Changes that Hipgnosis Songs Fund Limited (LSE:SONG) proposed to smooth shareholder acceptance of its proposed music rights sale to Blackstone are "minor but helpful" tweaks, said broker Stifel, which reiterated its call for the fund to change its manager.
The investment trust yesterday proposed a few new "actions" to shareholders as it sent out the letter for the proposed US$440 million asset sale.
The broker said the revisions, which include potentially bringing in a 12-month notice period and a lower-tiered management fee,
"In our view, investors appear in no mood to sell these catalogues to the manager in what in their eyes is a heavily compromised process with terms that are skewed in favour of the buyer," said analyst Sachin Saggar.
He said that, rather than voting on the deal, where the mood among shareholders appears to be negative, the big question is, "should the manager be allowed to continue?"
The short answer from the analyst appears to be negative, as he points to "too many basic errors" from the manager, including one of the companies holding music rights being accidentally dissolved and needing to be reinstated before the assets can be sold to Blackstone.
"In our view, the optimal solution would be to ensure that the dividend is protected and a new manager brought on board to fully review the portfolio and its historic acquisition agreements.
"In the interim, the fund should benefit from continued growth in the sector, a maturing catalogue and a lower interest rate environment. Once there is a clearer picture of the portfolio, shareholders can decide whether the portfolio should be sold or the fund continue."