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(Alliance News) - Hipgnosis Songs Fund Ltd's investment adviser, Hipgnosis Song Management, on Monday hit back against claims that it was to blame for the "many issues" affecting the company.
HSM said it had "repeatedly been blamed" for issues which were not its responsibility under the terms of its Investment Advisory Agreement with Hipgnosis Songs Fund.
It pointed out Hipgnosis Songs Fund has "multiple specialist advisers" to advise in their respective areas of expertise.
HSM said it had previously sought to address this "in private" as it felt it was in the best interests of shareholders to minimize public commentary.
But given recent developments "we feel it is now important to make our position clear", the company added.
"Based on extensive legal advice we are confident that [Hipgnosis Songs Fund] has no legal grounds to terminate our relationship without being subject to HSM's contractual rights contained in the IAA."
HSM said it has explained this in detailed legal correspondence with Hipgnosis Songs Fund but has not received a reply.
"HSM will vigorously protect its interests should the company purport to terminate the IAA," it remarked.
HSM said this would include include the right to exercise the call option to acquire Hipgnosis Songs Fund's assets.
Hipgnosis Songs Fund is in dispute with its investment adviser, alleging misconduct against Hipgnosis Songs Management and its founder Merck Mercuriadis.
The dispute was sparked by an arrangement, later rejected by Hipgnosis Songs Fund shareholders, to sell part of the fund's portfolio to a joint-venture between Hipgnosis Songs Management and Blackstone. This triggered board changes at the fund.
Hipgnosis Songs Fund is the subject of bid interest from at least two competing parties.
On Sunday, Hipgnosis Songs Fund said it would be "minded" to accept an official cash bid from Blackstone Inc, should one be forthcoming.
Hipgnosis Songs Fund, a music investment company, which has bought up the royalty rights to song catalogues of artists including the Red Hot Chili Peppers, Journey and Neil Young, had accepted a USD1.40 billion bid from Alchemy Copyrights on Thursday. Alchemy trades as Concord Chorus Ltd.
The Blackstone bid values each Hipgnosis Songs Fund share at USD1.24 each, the company overall at USD1.50 billion.
"The board, having reviewed the proposal with its financial adviser, Singer Capital Markets, has indicated to Blackstone that the proposal is at a value that it would be minded to recommend to its shareholders should Blackstone announce a firm intention to make an offer pursuant," Hipgnosis Songs Fund said.
On Tuesday, Sky News reported BMG, which is wholly owned by the German media and publishing giant Bertelsmann, approached Hipgnosis Songs Fund several weeks ago with an indicative offer.
City sources said that BMG's proposal was pitched significantly below those of both Blackstone and Concord Music, Sky said.
Sky said BMG's interest in a takeover of Hipgnosis Songs Fund is said to have diminished, and insiders said they did not expect it to compete with the other suitors.
https://news.sky.com/story/kylie-music-label-bmg-in-rival-approach-for-hipgnosis-13120881
Shares in Hipgnosis Songs Fund rose 11% to 101.80 pence each in London on Monday afternoon.
By Jeremy Cutler, Alliance News reporter
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