Blackstone’s reported £1.2b ($1.5b) bid for Hipgnosis Songs Fund, which followed a $1.4b bid from Concord Chorus, has spurred HSF investment advisor Hipgnosis Song Management, headed by founder Merck Mercuriadis, into action.

As we’ve reported previously, HSM has a “call option” enabling it to purchase the assets of HSF outright (according to a prescribed formula) should its agreement with the fund be terminated.

On 4/22, a spokesman for HSM made the following statement:

“Hipgnosis Songs Fund is a self-managed investment trust with multiple specialist advisers, appointed by the company’s board, to advise the board in their respective areas of expertise including accounting treatment, valuations, tax, financial market reporting obligations and legal matters. Under the Investment Advisory Agreement between the company and HSM, HSM’s responsibilities as one of its specialist advisors are clearly defined.

“HSM has repeatedly been blamed for many issues affecting the company which were not HSM’s responsibility under the terms of the IAA. We have previously sought to address this in private with the company’s board as we felt it was in the best interests of shareholders to minimize public commentary. Given recent developments, we feel it is now important to make our position clear.

“Based on extensive legal advice, we are confident that the company has no legal grounds to terminate our relationship without being subject to HSM’s contractual rights contained in the IAA. HSM has explained this in detailed legal correspondence with the company. The company has not responded to HSM on the legal arguments it has presented.

“HSM will vigorously protect its interests should the company purport to terminate the IAA. We will use all means necessary to defend our contractual position and interests. It is important that shareholders, songwriters and artists understand that HSM has acted appropriately and professionally in our role as Investment Advisor and fully in accordance with the IAA.

“To be clear, were the company to purport to terminate the IAA and/or hand HSM’s responsibilities under the IAA to a third party, HSM and its majority shareholder are fully resolved to protect all of our rights under the IAA, including the right to exercise the call option to acquire the company’s assets.”

The ball is in the HSF board’s court as the bidders await the next chapter in this unfolding drama.