Pre-Trial Briefs

tpltblogger20 Comments

I’m reading them at the same time as you. Don’t be shy about sharing findings in the comments!

“After all, for Proposal Four to succeed, an absolute majority of TPL’s outstanding shares were required to be voted in favor of the proposal.224 In fact, only about 35.18% of TPL’s outstanding shares were voted in favor of the proposal.” pp60, Defendant’s Brief

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20 thoughts on “Pre-Trial Briefs”

  1. Well given I trust them as far as I can throw them, I think they would exercise the undisclosed right to not use a single share for the stock split, and use all of the new shares for acquisition.

    Also, management thinks stock shouldn’t trade at a premium to other mineral companies…….

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    • if paid up front the PIMP lawyers would argue the sun sets in the south. What whores they are.

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  3. Looks like Horizon initially INCORRECTED voted their proxy statement on 11/4 – only to have it corrected 7 days later … how is that possible?????

    Also these deals with OXY and Brigham Minerals HIGHLIGHTS why management HAS TO GO. I’m still reading…

    Liked by 1 person

  4. As a regular reader and very minority shareholder it makes me proud that our collective action to hold the board accountable has had a noticeable effect. Keep it up y’all

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  5. Just finish reading both sides … The judge will rule in favor of Horizon. It’s clear as day. Their argument is very well written.

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  6. Judge will rule bench tomorrow. These guys are out. Need all the support tomorrow in Delaware and continued support from fellow like minded shareholders. This blog has been great as noticed in the filings. We need to continue to shed light on these crooks and collaborate with other shareholders.

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  7. After spending some time reviewing both sides and their respective briefs for the arguments that will be made at the trial tomorrow, I have made some observations.

    The controversy over Proposal 4 to both split the stock x3 and also have the same number of split shares in a category of authorized but unissued is understandable. Its a big deal since it will impact our investment and the future direction of the company.

    Horizon Kinetics, Softvest, and many of the shareholders on this blog want to keep TPL as a compounding machine. Acquisitions are tricky, one can overpay, and dramatically change the profitability of a company. A steady reduction in shares outstanding has worked especially well over the long term.

    Current TPL management, most of the directors and probably some institutional investors want to see TPL make acquisitions. One could argue having the ability to issue more shares could also help perpetuate current management by diluting Horizon Kinetics, Softvest, and individual owners with large positions that have been anti-management.

    This case is going to be resolved based on the interpretation of the Settlement Agreement and if Proposal 4 is defined as an “extraordinary event”? Does a potential merger or acquisition represent something HK/Softvest can oppose without violating the Settlement Agreement?

    TPL management has the opinion asking for authorizing new shares, but not issuing them is not an extraordinary event, since they haven’t done anything with them, and could just have that authority for years and never use them. The difficulty in this argument is if they did use them for a large acquisition, it’s clearly an extraordinary event. TPL shareholders would get to vote on any acquisition that is more than 20% of TPL’s market capitalization.

    To HK/Softvest, this authorization with unissued shares is giving management a blank check to pursue smaller than 20% acquisitions without shareholder approval. And also the chance to try and complete large acquisitions if they can get shareholders to approve.

    Neither of these outcomes are consistent with the 135 year history of TPL, which has never issued shares, and has had no need to have blank checks. HK/ Softvest on principle oppose any change here. Another argument for the additional share authorization being extraordinary.

    The briefs cover considerable ground with case law, and reasons that support the two warring sides positions. For TPL management many of their arguments are complicated based on semantics. HK/Softvest is persuasive in showing it is a recapitalization, relates to governance, and just because you call it “routine” doesn’t make something like this routine. Prevailing on any of these terms allows HK/Softvest to vote how they want.

    One can never know how a judge will see this case, and the further complexities of Delaware law and courts. Delaware business law seems straightforward with a bias towards common sense and pragmatic outcomes. This should favor the brief from HK/Softvest.

    The silliness over comments and who helped write them for the TPL blog represents a sideshow by TPL management. The HK/Softvest brief does a masterful job of debunking this as being deterministic on the voting. Its also a sign of weakness in the TPL management’s fundamental case. One has the sense they realize their case is weak and are looking for anything that might possibly stick to the wall if they throw it hard enough.

    I am impressed both sides could make legal briefs in excess of 70 pages on what really is a narrow case based on definitions. Its disappointing as shareholders we have to pay for this much legal work. Additionally, if the Judge rules in favor of HK/Softvest we could also as shareholders end up with TPL having to pay their legal bills also, since this is an asked for relief.

    I would actually be glad for such an outcome.

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    • I called Vice Chancellor J. Travis Laster’s chamber at end of day and got a voicemail. 302-255-0510

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  12. I was present in the courtroom today. A few things I learned…

    First, do not expect a ruling any time soon. The parties will decide how to do post-trial briefs for the judge tomorrow. That will impact if things are done before the next scheduled meeting.

    The judge seemed to indicate that the future meeting would be a moot point. If he rules for TPL, then Prop 4 will effectively be deemed passed. If he rules for HK/SV, then Prop 4 is effectively dead.

    The judge also seemed to think the date of record currently was too far out.

    My hunch is that the judge is inclined to rule for HK/SV. However, he will be mindful of any precedent could set for broader Delaware Corporate law. I suspect he will look for a narrow issue that does not have broader implications.

