RHM.L Regulatory News (RHM)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN (TOGETHER, THIS "ANNOUNCEMENT") IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY MEMBER STATE OF THE EEA (WITH THE EXCEPTION OF THE REPUBLIC OF IRELAND) OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL (EACH A "RESTRICTED JURISDICTION"). THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. THE SECURITIES DISCUSSED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN OR INTO THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN ANY RESTRICTED JURISDICTION.

This announcement is released by Round Hill Music Royalty Fund Limited and contains inside information for the purposes of the UK version of the Market Abuse Regulation (EC No. 594/2014).

24 June 2021

ROUND HILL MUSIC ROYALTY FUND LIMITED

("RHM" or the "Company")

Placing of C Shares

Proposed fundraise to acquire pipeline of catalogues

The Board of Round Hill Music Royalty Fund Limited is pleased to announce a placing of C Shares at an issue price of US$1 per C Share (the "Placing Price") under the terms of its Placing Programme as detailed in the prospectus published by the Company on 19 October 2020 and the supplementary prospectus published on 3 November 2020 (together the "Prospectus") (the "C Share Offer"). The C Share Offer constitutes a Subsequent Placing for the purpose of the Prospectus.

The Company intends to use the net proceeds of the C Share Offer to make acquisitions in its near- term pipeline of Copyrights in line with RHM's investment policy, where due diligence is well advanced.

Background

On 2 February 2021, the Board announced the Company's acquisition of the identified Pipeline Investments as detailed in the Prospectus by way of a two-step process. The first step comprised the acquisition of the assets of Round Hill Fund One excluding its shareholding in RH Carlin Holdings LLC ("Carlin") (the "First Investment") which was completed on 1 February 2021. The total cash consideration paid by the Company in respect of the First Investment was US$281,860,320 which represented 86 per cent. of the gross proceeds raised in the Company's IPO and subsequent placing. On 4 May 2021, the Board announced the completion of the second step and the acquisition of a 29.14 per cent. interest in Carlin (the "Second Investment"). The consideration for both the First Investment and the Second Investment represented the independent valuation of the assets acquired as at 30 June 2020.

The Company has fully invested the capital raised in the IPO and subsequent placing.

The Use of Proceeds

Round Hill, the Company's investment Manager, has identified, and is at an advanced stage of negotiation on, a pipeline of approximately US$120 million of investment opportunities (the "Advanced Pipeline")[1]. The Advanced Pipeline includes music publishing, master recordings and neighbouring rights from various iconic artists, songwriters and producers. The rights involved span the 1960s, 1970s and 1980s, and therefore fit comfortably with the Company's low risk strategy of investment in classic songs. The music has global acclaim, with some originating from the UK and is from the rock and pop genres. Some of the writers and artists involved have been recognised by the Grammy, Ivor Novello and Rock and Roll Hall of Fame committees.

The Board and Round Hill expect to deploy the net proceeds of the C Share Offer within three months of the closing of the C Share Offer.

Round Hill continues to see a strong medium-term pipeline of investment opportunities in excess of US$300 million.

Revolving Credit Facility

It is intended that the Company will utilise the remaining undrawn balance of its existing revolving credit facility (the "RCF") to assist in acquiring the Advanced Pipeline. The RCF allows the Company to borrow up to 25 per cent. of Economic NAV[2], calculated at the point of draw down. The term of the RCF is 5 years and the borrowing margin is 225bps over the relevant reference rate and a non-utilisation charge of 37.5bps.

The C Share Offer

Under the terms of the Articles, the C Shares will not convert into Ordinary Shares until (inter alia) at least 80 per cent. of the net proceeds of the C Share Offer have been invested in accordance with the Company's investment policy (or, if earlier, 12 months after the date of the issue of the C Shares). The assets representing the net proceeds of the C Share Offer will be accounted for and managed as a distinct pool of assets until their conversion date. By accounting for the net proceeds of the C Share Offer separately, Ordinary Shareholders will not participate in a portfolio containing a substantial amount of uninvested cash before the conversion date of the relevant C Shares.

The basis on which the C Shares issued under the C Share Offer will convert into Ordinary Shares is such that the number of Ordinary Shares to which holders of those C Shares will become entitled will reflect the relative net asset values per share of the assets attributable to the C Shares and the Ordinary Shares. As a result, the Economic Net Asset Value per Ordinary Share can be expected to be unchanged by the issue and conversion of any C Shares issued under the C Share Offer, and the Economic Net Asset Value of the Ordinary Shares will not be diluted by the expenses of the C Share Offer, which will be borne by that C Share pool alone. For the avoidance of any doubt, any income attributable to the C Shares issued under the C Share Offer will be accrued and included in the C Share net asset value on the conversion of those C Shares. The value of the existing assets in the current portfolio attributable to the Ordinary Shares will include all accrued income attributable to the Ordinary Shares and will also take into account all relevant factors which may affect the valuation of the existing assets attributable to the Ordinary Shares as at that date.

