The decision of whether to convert TPL into a c-corporation is subject to determination of the current Trustees. The Committee recommended that, if the Trustees elect to authorize the conversion, the conversion should follow a process intended to ensure a smooth transition that would be tax-free to shareholders. As proposed, TPL would transfer all its assets, including cash, land, Texas Pacific Water Resources, and other assets, to a wholly-owned limited liability company subsidiary of TPL (“TPL Holdco”). TPL would then contribute all of the equity in TPL Holdco, holding all of TPL’s assets, to a newly-created corporation (“TPL Corporation”). Current shareholders of the Trust would receive an amount of shares in TPL Corporation proportional to their ownership of shares in the Trust. When this process as recommended is completed, shares of the Trust would be cancelled. Shareholders of the Trust would not need to take any action to receive the new shares in TPL Corporation.
Great opportunity to split the new shares too. Would be amazing/horrifying if the Trustees went rogue and decided not to adopt. Given all we’ve been through I wouldn’t be surprised. That certainly isn’t the base case though.
Some folks were wondering about a unit holder vote to convert. That doesn’t appear to be the case.
Much remains unsaid about governance of the new entity. Also not mentioned is the plan for returning accumulated cash and cash going forward.