Yesterday (January 6), the board of Hipgnosis announced to investors that the firm had entered into a new agreement with a syndicated group of lenders, with JPMorgan Chase Bank as Lead Arranger.
Those lenders have increased Hipgnosis’ Revolving Credit Facility from USD $400 million to $600 million.
This obviously ups Hipgnosis’ access to credit by $200m on the firm’s prior agreement with the lenders, announced in July last year.
In a note to shareholders yesterday, Hipgnosis noted that it “may request [a further] increase in the Revolving Credit Facility commitment by a further $150 million subject to certain conditions”.
Hipgnosis added that, in accordance with its investment policy, its total borrowings will not exceed 30% of its Net Asset Value.
“Hipgnosis may request [a further] increase in the Revolving Credit Facility commitment by a further $150 million subject to certain conditions.”
Hipgnosis Songs Fund statement (January 6)
The firm, led by CEO Merck Mercuridadis, added: “As [Hipgnosis] grows, and given the now significant size of the Revolving Credit Facility, the Company and its Investment Adviser are continuously exploring and evaluating the most appropriate long term gearing strategy to support growth in shareholder value.”
At the close of September 2020, Hipgnosis owned £203.7m ($276m at current exchange rates) in cash and cash equivalents.
In the half-year period to end of the same month, Hipgnosis generated £50.0m in total revenue, and a net profit of £10.25m.
In the past four days, Hipgnosis has announced the acquisition of Jimmy Iovine’s future royalties from his production catalog, plus 100% of Lindsey Buckingham’s Fleetwood Mac songs.
In addition, Hipgnosis confirmed yesterday (January 6) that it has bought 50% of the writer and publisher share of Neil Young’s song catalog.
MBW understands the Neil Young deal cost Hipgnosis in the region of $150m.Music Business Worldwide