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(Alliance News) - Under pressure Hipgnosis Songs Fund Ltd on Thursday said two key votes on the music intellectual property rights investor's future, including a poll on its continuation, did not go its way.
In addition, shareholders voted against the re-election of the firm's Chair Andrew Sutch, though he had previously announced he would step down.
Roughly 83% of votes cast were against the company's continuation. Hipgnosis said it will now table put proposals for the reconstruction, reorganisation or winding-up of the fund.
"These proposals may or may not involve winding-up the company or liquidating all or part of the company's existing portfolio of investments," Hipgnosis said.
The proposals must be put forward within six months.
In addition, Hipgnosis said around 84% of votes rejected a planned portfolio sale. In September, Hipgnosis said it was selling off 29 of its music catalogues for USD440 million to Hipgnosis Songs Capital.
Hipgnosis Songs Capital is a partnership between HSF's investment adviser Hipgnosis Song Management Ltd and funds advised by New York-based alternative asset manager Blackstone Inc.
Finally, about 72% of voters rejected the re-election of Sutch as chair. He has stepped down immediately as a result.
"The board is at an advanced stage of an expedited process to appoint a new chair," Hipgnosis said.
Hipgnosis, which last week pulled a previously declared payout, has faced pressure from shareholders recently.
Asset Value Investors, which manages London-listed AVI Global Trust PLC, last week Monday said a "reset" is needed at Hipgnosis. Asset Value Investors manages a 5% stake in Hipgnosis.
AVI had encouraged shareholders to vote against the disposal and the continuation. AVI believed that a vote against the continuation would not mean a fire sale of HSF assets.
HSF last week Monday said it pulled the previously declared interim dividend because it now expects to receive "significantly lower retroactive payments" of songwriter royalties for 2018 to 2022. Due to the expected decision by the US Copyright Royalty Board for that period, Hipgnosis plans to reduce its retroactive accrual to USD9.9 million from the USD21.7 million it had accrued at the end of March.
It also initiated a strategic review last week, which will consider the "future management arrangements of the company". It had ruled out "any offer for the company, recommended or otherwise".
Senior Independent Director Sylvia Coleman said on Thursday: "The board and the investment adviser have each engaged widely with investors over recent months. While shareholders have not supported our proposed transaction or the continuation vote, it is clear that they share our belief in the inherent quality and potential of these assets. The directors are now expediting the appointment of a new chair who will drive the strategic review we have already announced, with a clear focus on delivering improved shareholder value."
Hipgnosis shares were 1.7% higher at 76.29 pence each in London on Thursday afternoon.
By Eric Cunha, Alliance News news editor
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