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UK-listed music rights holder Hipgnosis Songs Fund has canceled plans to pay an interim dividend after it warned the move would threaten its ability to comply with debt covenants after slashing expected payments on the group’s US catalog. Condition.

Hipgnosis said on Monday that Citrin Cooperman, the company’s independent portfolio valuer, had “significantly lowered” its expectations for industry-wide payments following the U.S. Copyright Commission’s decision last year to recalculate rates.

The decision covers royalties payable to songwriters between 2018 and 2022, meaning the company will receive “significantly lower” payments.

Hipgnosis shares plunged 16% in early trading on Monday.

The company said it would withdraw its proposed interim dividend announced last month to ensure it does not breach the terms of the revolving credit facility between the group and its lenders.

Hipgnosis added that it was in talks with its lenders to avoid further impact from the Copyright Royalty Board’s decision on its ability to comply with its covenants.

The company said future dividends would be subject to the “satisfactory conclusion” of discussions with lenders.

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