Hipgnosis Songs Fund Ltd, a renowned music royalty fund, has made a significant announcement today, declaring the suspension of dividend payments until the commencement of its new fiscal year. This strategic move is aimed at ensuring the fund maintains sufficient cash reserves following a comprehensive review of its financial standing.
Just last month, Hipgnosis shareholders rejected a $440 million deal to sell 29 of the fund’s catalogues, leaving the company in a precarious position. Consequently, the firm is now required to present a proposal for reorganization or winding up within the next six months, as shareholders also expressed their dissatisfaction with the fund’s existing structure.
Hipgnosis Songs Fund further disclosed that it anticipates a rise in the catalogue bonus provision, with an increase of approximately $23 million, totaling $68 million as of September 30th. To facilitate these payments, the fund will utilize its operating cash flow.
In light of these developments, the fund has revealed that 10 out of its 146 catalogues may no longer meet the “performance hurdles” established in the respective acquisition agreements. This underscores the significance of the recent restructuring efforts undertaken by Hipgnosis to address the concerns raised by its shareholders.
The suspension of dividend payouts, while a prudent financial decision, underscores the challenges faced by Hipgnosis Songs Fund Ltd in navigating its current circumstances. It remains to be seen how the fund will adapt and reposition itself to address the needs and expectations of its shareholders as it heads into the new fiscal year.