On conversion, the new Ordinary Shares issued through the conversion of the relevant C Shares, will rank pari passu with the existing Ordinary Shares in issue on the date of conversion.

The Board's current expectation is that the C Shares being issued pursuant to the C Share Offer will be converted into Ordinary Shares within 6 months of issue and the Board's current intention is for any income accruing to this C Share pool of assets to form part of the net assets of this C Share pool of assets for the purposes of conversion. Notwithstanding the foregoing, the Board reserves the right to declare and pay a dividend in relation to the C Shares in order, without limitation, to ensure that the Company continues to qualify as an investment trust.

Further details

Cenkos Securities plc ("Cenkos") is acting as sole bookrunner and financial adviser to the Company in connection with the C Share Offer. Cenkos will today commence a bookbuild process in respect of the C Share Offer at the Placing Price. The C Share Offer will be non-pre-emptive pursuant to the terms set out in the Prospectus and is expected to close no later than 15 July 2021 but may be closed earlier or later at the absolute discretion of Cenkos and the Company.

The C Share Offer is conditional, inter alia, on the C Shares being admitted to trading on the Specialist Fund Segment of the Main Market for listed securities of the London Stock Exchange ("Admission"). Subject to Admission becoming effective, it is expected that settlement of subscriptions by placees in respect of the C Shares, and trading in the C Shares, will commence at 8.00 a.m. on 20 July 2021, or such later time and/or date as may be announced by the Company after the close of the C Share Offer.

The C Share Offer is conditional on the minimum gross proceeds of the C Share Offer being US$50 million (or such lesser amount as the Company, Round Hill and Cenkos may agree) being raised.

The C Share Offer is not underwritten. The C Share Offer may be scaled back by the Company for any reason, including where it is necessary to scale back allocations to ensure the net proceeds of the C Share Offer align with the Company's acquisition pipeline. Details of the number of C Shares to be issued pursuant to the C Share Offer will be determined by the Board (following consultation with Cenkos and Round Hill) and will be announced as soon as practicable after the close of the C Share Offer.

The Placing Price is US$1 per C Share.

By choosing to participate in the C Share Offer and by making an oral and legally binding offer to subscribe for C Shares, investors will be deemed to have read and understood this Announcement and the Prospectus in their entirety and to be making such offer on the terms and subject to the conditions of the C Share Offer (a 'Subsequent Placing' under the Placing Programme) in Part 9 of the Prospectus, and to be providing the representations, warranties and acknowledgements contained therein.

A copy of the Prospectus is available on National Storage Mechanism at: https://data.fca.org.uk/a/nsm/nationalstoragemechanism as well as on the Company's website at www.roundhillmusicroyaltyfund.com.

Unless the context otherwise requires, capitalised terms used in this Announcement have the meanings given to them in the Prospectus.

EXPECTED TIMETABLE

The dates and times specified above are subject to change. In particular, the Directors may (with the prior approval of Cenkos) bring forward or postpone the closing time and date for the C Share Offer. In the event that a date or time is changed, the Company will notify persons who have applied for C Shares by post, by electronic mail or by the publication of a notice through a Regulatory Information Service.

References to all times are to London times unless otherwise stated.

Dealing codes

Commenting on the C Share Offer, Trevor Bowen, Chair of the Company said:

"We are delighted to announce RHM's C Share Offer today which is being launched to take advantage of the extremely compelling acquisition pipeline, assembled by Round Hill, our Investment Manager. We believe the target acquisitions will be accretive to our portfolio returns and further diversify the world class list of catalogues already amassed by the team. This opportunity to expand the size of the Company will also provide further economies of scale that will be beneficial for all shareholders. The highly experienced team at Round Hill are not simply asset gathers but rather asset managers and therefore we will aim to raise proceeds sufficient to acquire the most compelling acquisition opportunities available." 

Josh Gruss, CEO of Round Hill commented:

"Over the last few months since the Company's IPO, we have seen our pipeline of potential acquisition deals continue to grow rapidly. We believe there are a number of near-term compelling opportunities with catalogues connected to timeless artists that would provide long term sustainable revenue for RHM and provide further scale and diversification for shareholders. Having fully deployed the proceeds from the IPO and subsequent placing, it provides a strong track-record for further equity raises. As asset managers we continue to ensure that there is strong capital discipline whilst taking advantage of any attractive acquisitions that we identify.

The present moment represents a landmark time in our sector for new acquisition opportunities. However, from our ten years of experience, remaining highly selective towards acquisition multiples with an ongoing firm discipline on valuation remains, in our view, a key aspect to providing long term returns for investors."

