HSM said it had not been given time to review the report in detail, but that there were aspects it “strongly disagrees with and considers to be factually inaccurate and misleading”.
The adviser added: “Throughout the life of the company, HSM has worked constructively, and in good faith, with the company’s board and other advisers (including legal, audit, tax, financial markets and valuation) to deliver the best outcome for the company’s shareholders.”
The due diligence report forms part of a wider strategic review at Hipgnosis after it lost the backing of shareholders in a crunch vote in October.
The board must present options for the future of the fund by April 26, or face being wound up.
Hipgnosis’s newly appointed board, led by chairman Robert Naylor, has become embroiled in a row with Mr Mercuriadis over issues including governance and the valuation of the song’s portfolio of songs.
Shareholders last year blocked the sale of a $440m catalogue of songs to a Blackstone-backed sister fund also run by Mr Mercuriadis. Shot Tower said Hipgnosis will incur costs of around $5.7m linked to pursuing the deal.
Alongside the report, Shot Tower confirmed its estimation of the true value of Hipgnosis’s song catalogues at $1.95bn, a reduction of around 26pc from the company’s last valuation at the end of September.
Shares in Hipgnosis Songs Fund rose 8pc following the announcement, giving the company a market value of around £835m.