Shareholders of Hipgnosis Songs Fund overwhelmingly supported a board proposal that would pay a fee up to £20million to potential suitors to increase the appeal of bidding on its music assets.
A special resolution was passed at an extraordinary general assembly by 99.9% of shareholders, who hold the rights to artists from Shakira and Neil Young.
The decision is in response to a “call” option that Hipgnosis Song Management, the fund’s investment adviser, held. The fund’s 60-year-old founder, Merck Mercuriadis is the adviser, with Blackstone as its backer. Call option allows it to purchase the music portfolio of the fund if its agreement with them is terminated.
In recent months, the relationship between the management company of the fund and its investors has become strained after investors rebelled against the $440 million catalogue deal. This forced the board to be restructured and a strategic assessment was conducted.
The refusal of the bosses to remove the call option in the advisory agreement, which allows them to bid on the fund’s assets, has been a key point of contention.
The board is still focused on its strategic review and it’s looking at every option to maximize shareholder value, said Robert Naylor. He joined the board from Round Hill Music, which was acquired in November, after several members of the board had resigned following the shareholder revolt.
The share price of Hipgnosis Songs Fund increased by 1/4p or 0.3 percent to 65 1/4p.