Enquiries

Disclaimer

This Announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any C Shares referred to in this Announcement only on the basis of information (including terms and conditions) contained in the Prospectus published by the Company (and in any other supplementary prospectus) and not in reliance on this Announcement. Copies of the Prospectus are, subject to any applicable law, available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website.

This Announcement is not an offer to sell or a solicitation of any offer to buy the C Shares in the United States, Australia, Canada, the Republic of South Africa, Japan, or any member state of the EEA (with the exception of the Republic of Ireland) or in any other jurisdiction where such offer or sale would be unlawful.

This communication is not for publication or distribution, directly or indirectly, in or into the United States of America. This communication is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

The Company has not been and will not be registered under the U.S. Investment Company Act of 1940 (the "Investment Company Act") and, as such, holders of the C Shares will not be entitled to the benefits of the Investment Company Act. No offer, sale, resale, pledge, delivery, distribution or transfer of the C Shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act.

In the United Kingdom, this communication is being distributed only to, and is directed only at, qualified investors as defined under Article 2 of the Prospectus Regulation: (i) who have professional experience in matters relating to investments who fall within the definition of "investment professional" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) who are high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order, and (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). Any investment or investment activity to which this communication relates is available only to and will only be engaged in with such persons. For the purposes of this provision the expression "Prospectus Regulation" means the UK version of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended by The Prospectus (Amendment, etc) (EU Exit) Regulations 2019.

This communication is only addressed to, and directed at, persons in the Republic of Ireland who are "qualified investors" within the meaning of Article 2(e) of the EEA Prospectus Regulation. For the purposes of this provision, the expression "EEA Prospectus Regulation" means Regulation (EU) 2017/1129. This communication must not be acted on or relied on in any other member state of the EEA.

Cenkos, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and for no‐one else in connection with the matters described in this Announcement and will not regard any other person (whether or not a recipient of the Prospectus) as its client and will not be responsible to anyone for providing the protections afforded to its clients or providing any advice in relation to the matters contained herein.

The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of the Company. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the C Shares or the Ordinary Shares into which they will convert.

This Announcement may not be used in making any investment decision. This Announcement does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This Announcement does not constitute and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this Announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this Announcement or its completeness.

Nothing in this Announcement constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient.

The information and opinions contained in this Announcement are provided as at the date of this Announcement and are subject to change and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, Round Hill, Cenkos or any of their affiliates or by any of their respective officers, employees or agents in relation to it. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this Announcement or on its completeness, accuracy or fairness. This Announcement has not been approved by any competent regulatory or supervisory authority.

The Company has a limited trading history. Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the returns set out in this Announcement.

Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this Announcement nor, unless previously published by means of an RIS announcement, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

This Announcement may include statements that are, or may be deemed to be, "forward‐looking statements". These forward‐looking statements can be identified by the use of forward‐looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this Announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward‐looking statements.

Forward‐looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Prospectus. These forward‐looking statements speak only as at the date of this Announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations (including under the Prospectus Regulation Rules), the Company, Round Hill and/or Cenkos expressly disclaim any obligations or undertaking to update or revise any forward‐looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the UK version of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended by The Prospectus (Amendment, etc) (EU Exit) Regulations 2019 and the UK version of Directive 2014/65/EU on markets in financial instruments, Regulation (EU) No. 600/2014 on markets in financial instruments, and any secondary legislation, rules, regulations and procedures made pursuant thereto up to 31 December 2019, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended.

None of the Company, Round Hill and/or Cenkos, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this Announcement, including the truth, accuracy or completeness of the information in this Announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the Announcement or its contents or otherwise arising in connection therewith. The Company, Round Hill and Cenkos, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this Announcement or its contents or otherwise arising in connection therewith.

In accordance with the UK version of Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products and its implementing and delegated acts, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended by The Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit) Regulations 2019, a Key Information Document in respect of the C Shares is being prepared by Round Hill and will be available to investors at www.roundhillmusicroyaltyfund.com.

Round Hill is the only manufacturer of the C Shares for the purposes of the PRIIPs Regulation and Cenkos is not a manufacturer for these purposes. Cenkos makes no representations, express or implied, or accepts any responsibility whatsoever for the contents of any Key Information Documents prepared by Round Hill nor does it accept any responsibility to update the contents of any Key Information Documents in accordance with the PRIIPs Regulation, to undertake any review processes in relation thereto or to provide such Key Information Documents to future distributors of C Shares. Cenkos and its affiliates accordingly disclaim all and any liability whether arising in tort or contract or otherwise which it or they might have in respect of any Key Information Documents prepared by Round Hill.