Shareholders in the Hipgnosis Songs Fund - or SONG - have backed a proposal to give its board discretionary powers to pay fees of up to £20 million to any possible bidder for the music catalogues it owns. At an Extraordinary General Meeting earlier today, 68.4% of eligible shareholders participated in the vote and 99.9% of those participating voted in favour of the plan.
The new board of SONG announced the proposal last month. It means directors will be able to pay up to £20 million to “any prospective bidder(s) who approach the board seeking to make an acquisition of the assets of the company on terms recommendable by the board to shareholders”.
When first making the proposal, the directors said that being able to offer such payments will “provide significant protection to prospective offerors against their due diligence and acquisition costs” and help “ensure that they are not deterred from seeking to engage” with HSF should they wish to buy some or all of the fund’s assets.
At today's EGM, 825 million shareholder votes backed the proposal, while 1.1 million opposed it. It's not clear from the breakdown of the voting how many individual shareholders or entities the 1.1 million shareholder votes cast against the motion might represent. In monetary terms that stake constitutes a relatively modest investment in the company and it's entirely conceivable that those shares could be controlled by just one or two people.
The board of SONG is still in the process of conducting a strategic review of the fund's operations, including its relationship with investment advisor Hipgnosis Song Management. There has, of course, been a war of words of late between the two Hipgnosis entities, which were both founded by Merck Mercuriadis. He continues to head up HSM, although he announced last week that he will move from a CEO role to become Chair.