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Hipgnosis Songs Fund, a music rights investment trust facing challenges, has initiated a comprehensive strategic review amid shareholder dissension over its plan to sell a portion of its portfolio.
HSF, led by founder and former band manager Merck Mercuriadis, is overseen by an independent board of directors. In response to shareholder concerns, the review will explore various options, including potential changes to its management agreements.
Next week, the company faces a critical vote for the future of the investment trust, with shareholders deciding whether to extend its existence for another five years.
Shareholders have voiced discontentment with certain terms in the management agreement, such as the manager’s ability to purchase the company’s portfolio upon termination. HSF stated that it had rejected a proposal to modify this arrangement.
The company also considered terminating its agreement with Mercuriadis, but concluded that it would not benefit shareholders. However, such a move would result in defaulting on its debt facility unless a new manager was approved by lenders.
HSF disclosed that its lenders have agreed to modifications in its revolving credit facility, ensuring compliance with a fixed charge cover ratio covenant.
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