Company Announcements

LEI: 213800752UO1CJTV8C39

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This announcement is released by Round Hill Music Royalty Fund Limited and contains inside information for the purposes of the UK version of the Market Abuse Regulation (EC No. 594/2014).

11 February 2022

ROUND HILL MUSIC ROYALTY FUND LIMITED

("RHM" or the "Company")

Acquisition Highlights and Conversion of C Shares

The Board of Round Hill Music Royalty Fund Limited is pleased to announce that the net proceeds of the C Share issue undertaken in July 2021 have been fully invested and, accordingly, the C Shares will be converted into Ordinary Shares.

Acquisition Highlights

In July 2021, the Company successfully raised gross proceeds of US$86.5 million through an issue of C Shares (the "C Share Issue"). Since then, the Company has completed a number of acquisitions utilising the net proceeds of the C Share Issue and debt drawn from its existing revolving credit facilities ("RCF").

The Copyrights comprised in the acquisitions outlined below have the following characteristics:

·    acquired at an average historic three-year net publisher's share ("NPS") multiple of 17.9x;

·    over 77 per cent. of the income generated is in respect of compositions written between 1950 and 2010;

·    over 5,600 musical compositions;

·    Rock comprises approximately 90 per cent. of the Copyrights acquired with the C Share Issue proceeds and debt drawn from the RCF. Following these acquisitions, the Company continues to have a truly diversified portfolio in terms of genre: Rock (approximately 54 per cent.); Country (approximately 10 per cent.); Pop (approximately 18 per cent.); Classic R&B (approximately 6 per cent.) and Other (approximately 12 per cent.)¹; and

·    diversified in terms of income type: performance (approximately 25 per cent.), master recordings (approximately 50 per cent.), synchronisation (approximately 5 per cent.), mechanical (approximately 8 per cent.) and other (approximately 12 per cent.).

RHM's acquisitions include:

·    11 August 2021, the Company announced the acquisition of the publishing Catalogue of the prolific film score composer and Yes guitarist Trevor Rabin. The acquisition included 3,528 film cues and songs by Rabin. 

·    9 September 2021, the Company announced the acquisition of 100% of the master royalty income rights to the first seven albums by Foreigner from Dennis Elliott, the original drummer of the rock group.

·    15 September 2021, the Company announced the acquisition of the recorded music income and publishing rights to a 30-song Catalogue from Tim Palmer, providing exposure to Pearl Jam and Ozzy Osbourne.

·    28 September 2021, RHM announced the acquisition of the master royalty income of 532 original recordings from The O'Jays.

·    2 November 2021, the Company entered into a long-term agreement to administer 100% of the neighbouring rights income, generated from the master recordings, of three long-standing members of the British rock group, Supertramp.

·    29 December 2021, the Company announced that it had acquired a significant share of the publishing rights of Niko Moon, the American country singer/songwriter.

·    31 December 2021, the Board announced that the Company had acquired the master recordings and music publishing assets from the leading American reggae band Rebelution.

·    31 December 2021, the Company announced that it had acquired 100% of a catalogue of 308 tracks from the Richardsons, Jack and his son Garth, made up of producer royalties and neighbouring rights income to timeless classic tracks.

·    5 January 2022, the Company announced the acquisition of a significant share of the master artist royalties and entered into a long-term agreement to administer the neighbouring rights income of the catalogue of Nancy Wilson, acclaimed singer, songwriter and guitarist of Rock 'n' Roll Hall of Fame-inducted band Heart.

·    14 January 2022, the Company announced the acquisition of the music publishing, master rights and master rights royalties for, and entered into a long-term administration agreement for the neighbouring rights income from, the catalogue of legendary Whitesnake frontman and Deep Purple lead singer from 1973 to 1976, David Coverdale.

·    8 February 2022, the Board announced that the Company has acquired a significant majority of the rights to a legendarily influential American rock band. The acquisition covers the publishing, masters and neighbouring rights of the band.

As at 10 February 2022, the Company has utilised c.US$86.5 million being 100 per cent. of the net proceeds of the C Share Issue and had drawn down c.US$91.7 million under its existing RCF.  

