Back to Delaware

tpltblogger14 Comments

https://ir.stockpr.com/tpltrust/sec-filings-email/content/0001104659-22-121426/tm2231121d1_defa14a.htm

As previously disclosed, Horizon Kinetics LLC, Horizon Kinetics Asset Management LLC, SoftVest Advisors LLC, and SoftVest, L.P. (collectively, the “Investor Group”) submitted proxies to vote against Proposal 4, which is the proposal to approve an amendment to the Company’s Certificate of Incorporation increasing the amount of authorized shares of TPL common stock (the “Share Authorization Proposal”), at the Company’s 2022 annual meeting on November 16, 2022. The Company believes that the Investor Group is required to vote for the Share Authorization Proposal pursuant to the voting commitments in their stockholders’ agreement with the Company. On November 22, 2022, the Company filed a complaint in Delaware Chancery Court to resolve its disagreement with the Investor Group with respect to such voting commitments. The Company reserves all rights and remedies, and waives none.

The company is taking legal action against its largest shareholders. Again.

Can the King Air make it from Dallas to Delaware in one hop? The team seems to be spending a lot of time out there these days.

14 thoughts on “Back to Delaware”

  1. I wonder if the share price hits $3K if HK may decide to let management run TPL in the ditch without them?

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      • That’s always been the issue with the thesis that one should trust HK. I believe that they do such a hard sell on the stock because one day they have to unwind and need fan boys to sell it to. It’s more likely they’ll encourage a sale to Chevron or someone like that, but the potential for HK need to unwind due to a forced sale or desire to exit is a major risk.

        Liked by 1 person

  2. Nothing screams corporate governance like using shareholder money to sue shareholders, who’ve been shareholders almost as long as the CEO has been alive. Pathetic.

    Liked by 2 people

  3. How can the Board believe this latest legal action is in the best interest of shareholders? The audacity of the Co-chairs to think they know what is best for shareholders (when your largest shareholder disagrees) is astounding. I wonder how much in legal expenses this is going to cost us.

    This whole governance failing raises so many questions to my mind moving forward. Oh, by the way, the stock price is up over 100% this year. Couldn’t management just get out of the way and ride the tailwinds that are boosting the energy sector for the foreseeable future? Just cash the damn royalty checks, pay out some special dividends, and repurchase shares during dips in price. Do a true analysis on the water business to determine not only if it profitable, but also the opportunity cost of how that money could be used.

    – Is the Shareholder Agreement dead as it is supposed to be following the 2022 Annual Meeting? Of course, now the 2022 meeting is not being finalized until Feb. 2023.

    – When did the Board actually know that HK/SV was voting no on proposal 4? I can’t believe it was not before the day before the meeting as they claimed. Is it a fact the proposal would have passed if not for the HK/SV dissention? To even put forward that proposal on the proxy, wouldn’t it have been sensible to gauge the reaction of Stahl and Oliver right from the onset to spare all this animosity and drama?

    – What bonehead lawyers (Barry and Norris probably) crafted the Shareholder Agreement with such vague language that nobody seems to really know when Stahl and Oliver are within their rights to vote against certain items?

    – At what point is it going to make sense for Stahl and Oliver to vacate their board seats to completely unshackle their votes and be able to speak freely about their views? Can’t imagine they enjoy this treatment. Of course, this would only make sense if they could appoint replacements who are pro-shareholder unlike the rest of the clowns, and we systematically remove Barry, Norris, et al when their terms are over.

    – What is Stahl’s end game? He continues to buy a handful of shares daily no matter the price. I believe he once said he thought TPL was worth $3,000/share… which seemed like a pipe dream at the time but is now close to reality. Has his thesis been adjusted upward?

    This blog site is the only place where intelligent conversation/debate can occur about these issues and many others. Happy holidays to all and be thankful that we have one of the best stocks in the universe, despite all the conflict.

