Troubled Hipgnosis faces legal action
Hipgnosis Songs Fund is facing legal action, it was confirmed on Thursday, the latest development to hit the beleaguered music rights owner.
In a brief statement, the firm said that Hipgnosis Music Limited - which has been in liquidation since 2018 - had served proceedings against the company, its investment advisor and Merck Mercuriadis.
Mercuriadis, the founder of HSF, runs the firm’s investment advisor, Hipgnosis Song Management. He was also previously a director of Hipgnosis Music Limited.
HSF said Hipgnosis Music Limited alleged a "diversion of business opportunity" from Hipgnosis Music Limited to HSF and Hipgnosis Song Management.
It also claims that HSF "unlawfully assisted Mr Mercuriadis with, or received, this alleged diversion".
HSF denied the claims and said it would "vigorously" defend them.
HSF was recently hit by a shareholder backlash over a proposed $440m deal to sell its music catalogue to a partnership between Hipgnosis Song Management and private equity firm Blackstone.
Investors voted overwhelmingly against the deal last month, as well as against the re-election of chair Andrew Sutch.
They also voted against the trust’s continuation, and the board is now assessing the reconstruction, reorganisation or winding up of the business. It will put its proposals to shareholders within six months of the vote.
Should no agreement be reached, the trust could be wound down or sold.
HSF said on Thursday it intended to appoint independent advisers to conduct due diligence on the company’s assets.
"Completion of this due diligence will provide a strong knowledge base, from which the board will commence a process of identifying and bringing forward alternative proposals for the future of the company," it noted.
HSF also confirmed that it was looking for a new auditor, after its current firm, PwC, said it would not take part in an audit tender process for the 31 March 2024 audit.
As at 1000 GMT, shares in HSF were down 1% at 71.96p.
Mercuriadis, a former music manager, founded HSF in 2018.