The result of today's Hipgnosis Songs Fund continuation vote has been announced - with a significant majority of shareholders voting against continuation and also voting to eject the company's chair Andrew Sutch.
The publicly listed Songs Fund has been under increased investor scrutiny in recent months as today's routine vote on whether to continue operating approached. Some shareholders have been very critical of the Fund's board and others have criticised Hipgnosis Song Management, the separate entity that advises the Fund and manages its catalogues.
A key concern has been the flagging share price. The board proposed addressing that by selling a stack of rights to the separate Blackstone-backed Hipgnosis Songs Capital and then using the profits of that sale to buy back shares and service the Fund's credit facility, in order to boost its share price. But then some investors weren't happy with the proposed Hipgnosis-to-Hipgnosis deal either.
Some other measures were then instigated to allay investor concerns. Two directors on the board announced that they would stand down, including Chair Andrew Sutch, who said he would leave the role as soon as a replacement was found and definitely before next year's Annual General Meeting.
Then last week a strategic review was announced. Though some more vocal shareholders continued to criticise the board and their advisors. And then yesterday it was announced two directors would actually stand down alongside Sutch, Andrew Wilkinson and Paul Burger.
83.2% of shareholders voted against the continuation of the Fund this morning and 71.5% voted against Sutch's reappointment, despite his commitment to ultimately stand down. As a result the planned vote on whether to approve the Hipgnosis-to-Hipgonsis deal did not happen.
The vote against continuation doesn't necessarily mean the Fund will be wound up, but it does force a "reset", with a new Chair to be appointed who will lead the already announced strategic review.
Commenting on all the latest developments, Merck Mercuriadis - founder of the Hipgnosis empire - said: "Today’s Hipgnosis Songs Fund AGM marks an opportunity to reset and focus on the future".
“Our conversations with shareholders have revealed a consensus that they are enthusiastic about the quality of the company’s iconic portfolio of songs", he goes on. "However, it is also clear that they are asking for change and we respect that feedback. Hipgnosis Song Management’s new management team and I have already started taking the relevant necessary action to meet the expectations of shareholders".
“Our commitment to the company’s shareholders remains absolute and we look forward to working with a new Chair and reconstituted board during this period to ensure that the Hipgnosis Songs Fund delivers for its shareholders. During this process, shareholders can be certain that Hipgnosis Song Management will continue to manage the songs with the greatest duty of care as always".
“Finally", he concluded, "I would like to thank Andrew Sutch, Andrew Wilkinson and Paul Burger for their important contributions to the company over the last almost six years".