The Hipgnosis Songs Fund yesterday confirmed that it has completed the sale of about 20,000 songs in deal worth $23.1 million.
That price, an update to investors confirmed, "reflects a 14.2% discount to the valuation of the songs prepared by the company’s portfolio independent valuer as at 30 Sep 2023". The net proceeds of the sale, expected to be about $22.6 million, will be "used to pay down revolving credit facility drawings, providing the company with greater headroom under its future covenant compliance reporting". Which sounds like fun.
The publicly listed HSF announced back in September that it would sell a catalogue of what it dubbed "non-core songs". The works came from the catalogues Hipgnosis bought from Kobalt back in 2020 and, yesterday's update explained, "require time intensive, ongoing accounting and reporting obligations and do not all have perpetual ownership rights".
As a result, it added, "their eventual sale was part of the company's acquisition strategy". HSF will retain ownership of the "iconic songs" in the Kobalt catalogues which motivated that deal in the first place.
HSF had also planned to sell another set of rights - which included more valuable works - to the separate Blackstone-backed Hipgnosis Songs Capital in order to raise a chunk of cash that would be used to try to boost the HSF share price. However, that deal stalled when investors voted against the continuation of HSF in its current form in October.
A strategic review is now ongoing at HSF with the aim of identifying a future for the fund that is backed by investors. Yesterday's update also announced "the appointment of Singer Capital Markets as sole corporate broker and financial adviser and Shot Tower Capital LLC as lead adviser to conduct due diligence on the company’s assets as part of its strategic review".