TPL 2.0 : Investor Preferences

Investor Preferences in C-Corp Conversion:

  1. No dilution.  Share issuance of any kind should be prohibited in the corporate charter.  Any changes to this policy should require a significant majority vote. 
  2. Share repurchases should remain the primary method of returning capital.
    1. If a dividend is necessary, it should be regular and consistent.
  3. Board members, including originating board members, must be voted upon by shareholders.  Board terms should be of reasonable length.
  4. Board should be of reasonable size so as to function healthily at all times. Independent directors should outnumber executive members. 
  5. Remain in “business of going out of business”.  Primary duty of corporation is return of capital via royalty collections and asset sales.
    1. State limitations on additional business activity such as new business ventures and additional land/royally acquisitions.  
  6. Executives shall be required to purchase shares via dedicated cash compensation and/or company loans to ensure that shareholder and management incentives are aligned.  Executives should be required to attain and maintain some material level of ownership. 
  7. Executive compensation should be simple and oriented towards long term results.
  8. Stock shall be split regularly so as to facilitate liquidity for repurchases.
  9. Transparency in reporting of results and material events should be commensurate with those expected of a $5B+ publicly traded corporation.
  10. Corporation must hold an annual meetings and be regularly open to investor communcation.

The list above was kept short deliberately.  Spin-offs, head count, and other business decisions (in my opinion) should be the responsibility of directors and management with interests and incentives that are aligned with those of shareholders (TPL 2.0).

Tessler Parties Exit Cooperation Agreement

Looks like Tessler Parties are out of the Cooperation Agreement. Horizon and Softvest remain.  Would be a joy to see Tessler figure out another way to poke at the hornet’s nest.

March 27, 2020

Reference is made to that certain Cooperation Agreement (as amended, the “Cooperation Agreement“) by and among SoftVest Advisors, LLC (“SoftVest“), Horizon Kinetics LLC (“Horizon“), Tessler Family Limited Partnership (“TFLP“), and ART-FGT Family Partners Limited (“ART-FGT” and together with TFLP, the “Tessler Parties“) (collectively, the “Parties” and each, a “Party“).  Each of the Parties hereby mutually agree to terminate the Cooperation Agreement with respect to the Tessler Parties, effective immediately (the “Tessler Withdrawal“).

The undersigned Tessler Parties hereby wish to withdraw from the Cooperation Agreement and upon countersignature from SoftVest and Horizon, such withdrawal shall immediately become effective.  Upon such withdrawal, the undersigned Tessler Parties will no longer have any agreement, arrangement or understanding whatsoever with SoftVest or Horizon with respect to the acquisition, holding, voting or disposition of securities of Texas Pacific Land Trust (“TPL“).  Furthermore, upon such withdrawal, SoftVest and Horizon may vote or dispose of any securities of Texas Pacific Land Trust that they may beneficially own in their sole discretion, subject to any contractual obligations each may have to other third parties or to each other (including pursuant to the Cooperation Agreement).

The Cooperation Agreement shall otherwise remain in full force and effect between Horizon and SoftVest.  For the avoidance of doubt, Sections 6(d), 7, 8 and 9 of the Cooperation Agreement shall survive the withdrawal by the undersigned.

The Tessler Parties acknowledge that notwithstanding such withdrawal, the Tessler Parties may be subject to ongoing obligations to TPL under the Settlement Agreement dated July 30, 2019, as amended.


The Conversion Committee recommended a conversion to C-Corp on January 22, 2020.  After two months and a day pass, the Trustess come out to say they will adopt the recommendation of the committee they were on(!!!).  With no further details other than, uh, um, Fall 2020 maybe.

Why are things taking so long?  How much money has been paid in legal bills?

Even in good news there is misery with this pair of “Trustees” who appear to be working in the interest of everybody but the owners of the trust.



Done Deal

There’s your conversion.  Who’s on the board?

DALLAS–(BUSINESS WIRE)–The Trustees of Texas Pacific Land Trust (NYSE: TPL) (the “Trust”) announced today that the Trust has approved a plan to reorganize from its current structure to a corporation formed under Delaware law. The Trustees made their determination following careful consideration of the recommendation of the Conversion Exploration Committee of the Trust.

“The Trust’s present structure has suited the Trust’s needs and those of its shareholders for more than a century, but a Delaware corporate structure is more aligned with the expectations of today’s investors. A new corporate structure would better allow us to execute on business goals and capitalize on our enviable assets, resources and business potential,” said David E. Barry, a Trustee of the Trust. “With an enhanced governance framework in step with practices of publicly traded peer corporations, we expect a new corporate structure would enable value creation over time and drive value for stockholders.” John R. Norris III, Trustee of the Trust, added, “We are grateful to the members of the Committee for dedicating their time and attention to providing a thoughtful recommendation that informed this decision.”

Under the corporate reorganization plan, common stock of the new corporation would be distributed upon the consummation of the reorganization process to holders of sub-share certificates of proprietary interest of the Trust and traded on the New York Stock Exchange (NYSE). At or about such time, the sub-share certificates would be cancelled. The corporate reorganization is intended to be tax-free in the United States, and the corporation will be deemed a c-corporation for U.S. taxation purposes.

The Trust is presently aiming for the corporate reorganization to be effective by the end of the third quarter of 2020, but the Trust recognizes that unforeseen impacts of COVID-19 could extend this timeframe despite the Trust’s efforts. Barring any such unforeseen disruptions, further information regarding the corporate reorganization will be included in a registration statement on Form 10 to be filed by the corporation with the SEC as well as in other communications and disclosures anticipated to be made by the Trust and the corporation.

Tough Day

Record high volume of 96,356.  Volume weighted average price was $504.11.  Last trade was 751 shares @ $467.21.  Down 24.89% in price on the day.

Hoping the Trustees will act honorably and enact much needed governance changes so that repurchases can commence.  Not holding my breath.

We’ll see what tomorrow brings.