Pipeline

Round Hill Music LP ("Round Hill"), the Company's investment manager, has identified a near term pipeline in excess of US$120 million of investment opportunities (the "Pipeline"). The Pipeline includes music publishing, master recordings and neighbouring rights from various iconic artists, songwriters and producers. The Board is considering its options to take advantage of these strong opportunities, for the future benefit of Shareholders.

Conversion of C Shares

Pursuant to the Company's articles of incorporation (the "Articles"), Round Hill has given notice to the Board that the net proceeds of the C Share Issue have now been fully invested. Pursuant to the Articles, the Board has therefore resolved to trigger the process for the Conversion of the C Shares into Ordinary Shares. On Conversion, the new Ordinary Shares arising on the Conversion of the C Shares will rank pari passu with the existing Ordinary Shares in issue on the date of Conversion.

The Board have determined that the calculation date for the Conversion of the C Shares into new Ordinary Shares will be 29 April 2022. Accordingly, Conversion will be made by reference to the respective economic net asset values of the C Share pool and the Ordinary Share pool as at close of business on 29 April 2022 (the "Calculation Date") in accordance with the terms of the Articles. Dealings in the new Ordinary Shares arising on Conversion are currently expected to commence, and the cancellation of the C Shares is expected to occur, on 11 May 2022 (the "Conversion Date").

Dividend

C Shareholders will qualify for the dividend for the period commencing 1 April 2022 following conversion of their C Shares into new Ordinary Shares.

Timetable for C Share Conversion

It is currently expected that Conversion will occur in accordance with the following timetable:

Trevor Bowen, Chair of Round Hill Music Royalty Fund, commented:

"We are delighted to announce the successful completion of the Company's deployment from the recent C Share Issue into eleven high quality catalogues with many well-known songs, and to provide further disclosure on the quality of those acquisitions. Reflecting the Company's broader portfolio and investment philosophy of preferring catalogues with proven long-term revenue streams, over 77 per cent. of the income generated is in respect of compositions written between 1950 and 2010. Looking ahead, the investment manager's pipeline is significant and we look forward to updating Shareholders further in due course."

Josh Gruss, Chairman and CEO of Round Hill, the Company' s investment manager, commented:

"It is fantastic to have had the opportunity to acquire so many high-quality catalogues for the Company with the proceeds from the C Share Issue, providing our investors with access to many leading 20^th and 21^st century artists including Pearl Jam, Ozzy Osbourne, The O'Jays, Supertramp, Zac Brown Band, Nickelback, Avicii, Rebelution, Alice Cooper, Deep Purple, Yes, Foreigner, Bob Seger, Rage Against the Machine, Chevelle, Rise Against, Trapt, Mudvayne, Heart, and Whitesnake.

As planned, the recent acquisitions significantly increase the weighting of the Company's diverse portfolio in rock music. Rock is a genre which we believe has among the most compelling fundamentals for successful long-term music royalty investing with a consistently more loyal fanbase, and music which is often more enduring than other genres."

FOR FURTHER INFORMATION

Footnote[1]: Initial portfolio's genre diversification is calculated based on June 2021's fair market value, new acquisitions' genre diversification is calculated based on purchase price.

Notes: 

Terms defined in the prospectus published by the Company on 19 October 2020 and the supplementary prospectus published on 3 November 2020 (together the "Prospectus") shall have the same meaning when used in this announcement.

The Company is a non-cellular Guernsey company. The Company's Investment Objective is to provide investors with an attractive level of regular and growing income and capital returns from investment primarily in high quality, music intellectual property. In order to achieve its Investment Objective the Company will invest in a songwriter's copyright interest in a musical composition or song (being their writer's share, their publisher's share and their performance rights) together with the rights in the recording of the musical composition or song (known as the master recording rights) together with all such rights and assets considered by its investment manager, Round Hill Music LP, to be ancillary thereto. 

Founded in 2010, Round Hill is a fully integrated owner and operator of music copyright properties and the sixth largest music publishing company in the US. Headquartered in New York with additional offices in Nashville, Los Angeles and London, Round Hill has an experienced management and investment team with an established reputation and extensive experience in the music and finance industries.