23 thoughts on “Ouch”

  1. And this is why it was so critical for David Barry to no longer be in charge. Now this is inconsequential. Murray controls the Board and will not allow any shenanigans

    Like

  3. Remember, the board said an authorization is not dilutive, as it is not an issuance…. Let’s hope they live by those words.

    Like

  4. Correct Fred, the Board previously said that just because it passes does NOT mean that the shares are automatically issued. If they proceed to issue the shares we will vote them out. Simple as that. Hit the reset button. All new Board except for Murray and Eric.

    Like

  5. Can they just now issue shares for an acquisition? I would hope there would be a vote for any purchase. What a shame. A good company run poorly. I long for the old trustees, upstanding and always looked out for the shareholders

    Like

  6. I suspect that in order for the shares to be issues, Proposal 4 needs to be ratified by the board. And if the board is going to meet to ratify Proposal 4, then the board will need to ratify the other shareholder proposals or they can kiss their abilities to serve on other boards good by.

    Like

  7. You need to at least skim thru the 69 pages and then carefully read Page 69 which I have attempted to cut and paste.

    E. The Company’s Relief Is Conditioned On The Stock Split.
    On its face, Proposal Four calls for increasing the authorized common stock
    from 7,756,156 shares to 46,536,936 shares—a sextupling of the authorized common stock. To minimize the significance of that increase, the Company repeatedly stressed during this litigation that the bulk of the shares will be used for a 3-for-1 stock split. But the Company never committed to the split. Having relied on the split for purposes of this case, the Company cannot now walk away from it. Consequently, the final order will condition the increase in the authorized shares on the Company completing
    the split. If the Company does not complete the split, then the additional authorized shares will be void.
    III. CONCLUSION
    The Investor Group breached the Voting Commitment by failing to vote with the Board’s recommendation in favor of Proposal Four. The Investor Group’s shares are deemed voted in favor of Proposal Four, which is deemed approved by holders of a majority of the Company’s common stock. The Company is entitled to an award of costs as the prevailing party. Within thirty days, the parties will submit a joint letter that either attaches an agreed-upon form of final order or identifies any issues that remain to be addressed and proposes a procedure for resolving them. The invitation
    to identify issues is not intended to provide an opportunity for a full or partial doover. It is designed to enable the parties to ensure that the court has addressed all of the matters that the parties have fairly put at issue”

    MY two takeaways from this is TPL has to perform the stock split and the Investor group is on the hook for TPL’s Legal Expenses. But I am not a lawyer so please correct me if i am mistaken. And what happened to TPL stock today? [I don’t believe the word has got out yet.

    Like

      • My comment was addressed to some of the other commenters who don’t seem to have digested the news before posting. I see that the opinion was posted today, it wasn’t on the Court of Chancery web site last night.

        Like

    • Yes, about the legal fees to me also. So how would it work? At a 3/1 split but they are really splitting 6/1 so basically we would be giving 50% back to the directors for their kitty? Please correct me if I am wrong. Book value does not increase so what we have would be 50% less?

      Like

  8. Well, get ready for dilution. Can’t wait to see what ole Tyler acquires with our shares. Plenty of time left with the bad apples of the board still serving to get it done.

    So sad that a great company was taken hostage by a few greedy people that own minimal shares.

    Like

  9. What’s the big deal here exactly? 3-for-1 split and another 2x shares authorized? Isn’t that just a technicality? It’s not as if the share count just doubles out of thin air and we’re all 50% poorer.

    Like

  10. Yea this isn’t a big deal. It would have been nice to have the ‘win’ but in reality nothing will change . And the 3-1 split just speeds up the process of gaining enough trading volume to eventually be included in the SP500.

    Like

  11. The tool to fix this is “E. The Company’s Relief Is Conditioned On The Stock Split.” I think that there are actions this Board can take to fix this.

    A proposal to do a reverse stock split should be done and a stock split could be done with a proposal to authorize just enough shares to cover a split.

    I also don’t know what legal expenses he refers to since the company paid them. I, as a shareholder, don’t want to see HK/SV being made to reimburse the company as a result of this ridiculous verdict.

