The music fund, which owns the rights to the catalogs of artists including Justin Bieber and Shakira, saw its shares fall after canceling a shareholder dividend and warning of lower-than-expected US streaming royalty income.
Shares in Hipgnosis Songs Fund fell as much as 22% to a record low at one stage and then fell around 11% after the company said it had “significantly reduced” its industry-wide payout forecast following last year’s US ruling. Royalty Board.
It said the ruling, which covers royalties paid to songwriters or rights holders for music broadcast between 2018 and 2022, means the firm will receive a “significantly reduced” payout compared to the $21.7 million originally expected. .9 million pounds) to just 9.9. million US dollars (8.1 million pounds sterling).
Hipgnosis said it decided to forgo the planned dividend because otherwise the company could be in breach of the terms of its loan agreements.
The company is currently negotiating with creditors to avoid further impact on its ability to comply with covenants.
Unfortunately, his 15 minutes of fame have evaporated amid allegations of poor corporate governance, a disastrous attempt to sell some assets at a steep discount to a private fund also managed by his adviser, and now a dividend crisis.
The group said future dividends would depend on the “satisfactory conclusion” of these discussions.
The fund was launched on the London Stock Exchange in 2018 by CEO Merck Mercuriadis – a former manager of Sir Elton John and the Pet Shop Boys – along with Chic’s Nile Rodgers.
Mr Mercuriadis has amassed a large catalog of songs since launching the fund, but earlier this year he struck a deal to sell 29 music catalogs for $440 million (£362 million) because he said the shares were undervalued.
But it raised eyebrows among some investors who thought the price was too low.
Russ Mold, investment director at AJ Bell, said: “Sadly, his 15 minutes of fame have evaporated amid allegations of poor corporate governance, a disastrous attempt to sell some assets at a deep discount to a private fund that was also his adviser. succeeds, but now there is a dividend crisis.
“Investors will decide the future of the Hipgnosis Songs Fund in a re-vote on October 26th.
“This doesn’t look good given that the company’s value continues to decline and now it doesn’t even pay a dividend – shocking given that the income should have been a key part of investment income.”