Yesterday (14 September), the trust said it had agreed to sell the music catalogues to Hipgnosis Songs Capital, the Blackstone-backed private fund managed by SONG's investment adviser, Hipgnosis Song Management.
Using the proceeds from the catalogue sales, the board also outlined a share buyback programme of up to $180m and the repayment of $250m drawn under the trust's revolving credit facility, as well the introduction of additional, lower investment advisory fee tiers.
The move has been placed under heavy scrutiny by shareholders and analysts, who raised whether doubts the deal would be enough for shareholders to decide to continue to back the trust for another five years at the upcoming continuation vote.
In a research note today (15 September), Investec analysts Alan Brierley and Ben Newell said that while the share buyback programme could reduce some of the volatility in the share price and deliver accretion, that will depend on "what is considered a true net asset value".
"The transaction implies a valuation of the company's assets as being a little more than IPO price and there is substantial value leakage to related parties that again sadly raises significant corporate governance concerns," they wrote.
The pair said: "Worse, this transaction fails to address the complexity of owning the administration business (Hipgnosis Songs Group) and sets an unattractive precedent for the terms of any subsequent deals with the Blackstone-backed fund."
In an environment where investment company corporate governance is "under the microscope", the analysts said the board "has fallen short here".
"Shareholders may believe that they are better off voting against continuation and looking for more holistic solutions. We downgrade our recommendation to Hold," they added.
Hipgnosis Songs has been contacted for comment.