The board of Hipgnosis Songs Fund has decided to scrap its dividend after a hit to expected retroactive royalty payments.
In a stock exchange announcement this morning (16 October), the investment trust’s board said independent portfolio valuer Citrin Cooperman had reduced expectations of retroactive royalty payments in the US.
It follows a decision by US Copyright Royalty Board’s decision in relation to royalties payable to songwriters for the period covering 2018-2022 (CRB III).
As a result, the trust’s expected retroactive payments have plummeted 54% to $9.9m (£8.1m) from $21.7m (£17.8m) as of 31 March, with the board deciding to scrap the proposed 1.1p per share interim dividend it had announced on 21 September.
However, the board said that subject to satisfactory conclusion to discussions with lenders, it expects to declare and pay future dividends as targeted.
See also: Jefferies: Hipgnosis shareholders could vote against portfolio sale
In September, the trust announced a deal to sell a portion of its portfolio to the Hipgnosis Songs Capital private fund.
If approved by shareholders, the $465m (£382.5m) deal would see a fifth of its portfolio shift to the Blackstone-owned private vehicle.
At the same time, the trust is also subject to a continuation vote due by the end of the year.
