The board of Hipgnosis Songs Fund (SONG ) has slashed the October dividend after the embattled trust’s portfolio valuer reduced expected royalty back payments by 54%.

Following the US Copyright Board’s decision to increase royalties owed to artists over the 2018-2022 period SONG anticipated a $21.7m windfall, but Citrin Cooperman has reduced its expecation to $9.9m.

In an announcement on Monday outgoing chair Andrew Sutch cancelled the trust’s 1.32p per share interim dividend so the company would continue to comply with a charge cover ratio covenant on its revolving credit facility, which measures it ability to pay interest and debt payments.

Future dividends are in question until SONG has discussions with the lenders about the impact of the valuation change on its future compliance with the convenant.

In response, the shares initally plummeted 15% to an all-time low of 63.5p, signalling shareholders discontent ahead of a continuation vote at the annual general meeting on 26 October. 

Peel Hunt analyst Tom Pocock said the news added ‘significant uncertainty’ to SONG’s prospects with no commitment made around the company’s ability not to breach debt covenants. He added that it could also impact the $440m (£361m) music catalogue sale, which will be voted on at the general meeting. 

Last week several told the Financial Times they were not happy with the proposal and the future of the alternative income fund looks in doubt. 

Discount hunter AVI Global (AGT ) recently piled into the £894m embattled song royalties trust, building a stake worth 3% of the voting register, while fellow activists Aviva and Brooks Macdonald both have respective stakes of 6.7% and 3.5% respectively.