Former chief executive of the Hipgnosis Songs fund Merck Mercuriadis and the trust’s investment adviser, Hipgnosis Songs Management (HSM), have refused Hipgnosis’s request for indemnity against both parties following “unlawful diversion” claims made by a former business of Mercuriadis.
Hipgnosis Music Limited has alleged a diversion of the Hipgnosis business opportunity, and issued and served High Court proceedings against the trust, HSM, and Mercuriadis on 5 February. Mercuriadis stepped down from his chief executive position on 2 February.
Following Mercuriadis’s dissent, Hipgnosis Songs announced it will file a Part 20 Claim in the High Court, seeking full indemnity against the investment adviser HSM.
“The company is concerned, having been assured by Mr Mercuriadis and the investment adviser that these claims are without merit and that they intend to vigorously defend them, that the request for an indemnity was refused,” Hipgnosis Songs fund stated in a stock exchange announcement this morning (19 February).
“The company is not insured as to the costs of this claim.”
HSM currently holds a call option in its advisory agreement, which allows the investment adviser to purchase the trust’s portfolio if it is removed as the investment adviser, and has not budged as the trust’s new board’s calls for removal of the clause.
On 7 February, shareholders of the fund backed a proposal to offer a £20m payment to prospective bidders for its assets in an attempt to entice bidders.
