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Interesting that after todays announcement the share price has come back up, despite there being no dividends for a while. Seems to be a lot of buyers at these prices.
If I've understood the rns correctly, when Hipgnosis bought the catalogues there was provision for extra payments if the catalogue performed above a certain hurdle. Some of these are now due for payment and there might be some due at a later date which means no dividends will be paid this financial year. Before buying this share I did some research but didn't spot this. Was this information publically available before today?
Good summary from AJ Bell.
"Russ Mould, investment director at AJ Bell, said: "Just when you thought it couldn't get any worse for Hipgnosis Songs Fund's shareholders, along comes another bit of bad news. The music royalty vehicle was originally pitched as an investment that was uncorrelated with markets, offering the potential for capital growth and a steady stream of generous dividends. It has now failed on both accounts.
"Having backtracked on a recently declared dividend to avoid breaching banking covenants after realising it would get less than expected cash flow from certain royalties, Hipgnosis has now said it will not pay dividends for the rest of its financial year as it needs to set aside cash to pay for bonus payments on certain royalties triggered by meeting specific performance criteria.
"Understandably, investors will be peeved at this news, particularly as it has dragged the share price back close to its all-time low.
"The investment company is in a real mess and big decisions need to be made about its future. The board needs to act fast to determine whether some of the portfolio needs to be sold to raise cash to help pay down debt, new people need to be found to manage the assets or if the business should simply be wound up."
I guess the income funds will be dumping this if they haven't already.
Best hope must be a buyout by someone who can run it better.
You naughty shareholders - you voted against us so now we're going to stop paying you dividends.
See how you like that!
So following latest update the shares are down another 6%.. But looks like a better story than recent updates on royalties side. Dividend miss disappointing but should be back next year. Think I've missed the boat tk sell so looks like I'll have to hang in there. Anybody know any more
And on a more positive note:-
https://www.recordoftheday.com/news-and-press/global-creators-collections-grow-by-a-record-267-to-eur121-billion-in-2022-paris
Yes, those copyrights really do have a value!
If I remember correctly, the musicians were underpaid and the royalty board recalculated giving them a boost (after SONG bought them), then it seems this number has been reduced but still above the original royalties.
The London-listed company said an independent valuer of its portfolio had “materially reduced” its assessment of industry-wide royalty payments after a decision last year by the US Copyright Royalty Board to recalculate the rate.
So a group of musicians sold the rights to their catalogues of music for top dollar, then the copyright royalty board reduces earnings a few months later ( Was that anticipated) Then the lower priced assets after all the musicians had got their money out pre price review.This needs investigating.If this was on the cards isn’t it a form of insider trading ? Just asking !
What did this team pay for the dings to their friends in the industry ? Are they selling them for less than they paid ? Or more than they paid ? That’s a very important point ?
These block of songs will have an expected income stream which is important…If they are in the market they must not sell if they have lost confidence they should go away.
Only sell the company not the assets….Or someone will be cherry picking
There is subtly in the wording. No-one was prepared to offer more than the existing offer.
Nobody else interested in buying the portfolio - does this confirm it was overvalued?
Interesting to see AVI putting their money where their mouth is, they've moved from 3.13% ownership to 5.01%, with 1209m shares in issue I make that about 22m shares. The timing is interesting, 13th October before the bombshell, so maybe they bought at 74p or lower over the counter. So it could have been about £16m or less.
"The dividend rate was noted as 1.1325 pence per share instead of the correct figure of 1.3125 pence per share"
The nerves showing??
AVI has come out against continuation. That story also has a good summary of the situation.
https://www.lse.co.uk/news/SONG/update-hipgnosis-songs-fund-investor-backs-rejecting-continuation-jvtv0mvn7sfulv9.html
Judging by what happened with Round Hill Music Royalty fund (67% premium to share price take over), there's a lot of value in the assets. I haven't been directly involved in the closure of an IT but as far as I can tell it isn't a fire sale just a long slow painful process of selling. So I'm gambling on a close to NAV return.
I wonder if Alchemy will put in a bid.
I'm holding too. I'd even consider a top-up if I had any spare cash. However I'm still a concerned what else they have mis-valued. It doesn't inspire confidence.
While I agree a 50% discount is probably excessive, I'm not expecting to get anything close to the stated NAV in the fire sale which now seems inevitable.
"the NAV then it will be a 9.75/2391*100 = 0.4% reduction"
Be that as it may: but why cancel the dividend and why make a statement that future dividend payments will require approval of the lenders if it is indeed going to be just a 0.4% of the NAV? Something does not add up here.
So it looks like the valuers have made a £9.75m mistake, assuming this counts towards the NAV then it will be a 9.75/2391*100 = 0.4% reduction. As far as I can see the divi will be recalculated, maybe a bit less. The discount widens to more than 50% so either a take over or assets sale if the continuation vote fails, which lets face it there's no chance of it succeeding at a 50% discount. I'm holding.
Mis-managed dog turd (Should say)
It’s a mid-managed dogs turd unfortunately
Could today's screw up on the valuation make a failed continuation vote and wind up more likely? (On the other hand the wind up value is less certain based on this.)