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Hipgnosis Songs Fund, the UK-listed music rights proprietor, has scrapped plans to pay an interim dividend after warning that the transfer would have threatened its compliance with debt covenants following a lower within the funds the group expects from its US catalogue.
The corporate’s unbiased portfolio valuer, Citrin Cooperman, had “materially diminished” expectations of industry-wide funds following a call final yr to recalculate the speed by the US Copyright Royalty Board, Hipgnosis stated on Monday.
The choice coated royalties payable to songwriters between 2018 and 2022, and meant the corporate would obtain “considerably decrease” funds.
Shares in Hipgnosis tumbled 16 per cent in early buying and selling on Monday.
The corporate stated it will withdraw the proposed interim dividend it had introduced final month to make sure it was not in breach of the phrases on a revolving credit score facility the group has with lenders.
Hipgnosis added that it was speaking to lenders to keep away from additional influence on its capacity to adjust to covenants from the choice by the Copyright Royalty Board.
Future dividends would depend upon a “passable conclusion” of those discussions with lenders, it stated.