Hipgnosis Songs EGM

On 14 September 2023, Hipgnosis Songs Fund Limited (“Hipgnosis” or the “Company”) announced that it had entered into a transaction to sell a portfolio of 29 music catalogues to Hipgnosis Songs Capital, the trading name of Hipgnosis SC IV (Delaware) L.P. (the “Buyer”) for aggregate cash consideration of $440 million (the “Transaction”).

Further to such announcement, the Company announces that the circular relating to the Transaction (the “Circular”) has been approved by the UK Financial Conduct Authority and has been published today. The Circular will shortly be posted to the Company’s shareholders that have elected to receive hard copies of shareholder documentation.

Following the announcement on 14 September 2023, the Board has continued to engage with shareholders on the strategic rationale and merits of the Transaction. The Board and the Investment Adviser firmly believe that the Company has a unique portfolio of iconic, culturally significant songs that will deliver strong long-term value as they benefit from the structural tailwinds in the music industry. Furthermore, the Board believes that the Investment Adviser’s approach to Song Management should enable the Company to outperform the wider music market. This has been evidenced by the 44% total return, including right to income, transaction fees and expected taxes, realised since acquisition on the Transaction. Furthermore, the Board and the Investment Adviser are committed to ensuring that this value is achieved for shareholders by a re-rating of the share price and are determined to deliver on the ongoing opportunity of the Company.

Against this backdrop, the Board and Investment Adviser have included in the Circular the following actions which will provide shareholders with greater opportunities to realise value in a shorter timeframe should the share price re-rating not occur:

·      The Board has resolved that, if the Continuation Resolution is approved at the 2023 Annual General Meeting, the Directors will put a further Continuation Resolution to Shareholders at an extraordinary general meeting in January 2026, again at the Annual General Meeting to be held in 2028 and at every third Annual General Meeting thereafter;

·      The Board and the Investment Adviser have agreed certain further amendments to the Investment Advisory Agreement between the Company and the Investment Adviser such that (subject to the Continuation Resolution being passed) the Investment Advisory Agreement will be terminable by the Company on 12 months’ notice; and

·      If the Company’s share price stands at an average discount to Operative NAV (as determined at the time of publication of the interim report for the period to 30 September 2024) of 10% or more, measured on average over the month of January 2025, the Board intends to serve notice to terminate the Investment Advisory Agreement.  The Board may withdraw the notice before the effective date of termination if it considers it to be in the interests of shareholders to do so.

Andrew Sutch has informed the Board that he will step down as Chair and retire as a director of the Company once a suitable replacement is found and, in any event, at or before the Company’s annual general meeting in 2024. The Company will now commence a process to recruit a new Chair. In addition, Andrew Wilkinson has also informed the Board that he intends to retire as a director before the end of 2023, thereby reducing the Board to five directors. The Board intends to appoint Cindy Rampersaud, who joined the Board as an Independent Non-Executive Director on 1 August 2023, to the role of chair of the Company’s Audit and Risk Management Committee upon Andrew Wilkinson’s retirement.

The Transaction constitutes a related party transaction for Hipgnosis under the Listing Rules and completion of the Transaction is conditional upon, among other things, the approval of the Company’s shareholders at a general meeting of the Company. Accordingly, the Circular contains a notice convening an extraordinary general meeting of the Company which is to be held at 10:30am on 26 October 2023 at United House, 9 Pembridge Road, Notting Hill, London, W11 3JY, United Kingdom (the “Extraordinary General Meeting”) at which an ordinary resolution will be proposed for the Company’s shareholders to approve the Transaction.

In addition, the terms of the Transaction include a “Go-Shop” provision, pursuant to which the Board is entitled to solicit alternative offers for a period of 40 days from 14 September 2023, and the Board has recently confirmed that credible third parties are already engaged in this Go-Shop process.

The Circular also incorporates a notice convening the annual general meeting of the Company which is to be held at 10:00am on 26 October 2023 at United House, 9 Pembridge Road, Notting Hill, London, W11 3JY, United Kingdom (the “2023 Annual General Meeting” and, together with the Extraordinary General Meeting, the “Meetings”) at which resolutions will be proposed for the Company’s shareholders to approve, amongst other things, an on-market share buy back programme and the continuation by the Company of its business as a closed-ended investment company.

If shareholders are unable to attend and vote in person, the directors of the Company strongly recommend that shareholders vote by proxy as soon as possible. Further information as to how to vote by proxy can be found in the notices of the Meetings contained in the Circular.