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October was already a crunch month for Hipgnosis Songs Fund, thanks to a pair of shareholder votes that will have a seismic impact on the future of the music rights fund.

One vote is for whether the company should continue, and the other is to approve (or reject) its plans to sell a number of its music catalogues to sister fund Hipgnosis Songs Capital for $440m.

Shareholder rumblings about whether that’s a good deal were only magnified this week by news that Hipgnosis now expects to get a significantly lower payout from a recent royalty rate-setting agreement in the US.

Now Hipgnosis has taken a step to fend off (or rather, placate) any shareholders. It has launched a “strategic review” following “extensive engagement over recent weeks with shareholders” that highlighted “a continued belief in the Company’s portfolio and growth prospects of the asset class as well as the need for changes by the Company in order to deliver value for shareholders”.

(You don’t need to be a between-the-lines-reading expert to get the gist here: “the need for changes” is the important part.)

Within all this, there is also some news about the relationship that Hipgnosis Songs Fund has with its ‘investment adviser’ – Hipgnosis Songs Management, founded by Hipgnosis boss Merck Mercuriadis. HSF and HSM, respectively

The agreement between the two companies includes a clause that would enable HSM to acquire HSF’s portfolio of rights if its contract was terminated. “The Board has asked the Investment Adviser to remove the clause,” explained HSF yesterday. “The Investment Adviser has declined to accept.”

The HSF board will now be “undertaking a further round of engagement with shareholders” alongside its strategic review. It seems likely that they will have plenty of opinions to air, ahead of the crucial continuation vote. The Guardian reported that Mercuriadis remains committed to fighting against any efforts to eject him during this process.

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