    ***

    A few things I’ve learned: TPL has spent north of $, probably closer to $10 million of shareholder money on litigation.

    TPL – through its law firm, Sidley Austin – hired a private investigator to determine if Lion Long Term Partners colluded with HK/SV.

    The courtroom was over capacity. A reporter for Bloomberg Law said she has never seen shareholders appear in person. No shareholders present indicated support for TPL management.

    This was probably the first time in years people were sitting on the floor in the Delaware Chancery Court.

    The judge referenced the crime-fraud exception to pierce attorney-client privilege TPL asserted on one its documents.

    The statement was: “The Company currently does not currently have sufficient shares available for issuance to meet its existing obligations. We are concerned that the Company is unable to meet its current and potential obligations and believe it is important that the Company obtain additional common shares available for issuance in the future.”

    Director Karl Kurz testified that the quote in the proxy did not appear to be accurate. TPL’s lawyers tried to rehabilitate this later.

    EO and MS were excellent witnesses. (Humorosly they were quite a contrast. New York HK and West Texas EO.)

    The TPL lawyers, at times, came across like high school mock trial participants. They seemed to be trying to create drama and theatrics where none existed.

    TPL management does not appear to be a fan of the TPLT Blog. (Ty, Michael, John & David – nice to meet you via blog. I wish it hadn’t come to this.)

    My hunch has been that management wants to do an acquisition to dilute HK/SV. Nothing I saw today has changed my opinion.

    The trial also convinced me that no one knows TPL better than EO. He and MS are genius-level folks.

    By my count there were around 25 attorneys and paralegals there on behalf of TPL. And, as shareholders, we are collectively paying for them to sue the majority of voters.

    ***

    As TPL shareholders we all owe MS & EO a debt of gratitude for spending the huge amounts of money to fight this fight. While they have their own reasons, we are free-riders on their dime.

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  13. I was present in the courtroom today. A few things I learned…

    First, do not expect a ruling any time soon. The parties will decide how to do post-trial briefs for the judge tomorrow. That will impact if those briefs are done before the next scheduled meeting.

    The judge seemed to indicate that the future meeting would be a moot point. If he rules for TPL, then Prop 4 will effectively be deemed passed. If he rules for HK/SV, then Prop 4 is effectively dead.

    The judge also seemed to think the date of record currently set for voting on the proposal was too far in the past. However, the point is likely moot based on either ruling.

    My hunch is that the judge is inclined to rule for HK/SV. However, he will be mindful of any precedent that a ruling could set for broader Delaware Corporate law. I suspect he will look for a narrow issue that allows him to rule for HK/SV that does not have broader implications.

    ***

    A few things I’ve learned: TPL has spent north of $6, probably closer to $10 million of shareholder money on litigation.

    TPL – through its law firm, Sidley Austin – hired a private investigator to determine if Lion Long Term Partners colluded with HK/SV in releasing its pre-vote statement.

    The courtroom was over capacity. A reporter for Bloomberg Law said she has never seen so many shareholders appear in person. No shareholders present indicated support for TPL management.

    This was probably the first time in years people were sitting on the floor in the Delaware Chancery Court. The floor and benches do not appear to offer different levels of comfort.

    The judge referenced the crime-fraud exception to pierce attorney-client privilege TPL asserted on one its documents.

    The statement in question was in a proxy statement: “The Company currently does not currently have sufficient shares available for issuance to meet its existing obligations. We are concerned that the Company is unable to meet its current and potential obligations and believe it is important that the Company obtain additional common shares available for issuance in the future.”

    Director Karl Kurz testified that the quote in the proxy did not appear to be accurate. TPL’s lawyers tried to rehabilitate this later.

    EO and MS were excellent witnesses. (Humorosly they were quite a contrast. New York HK and West Texas EO.)

    The TPL lawyers, at times, came across like high school mock trial participants. They seemed to be trying to create drama and theatrics where none existed.

    TPL management does not appear to be a fan of the TPLT Blog. (Ty, Michael, John & David – nice to meet you via blog. I wish it hadn’t come to this.)

    My hunch has been that management wants to do an acquisition to dilute HK/SV. Nothing I saw today has changed my opinion.

    The trial also convinced me that no one knows TPL better than EO. He and MS are genius-level folks. It had to be unnerving for opposing counsel to be in a situation where the witness was clearly more intelligent than the lawyer asking the question. That’s not something you see all the time.

    By my count there were around 25 attorneys and paralegals there on behalf of TPL. And, as shareholders, we are collectively paying for them to sue the majority of voters.

    The expert witness testimony led me to believe this is not a slam-dunk case. Clearly I think HK/SV should win. However, the judge will be thinking about more than just this case. There’s a reason companies choose Delaware. This is why I suspect he will find a narrow point that favors HK/SV and use that rather than staking out new law.

    ***

    As TPL shareholders we all owe MS & EO a debt of gratitude for spending the huge amounts of money to fight this fight. While they have their own reasons, everyday retail investors are free-riders on their dime.

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  15. This is magnificent to learn….count me in as another shareholder that believe the management team and the portion of their stacked board need to be replaced as self serving incomptetnets. Thank you anonymous user.

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