Hipgnosis losses widen amid row over asset valuation

(Sharecast News) - Troubled music rights owner Hipgnosis Songs Fund reported wider interim losses on Thursday and said dividends would be suspended for at least the end of the financial year amid a row with its investment adviser over the valuation of assets. Operating losses before tax for the six months to September 30 were $63.6m, compared with a loss of $17m a year earlier. Gross revenue from continuing operations for the period fell too $63.2m from $86.4m.

Operative net asset value (NAV) per share fell 9.2% from $1.92 at the end of March to $1.74 as of September 30. The dividend was axed to comply with bank loan covenants.

The company, which owns the rights to songs from artists such as the B-52s and Red Hot Chili Peppers, is undergoing a strategic review to deal with "ongoing failures in the financial reporting and control process". Concerns over the fair valuation of its assets forced it to delay publication of its results this week after a dispute with Blackstone-controlled Hipgnosis Song Management, which advises on investments.

HSF's new board sought advice from HSM "for their opinion as to the fair value of the company's assets", said new chairman Robert Naylor".

HSM initially refused and then produced a "heavily caveated" opinion, but refused consent for correspondence on the matter to be published on the company's website "in order to provide transparency for shareholders".

"On behalf of the board, I therefore urge the investment adviser to provide the board with their opinion as to the fair value of the company assets, without caveats, such that we can provide greater certainty and transparency to our shareholders," Naylor said.

"The board recommends that investors use the fair value and the operative net asset value with a higher degree of caution and less certainty than might otherwise be attached to it as an accurate reflection of the fair value of the company's assets."

Reporting by Frank Prenesti for Sharecast.com