, whether this was properly and fully disclosed to the previous board in the investment papers, which included the recommendation provided by Hipgnosis Song Management, and therefore whether the previous board were provided with the relevant information to enable them to make a decision in the best interests of shareholders.
SONG : Hipgnosis Songs Fund provides strategic review update