Hipgnosis Song. Regulatory News (SONG)

LEI: 213800XJIPNDVKXMOC11

Hipgnosis Songs Fund Limited

28 September 2023

For immediate release

Hipgnosis Songs Fund Limited

Publication of Circular and Notice of General Meetings

On 14 September 2023, Hipgnosis Songs Fund Limited ("Hipgnosis" or the "Company") announced that it had entered into a transaction to sell a portfolio of 29 music catalogues to Hipgnosis Songs Capital, the trading name of Hipgnosis SC IV (Delaware) L.P. (the "Buyer") for aggregate cash consideration of $440 million (the "Transaction").

Further to such announcement, the Company announces that the circular relating to the Transaction (the "Circular") has been approved by the UK Financial Conduct Authority and has been published today. The Circular will shortly be posted to the Company's shareholders that have elected to receive hard copies of shareholder documentation.

Following the announcement on 14 September 2023, the Board has continued to engage with shareholders on the strategic rationale and merits of the Transaction. The Board and the Investment Adviser firmly believe that the Company has a unique portfolio of iconic, culturally significant songs that will deliver strong long-term value as they benefit from the structural tailwinds in the music industry. Furthermore, the Board believes that the Investment Adviser's approach to Song Management should enable the Company to outperform the wider music market. This has been evidenced by the 44% total return, including right to income, transaction fees and expected taxes, realised since acquisition on the Transaction. Furthermore, the Board and the Investment Adviser are committed to ensuring that this value is achieved for shareholders by a re-rating of the share price and are determined to deliver on the ongoing opportunity of the Company.

Against this backdrop, the Board and Investment Adviser have included in the Circular the following actions which will provide shareholders with greater opportunities to realise value in a shorter timeframe should the share price re-rating not occur:

· The Board has resolved that, if the Continuation Resolution is approved at the 2023 Annual General Meeting, the Directors will put a further Continuation Resolution to Shareholders at an extraordinary general meeting in January 2026, again at the Annual General Meeting to be held in 2028 and at every third Annual General Meeting thereafter;

· The Board and the Investment Adviser have agreed certain further amendments to the Investment Advisory Agreement between the Company and the Investment Adviser such that (subject to the Continuation Resolution being passed) the Investment Advisory Agreement will be terminable by the Company on 12 months' notice; and

· If the Company's share price stands at an average discount to Operative NAV (as determined at the time of publication of the interim report for the period to 30 September 2024) of 10% or more, measured on average over the month of January 2025, the Board intends to serve notice to terminate the Investment Advisory Agreement. The Board may withdraw the notice before the effective date of termination if it considers it to be in the interests of shareholders to do so.

Andrew Sutch has informed the Board that he will step down as Chair and retire as a director of the Company once a suitable replacement is found and, in any event, at or before the Company's annual general meeting in 2024. The Company will now commence a process to recruit a new Chair. In addition, Andrew Wilkinson has also informed the Board that he intends to retire as a director before the end of 2023, thereby reducing the Board to five directors. The Board intends to appoint Cindy Rampersaud, who joined the Board as an Independent Non-Executive Director on 1 August 2023, to the role of chair of the Company's Audit and Risk Management Committee upon Andrew Wilkinson's retirement.

The Transaction constitutes a related party transaction for Hipgnosis under the Listing Rules and completion of the Transaction is conditional upon, among other things, the approval of the Company's shareholders at a general meeting of the Company. Accordingly, the Circular contains a notice convening an extraordinary general meeting of the Company which is to be held at 10:30am on 26 October 2023 at United House, 9 Pembridge Road, Notting Hill, London, W11 3JY, United Kingdom (the "Extraordinary General Meeting") at which an ordinary resolution will be proposed for the Company's shareholders to approve the Transaction.

In addition, the terms of the Transaction include a "Go-Shop" provision, pursuant to which the Board is entitled to solicit alternative offers for a period of 40 days from 14 September 2023, and the Board has recently confirmed that credible third parties are already engaged in this Go-Shop process.

