REG - Hipgnosis Songs Fund - Initiation of Strategic Review, update on RCF

Hipgnosis Songs FundAnnouncement

19/10/2023 07:00

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RNS Number : 6531Q  Hipgnosis Songs Fund Limited  19 October 2023

This announcement contains inside information for the purposes of UK Market
Abuse Regulation

LEI: 213800XJIPNDVKXMOC11

Hipgnosis Songs Fund Limited ("Hipgnosis" or the "Company")

Initiation of a Strategic Review

Amendment of the Revolving Credit Facility Agreement

19 October 2023

Initiation of a Strategic Review

The Board of Hipgnosis Songs Fund Limited announces that it has decided to
initiate a strategic review (the "Strategic Review").

This decision follows extensive engagement over recent weeks with shareholders
in light of the forthcoming Continuation Resolution and First Disposal
Resolution. These meetings highlighted a continued belief in the Company's
portfolio and growth prospects of the asset class as well as the need for
changes by the Company in order to deliver value for shareholders.

The Strategic Review will look at all options to be considered for the future
of the Company with the aim of maximising value for shareholders including,
among other things, a review of the future management arrangements of the
Company.

The Board continues to recommend voting in favour of the Continuation
Resolution, believing it is in shareholders' interest to have a Strategic
Review with the widest array of options for the Company to consider and to
identify changes that will focus on recovering and delivering improved
shareholder value.

In addition, the Board continues to recommend voting in favour of the First
Disposal Resolution in order to realise proceeds to reduce leverage and
undertake a share buyback, and notes that the Go-Shop process to seek a
potential superior offer remains ongoing.

The Board has commenced the process to identify a new Chair for the Company
and has appointed an executive search firm, with a view to announcing a new
Chair at the earliest opportunity. As mentioned in the Company's recent annual
results and following individual discussions with each Director, a timetable
has been set for the phased retirement and, if appropriate, replacement of the
Directors in place since IPO.

In light of the Strategic Review, the Board has looked at making changes to
the Investment Advisory Agreement:

-      It has considered serving notice on the Investment Adviser to
terminate the Investment Advisory Agreement, but concluded that it is not
currently in shareholders' interests to do so, as it would be an event of
default under the Revolving Credit Facility if the Investment Advisory
Agreement terminates in circumstances where a new investment adviser has not
been approved by lenders. The Investment Advisory Agreement can be terminated,
other than for cause, by the Company on not less than 12 months' notice, with
an additional one-time termination fee equal to one year's advisory fee
calculated on NAV as at the termination date.

-      The Board has asked the Investment Adviser to remove the clause in
the Investment Advisory Agreement related to the call option entitling it to
acquire the Company's portfolio on termination of its contract, which the
Investment Adviser has declined to accept.

In light of this announcement and in advance of the Continuation Resolution,
the Board will be undertaking a further round of engagement with shareholders.

For the avoidance of doubt, the Strategic Review does not envisage any offer
for the Company, recommended or otherwise, under the City Code on Takeovers
and Mergers.

Amendment of the Revolving Credit Facility Agreement

Following the announcement on 16 October 2023, the Company's lenders have
agreed to amendments to the Revolving Credit Facility to return the Company to
compliance with the Fixed Charge Cover Ratio covenant.

Except as otherwise defined, capitalised terms in this announcement have the
meaning given to them in in the Company's circular published on 28 September
2023.

The person responsible for making this notification is Andrew Sutch, Chairman
of Hipgnosis Songs Fund Limited.

For further information please contact:

 For Hipgnosis Songs Fund                                                  +44 (0) 20 4542 1530

 Andrew Sutch

 Headland Consultancy - Financial PR to Hipgnosis Songs Fund               +44 (0) 20 3805 4822

 Susanna Voyle / Del Jones / Charlie Twigg
 J.P. Morgan Cazenove - Sponsor, Financial Adviser and Corporate Broker    +44 (0)203 493 8000

 William Simmonds / Jérémie Birnbaum (Corporate Finance)
 Singer Capital Markets - Corporate Broker                                 +44 (0)20 7496 3000

 James Moat / James Maxwell / Angus Campbell (Corporate Finance)

 Alan Geeves / James Waterlow / Sam Greatrex (Sales)
 RBC Capital Markets - Corporate Broker                                    +44 (0)20 7635 4000

 Elliot Thomas / Max Avison (Corporate Finance)

 

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