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(Alliance News) - Hipgnosis Songs Fund Ltd on Monday withdrew a previously declared interim dividend, explaining that its independent portfolio valuer had "materially reduced" its expectations for retroactive royalty payments in the US.
Hipgnosis shares were down 15% at 62.80 pence early Monday in London.
Back in September, the London-based music intellectual property rights investor had declared a 1.3125 pence per share dividend for April to June, its financial first quarter.
On Monday, Hipgnosis said 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.
To ensure compliance with a covenant of its revolving credit facility, Hipgnosis will withdraw the dividend payment. It also will discuss the royalties issue with its lenders.
"Subject to satisfactory conclusion to discussions with lenders, the Board expects to declare and pay future dividends as targeted," Hipgnosis said.
By Tom Waite, Alliance News editor
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