Hipgnosis cancels interim dividend, shares tumble

(Sharecast News) - Hipgnosis tumbled on Monday after saying it will no longer pay an interim dividend in order to make sure it complies with its debt covenants, as it now expects lower payments from its US catalogue. The music rights owners said that its independent portfolio valued has "materially reduced" its expectations of industry-wide retroactive payments in relation to the US Copyright Royalty Board's decision regarding royalties payable to songwriters for the period from 2018-2022 (CRB III).

As a result, paying a dividend could threaten the group's compliance with debt covenants.

"In consequence of this unwinding of the CRB III accrual, the board has decided to withdraw the proposed interim dividend of 1.1325 pence per share announced on 21 September 2023 in order to ensure compliance with its revolving credit facility's fixed charge cover ratio covenant," it said.

In addition, the company said it's in talks with the agent and the lenders to avoid any potential impacts of the unwinding of the CRB III accrual on future fixed charge cover ratio covenant compliance.

"Subject to satisfactory conclusion to discussions with lenders, the board expects to declare and pay future dividends as targeted," Hipgnosis said, adding that a further announcement will be made in due course.

At 0855 BST, the shares were down 9.5% at 66.90p.