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(Alliance News) - Hipgnosis Songs Fund Ltd on Tuesday said it did not receive a superior offer for the USD440 million disposal of a portfolio.
The music intellectual property rights investor said it was in contact with 17 parties, eight of which signed non-disclosure agreements. It said one first round non-binding offer was received, though an official bid was not forthcoming.
“The board received feedback through the process that a number of the parties assessed that they could not justify paying a higher price than the offer from the buyer for the first disposal,” Hipgnosis said.
In September, Hipgnosis said it is selling off 29 of its music catalogues for USD440 million to help fund a share buyback programme and reduce its debt.
It is selling off the catalogues to Hipgnosis Songs Capital, which is a partnership between HSF's investment adviser Hipgnosis Song Management Ltd and funds advised by New York-based alternative asset manager Blackstone Inc.
Shareholders will vote on the disposal on Thursday.
Hipgnosis, which last week pulled a previously declared payout, has faced pressure from Asset Value Investors.
Asset Value Investors, which manages London-listed AVI Global Trust PLC, on Monday said a "reset" is needed at Hipgnosis. Asset Value Investors manages a 5% stake in Hipgnosis.
AVI encouraged shareholders to vote against the disposal and also oppose a measure to allow for Hipgnosis Songs Fund’s continuation. The continuation vote is also on Thursday. Hipgnosis has encouraged shareholders to vote in favour of it.
HSF has previously said that if its continuation is not passed, it would be "required to put forward proposals for the reconstruction, reorganisation or winding-up of the company to the shareholders for their approval within six months".
Asset Value Investors last week said that should not be interpreted as 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.
HSF last week Thursday kicked off a strategic review.
Among the things the music intellectual property rights investor will consider are "future management arrangements of the company".
It ruled out "any offer for the company, recommended or otherwise".
Hipgnosis said at the time that it has begun the process of identifying a new chair, appointing an executive search firm. It is currently chaired by Andrew Sutch.
The decision to undertake the strategic review followed "extensive engagement over recent weeks with shareholders".
"These meetings highlighted a continued belief in the company's portfolio and growth prospects of the asset class as well as the need for changes by the company in order to deliver value for shareholders," the firm said.
Shares in Hipgnosis Songs were down 3.2% at 73.00 pence each in London on Tuesday morning.
By Eric Cunha, Alliance News news editor
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