SONG said it is working with its investment adviser, Hipgnosis Song Management (HSM), to run a formal process to appoint a new independent valuer.
Hipgnosis Songs’ independent valuer Citrin Cooperman has parted ways with the trust after the board questioned the firm's valuation of the portfolio.
On 19 December, the trust's board said it would delay the publication of its half-year results to September-end over concerns that the valuations from Citrin Cooperman were "materially higher" than the valuation implied by proposed and recent transactions in the sector.
A day after Hipgnosis delayed its results, Citrin Cooperman gave notice that "it would not be providing future valuation services" to the trust, a spokesperson for the firm told The Times today (12 February).
The interim results were eventually published on 21 December, but the board recommended investors to use the valuations "with a higher degree of caution and less certainty than might otherwise be attached to it".
Hipgnosis Songs delays publication of half-year results over valuation concerns
A spokesperson for Hipgnosis Songs told Investment Week the trust is working with its investment adviser, Hipgnosis Song Management (HSM), to run a formal process to appoint a new independent valuer as part of the 31 March 2024 year-end process.
"The new valuer will advise the board on an ongoing basis," they said. "The board remains focused on the strategic review, under which it is looking at all options to deliver shareholder value."
As part of the strategic review, the board has engaged Shot Tower Capital, a specialist music rights practice, to assess the portfolio. The outcome of the strategic review is due this month.
"We would hope for results of this review in the near future so that the board can start formulating plans for the future of the company and investors can gain some clarity," Numis said in a research note.
"In addition, a new valuer for the annual results would help to provide a ‘clean slate' to seek to restore faith of investors in the valuation process."
Hipgnosis shareholders approve £20m bidder incentive
Last week, Hipgnosis shareholders overwhelmingly backed the board's proposed bidder incentive fee, which would allow the board access to a discretionary payment of up to £20m to any bidder who presents terms "recommendable to shareholders".
The special resolution was proposed as a partial solution to the unattractive nature of submitting a bid for SONG assets, caused by the call option held by HSM, which gives it the right to purchase the portfolio if and when its agreement with the fund is terminated.
The refreshed SONG board, led by chair Robert Naylor, has described the option as a "structural conflict between the interests of our shareholders and the investment adviser". HSM has rejected multiple calls to give up the call option.
