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June 13, 2024

Hipgnosis is selling off Shakira songs to pay down its debt

Hipgnosis is selling off Shakira songs to pay down its debt

Hipgnosis Song Fund (HSF), whose business hinges on owning music rights and collecting music royalties, is having to sell some of its song catalogues to bolster its bottom line.

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HSF, a five-year-old fund based in the UK, is selling 29 song catalogues, including those of the singer Shakira, the rapper Nelly, and the Canadian record producer Bob Rock, for $440 million. The buyer is Hipgnosis Songs Capital, a sister fund owned and run by the asset manager Blackstone. HSF is also selling a collection of non-core songs for $25 million to another buyer, it announced yesterday (Sep. 14).

With the sale income, HSF plans to fund a share buyback program and reduce debt, all to boost its stock price, which HSF believes doesn’t reflect the “fundamental value” of the company.

Hipgnosis had already teased a “strategic sale of catalogues of songs” in July to shore up its stock.

By the digits: Hipgnosis’ stock-rescue sale

$465 million: The total money Hipgnosis expects to earn from its sale of song assets

$180 million: The cost of HSF’s share buyback program, to raise its stock price

$250 million: HSF’s repayment obligations, under the company’s revolving credit facility (RCF)

81%: The share of its existing portfolio that HSF will continue to retain

47: The number of songs in Rolling Stone’s 500 Greatest Songs of All Time that HSF will retain after the sale, down from the current 52 in the pre-sale portfolio

44%: The total return HSF’s sale will realise for shareholders. The deal gives “clear transactional evidence…of the current realisable value of the company’s catalogues,” according to Merck Mercuriadis, HSF’s founder-CEO.

40: The number of days other interested parties have under the go-shop clause to come up with a better proposal. But they’ll have to pay a $6.6 million termination fee to HSF.

$1 billion: The sum of money that Blackstone agreed to deploy in 2021, in partnership with Hipgnosis, to buy music rights

Company of interest: Round Hill Music Royalty Fund

Earlier this month, Round Hill Music Royalty Fund, a private equity firm focused, like HSF, on investments in music copyright assets, agreed to a cash takeover offer with Los Angeles-based Alchemy Copyrights.

Charted: Hipgnosis stock jumped on Round Hill news

One more thing: Will HSF be liquidated?

A crucial shareholder vote in October will compel investors to decide whether to liquidate the fund or back it for another five years.

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