(Sharecast News) – Hipgnosis Songs Fund said on Thursday that it has agreed to sell some catalogues to a partnership between its investment adviser and funds advised by Blackstone for $465m in order to fund a share buyback programme and reduce debt.
The group will sell a portfolio of 29 music catalogues for $440m and a portfolio of non-core songs for around $25m.
Hipgnosis will use the proceeds to establish a share buyback programme of up to $180m, to repay $250m of drawings under its revolving credit facility and to enhance financial flexibility.
Merck Mercuriadis, chief executive and founder of Hipgnosis Song Management and founder of Hipgnosis Songs Fund, said: “Earlier this year we initiated consultations with shareholders, in contemplation of the continuation vote and our concerns that the true value of our iconic songs was not being reflected in our share price.
“It was clear that shareholders shared our belief in the continuing long-term opportunity of Hipgnosis Songs Fund and wished to see a significant share buyback programme and reduction of our leverage in order to deliver a re-rating in the share price.
“The transactions announced today allow us to execute on that strategy and reflect our determination to deliver immediate shareholder value and enhance the company’s position to deliver long-term exceptional returns and capital growth through our investment strategy of ‘buying, holding and actively managing’ a major portfolio of iconic songs as they benefit from the continued growth of streaming.”