Following the abrupt cancellation of a Hipgnosis Songs Fund (HSF) interim dividend – and as investors prepare to assemble at an annual meeting that will determine the entity’s fate – shares plummeted to a record low.
DMN covered the decision to nix the dividend (as well as execs’ explanation, centering on smaller-than-anticipated retroactive royalties) in detail yesterday. The far-from-ideal development represents the latest in a series of recent setbacks for Hipgnosis (LON: SONG), which two weeks ago placed the CEO of its overarching group on leave due to sexual assault allegations.
In the wake of the dividend news, Hipgnosis Songs Fund stock fell to an all-time-low value of 58 pence (currently 71 cents), the relevant London Stock Exchange profile shows. Ultimately, after improving to hover around 67 pence (82 cents) during trading on Tuesday, SONG finished at an even 69 pence (84 cents).
Despite marking a substantial boost from the record-low price, the day-end value is well beneath the 80 pence (97 cents) SONG was trading for one month back, the 90 pence ($1.10) it was worth at 2023’s start, and the £1.25 ($1.52) it was fetching throughout 2021.
Of course, the publicly traded Hipgnosis’ market share, at £810.17 million/$988.83 million, has experienced a corresponding falloff as well. On the 16th, investors executed 903 trades involving SONG, the highest single-day total since at least early September, according once again to the company’s profile. Plus, filings show several new changes in sizable stakeholders’ voting-rights percentages.
Bigger picture, even before the dividend was shelved and shares touched their lowest price to date, shareholders appeared poised to vote down the proposed $440 million sale of 29 HSF catalogs to the closely associated (and Blackstone-powered) Hipgnosis Songs Capital.
Proceeds would be used to buy back shares and to pay down HSF’s long-maxed-out credit facility, execs have signaled. The same tapped-out credit line has prevented the company (which can only accrue a certain amount of debt relative to the net value of its assets) from finalizing fresh deals; adjacent (but not publicly traded) entities like Hipgnosis Song Management and the aforesaid Hipgnosis Songs Capital have picked up the IP-acquisition slack during 2023.
Now, logic suggests that less-than-thrilled investors, a portion of whom had already been criticizing the potential sale’s price and perceived lack of transparency, are perhaps likelier to oppose the deal. This vote is expected to take place at one of two meetings scheduled for October 26th, according to a formal announcement published by Hipgnosis.
As initially mentioned, the other vote will determine the operational fate of Hipgnosis. Prior to the dividend debacle, investors seemed generally supportive (in the media, that is) about keeping HSF afloat – with some expressing concerns that dissolving the Fund could prompt third parties to snatch the involved assets at a discount. But the coming week or so will reveal whether said support has remained intact following the above-described occurrences and controversies.