The Circular also incorporates a notice convening the annual general meeting of the Company which is to be held at 10:00am on 26 October 2023 at United House, 9 Pembridge Road, Notting Hill, London, W11 3JY, United Kingdom (the "2023 Annual General Meeting" and, together with the Extraordinary General Meeting, the "Meetings") at which resolutions will be proposed for the Company's shareholders to approve, amongst other things, an on-market share buy back programme and the continuation by the Company of its business as a closed-ended investment company.

If shareholders are unable to attend and vote in person, the directors of the Company strongly recommend that shareholders vote by proxy as soon as possible. Further information as to how to vote by proxy can be found in the notices of the Meetings contained in the Circular. The expected timetable of principal events, as contained in the Circular, is as follows:

If the Go-Shop Process concludes with no Superior Proposal having been received, the Board expects the Annual General Meeting and Extraordinary General Meeting will proceed on the date stated in this announcement. In the event a Superior Proposal is received during the Go-Shop Period and the Buyer exercises its matching right, the Board expects it may be necessary to adjourn the Shareholder Meetings to a later date in November 2023. In the event the Board receives a Superior Proposal, the Matching Right Period has expired without the Buyer having matched (or improved upon) such Superior Proposal and the Asset Sale Agreement is terminated in favour of such Superior Proposal, the Board expects that the Extraordinary General Meeting will be adjourned and not rescheduled, and the Annual General Meeting will be rescheduled in November 2023

A copy of the Circular will be submitted to the National Storage Mechanism and the Circular will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. In addition, a copy of the Circular will be available for inspection on the Company's website at https://www.hipgnosissongs.com/song-investors/company-documents from the date of the Circular up to and including the conclusion of the Extraordinary General Meeting.

IMPORTANT NOTICE

This announcement is not intended to, and does not constitute, or form part of, any offer to sell or issue or any solicitation of an offer to purchase, subscribe for, or otherwise acquire, any securities or a solicitation of any vote or approval in any jurisdiction. Hipgnosis shareholders are advised to read carefully the Circular once it has been published. Any response to the Transaction should be made only on the basis of the information in the Circular to follow.

J.P. Morgan Securities PLC, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated by the Financial Conduct Authority ("FCA") and PRA. J.P. Morgan Cazenove is acting as sponsor and financial adviser exclusively for the Company and no one else in connection with the Transaction and the matters set out in this announcement and will not regard any other person as its client in relation to the Transaction and will not be responsible to anyone other than the Company for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, or for providing advice in relation to the Transaction or any other matters referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on J.P. Morgan Cazenove by FSMA or the regulatory regime established thereunder or under the regulatory regime of any jurisdiction where the exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, J.P. Morgan Cazenove and any person affiliated with it assumes no responsibility whatsoever for and makes no representation or warranty express or implied, in relation to the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf and nothing contained in this announcement is, or shall be, relied upon as a promise or representation in this respect whether as to the past, present or future, in connection with the Company, or the Transaction. J.P. Morgan Cazenove and its respective subsidiaries, branches and affiliates accordingly disclaims to the fullest extent permitted by law all and any duty, responsibility and liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise be found to have in respect of this announcement or any such statement or otherwise. Any reproduction or distribution of this announcement, in whole or in part, and any disclosure of its contents or use of any information contained in this announcement for any purpose other than considering the terms of the Transaction is prohibited.

This announcement contains "forward-looking statements" which includes all statements other than statements of historical fact, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would, "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. None of the Company, J.P. Morgan or their respective Affiliates undertakes or is under any duty to update this announcement or to correct any inaccuracies in any such information which may become apparent or to provide you with any additional information, other than any requirements that the Company may have under applicable law or the Listing Rules, the Prospectus Rules, the Disclosure Guidance and Transparency Rules or MAR. To the fullest extent permissible by law, such persons disclaim all and any responsibility or liability, whether arising in tort, contract or otherwise, which they might otherwise have in respect of this announcement. The information in this announcement is subject to change without notice.