    Liked by 4 people

  4. This is a desperate act by bad actors who recognize their plan is failing. HK and SV control enough votes to generally win on any proposal and they have the backing of a fair number of shareholders. Former trustees hoped by giving MS and EO board seats they would control their votes via shareholder agreement. When that didn’t work with Dana, they thought up a new plan to dilute HK and SV via split with retained shares. MS and EO told them no to dilution and basically signaled with declassification that Barry and Norris’s days are numbered. The trustees are forcing MS and EO to either oust them or surrender control. I am betting on the first. The empire is striking back, but the Ewoks are in control of the narrative. I am a proud Ewok, let the dancing commence.

    Liked by 1 person

      • I might have screamed like that the first time the Trustees canceled the vote on the third trustee. Since then each new plot twist is about as surprising as the plot twists in a Marvel movie. Still, we all need to send letters (emails) to the BOD that this lawsuit is not what owners want. BOD need to starting acting like Directors and in the best interest of owners (not mngt).

        Liked by 1 person

  5. I analyzed the Delaware filed lawsuit by TPL management against HK/Softvest, over their refusal to vote for Proposal #4. Its the same legal team for TPL as was unsuccessful on the Gliksberg matter.

    From a timing standpoint HK/Softvest has 20 days to respond to the complaint. They can respond in a variety of ways with rebuttal information that supports their position on how they voted. They can also expand the scope with counter claims (new claims where they feel they have been wronged) and third party claims (including as an example more parties such as individual directors and not just TPL management).

    Seeing the response motion will show what kind of a legal tussle will unfold. And also allow for some sense of time to a trial date. Steps in the process are the usual ones, can the parties work this out themselves, if not what discovery and depositions are needed to further build your case, and the usual steps and time of the process on the path to the trial date.

    The Gliksberg case took about a year. This one seems like it should take about the same time, but thats a guess. And if the case gets expanded to other issues, that lengthens the time. Its possible this may not be resolved before the 2023 shareholder election which will have Barry and Norris up for reelection.

    There are several interesting parts to this drama. First interesting fact was HK started the voting process by voting against Cook, and for Proposal #8 (the proposal to free HK and Softvest from the agreement. They later changed their votes on these two items and voted against #4. Softvest was consistent in their vote against #4 right up to the annual meeting.

    The case is framed around HK/Softvest not following the agreed on process to support what the board had supported in regard to voting.

    The wrinkle on Proposal #4 is it seems dilutive and a change in the business plan. And this is key to the controversy.

    The Stockholders’ Agreement limits “Extraordinary Transaction[s]” to “any tender offer, exchange offer, share exchange, merger, consolidation, acquisition, business combination, sale, recapitalization, restructuring, or other matters involving a corporate transaction that require a stockholder vote.”

    On or around October 18, 2022, the New York Stock Exchange
    categorized Proposal 4 as routine under NYSE Rule 452.

    Did the NYSE error in this determination? It’s certainly an argument that can be made. There is also the Glass Lewis statement saying how the company needed Proposal #4 to meet current and future obligations, which obviously wasn’t true. Given some of the challenging ethics seen on the Gliksberg case in that trial transcript there could be a considerable amount of dirty laundry coming to light.

    At this point with so many possibilities on where this could go, its hard to consider the various strategies and negotiation directions until the answer is filed.

    Liked by 4 people

  6. This feels like it could a long but pivotal battle in what has been years of war over the future of TPL and control of the Board. MS has chipped away slowly at the board but it feels like he’s got quite a bit of leverage now (thanks to the help of activist shareholders like Gliksberg and many others).

    Thanks to TPL Blogger for creating this platform to unite and inform shareholders, this place has grown incredibly and there are so many great posters here sharing important perspectives.

    Liked by 1 person

  7. I find it ironic that the cost of this law suit against MS and EO is 20% financed by MS and EO, as they own 20%+ of the company. Likely not a legal argument, but it shows how management overlooks share holder interest in a more or less direct manner.

    Liked by 1 person

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