- The firm said sale was a 14.2 per cent discount to its valuation at 30 September
Hipgnosis Songs Fund has sold a large number of song rights at a significant discount as the embattled music fund continues to raise cash.
The investment trust told investors on Monday it has completed the sale of around 20,000 songs for $23.1million (about £18.4million), roughly 1 per cent of its total assets, reflecting a 14.2 per cent discount to its valuation at 30 September.
Hipgnosis, which owns the rights to the music of a broad array of artists including Shakira to Neil Young, faces a battle for its survival amid lawsuits, high levels of debt and shareholder rebellions.
The music investment trust said in a trading update it has completed the sale of around 20,000 songs for around $23.1million (around £18.4million)
Co-founded by Merck Mercuriadis and Chic guitarist Nile Rodgers in 2018, Hipgnosis offers investors the chance to make money from the royalties of tracks by famous artists.
The firm’s market capitalisation has plummeted over the past couple of years due to interest rate rises making royalties comparatively less attractive than other asset classes such as bonds.
It has accumulated excessive debts from spending more than $2billion buying catalogues from some of the world’s most famous musicians, including Neil Young, Blondie and the Red Hot Chili Peppers.
In an attempt to reduce debts and fund a share buyback, the group agreed in September to offload about 20 per cent of its entire portfolio for £372million to funds advised by asset manager Blackstone.
However, shareholders voted down the deal at an extraordinary general meeting on 26 October, and also decided against allowing the company to operate as an investment trust.
A short time following the vote, Hipgnosis told investors they would not receive dividends for at least six months so that it could fund catalogue bonuses and abide by debt covenants.
Last month, the firm along with co-founder Merck Mercuriadis were served legal proceedings by a company once owned by the Canadian.
The struggling music catalogues investor is accused of engaging in ‘a diversion of business opportunity’ from Hipgnosis Music Limited (HML) to the firm and its investment adviser, Hipgnosis Song Management.
The lawsuit, brought by HML on behalf of creditors, further claims the ‘company unlawfully assisted Mr Mercuriadis with, or received, this alleged diversion’, Hipgnosis told investors.
Mercuriadis, 60, was a director of HML until it was wound up in 2018.
Having listed at £1 five years ago, Hipgnosis Songs Fund shares were trading at 67.10p on Monday morning.
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