    I don’t know what universe Laster exists in, but his take on what was submitted must exist absent facts.

    Liked by 1 person

    • Have been in a cabin the deep woods the last week. A blessing and a curse of the cabin is its total lack of internet or cell coverage. Now that I am back….wow.

      An unexpected ruling from my earlier perspectives.

      The mea culpa on my part was believing that the significant lack of material disclosures by the Company produced proxy information would negate the contractual obligations to support Measure 4. I also thought there was enough carve out wiggle room due to recapitalization, governance, merger or acquisition, and extra-ordinary transaction terminology that something would stick. Again, I was wrong, and the court felt these were all ambiguous and unconvincing.

      What I failed to fully appreciate is the Delaware Court is a business court. The fundamental building block of business is contracts. The court opinion is the contract is an agreement between the two parties and was breached. This rises to a level of importance that overrides the other issues and concerns by Team HK/SV.

      This is an interesting look into the interpretive calculus on how this court thinks. The breaches by HK/SV in opposition to Measure 4 seemed small, and reasonable conversations to have with like minded individuals. But again, the court through a strict reading of the voting contract, felt they were egregious contract violations.

      No harm from these conversations could be shown to the plaintiffs, but that is not the point. Rather, those things taking place are a contract breach, and contracts seem to be interpreted strictly in Delaware. Or perhaps a bias of this presiding judge.

      So, what happens next? There is a very narrow window to file an appeal at 30 days after the post trial opinion of December 1.

      An appeal could serve the purposes of further delay, and a chance of a favorable ruling but also comes with the risk of Team HK/SV being on the hook for yet more legal expenses of their own, and the other side. The opinion is long which provides both ample reasons for the opinion, but also opens the door to many avenues for appeal. The judge during the one day trial in April did comment on the complexity of the case and an extemporaneous comment that the case was likely to be decided on appeal.

      Just a guess, but I think there is a 25-50% chance of an appeal. The threat of appeal also can be a negotiation tool, if a middle ground can be found between the two sides. Not sure there is one here.

      Liked by 2 people

  14. Now that Horizon and Softvest can vote freely, is this even a threat anymore? Wouldn’t any potential share-based value destruction (like using undervalued shares as currency) have to be board/shareholder approved?

    Like

  15. If you deep dive the opinion you will learn about the existence of the “Strategic Acquisition Committee” [didn’t know about that did you? Use the find function in your browser to search for “Strategic”]. Hint it is on page 11 and 12.

    “G. The Company Pursues Acquisitions.
    One of the reasons why management wanted to increase the Company’s
    authorized shares was to facilitate acquisitions. In November 2021, the Company began exploring a purchase of assets from Occidental Petroleum (“Oxy”). In February 2022, the Board formed a special committee to consider potential acquisitions (the “Strategic Acquisitions Committee”). Over the next ten months, management and the Strategic Acquisitions Committee considered eighteen different transactions, none of which resulted in a binding offer or signed agreement. JX 598 at 6–11. The two largest transactions were the potential asset purchase from Oxy and a potential merger with Brigham Minerals, Inc. (“Brigham”).
    The Oxy transaction fell apart over price. In April 2022, Oxy signaled a
    purchase price in the range of 12x EBITDA, above the Company’s range of 8x to 10x EBITDA. The Strategic Acquisitions Committee and management discussed Oxy’s ask. Management reported that Oxy was interested in consideration that included stock and asked for a premium because of “perceived execution risk on the part of the Corporation to be able to get necessary approvals and consummate the transaction….” JX 360 at 3. The potential transaction died shortly thereafter.

    Contemporaneously, management internally expressed its desire to increase the number authorized shares to facilitate acquisitions. An internal management presentation from April 2022, flagged that the Company’s “access to capital (i.e., authorized shares) has become a primary barrier to progressing transactions to formal decision points.” JX 318 at 8.
    The Brigham transaction suffered a similar fate. In July 2022, the Company
    submitted a non-binding offer to acquire Brigham for stock worth $1.746 billion. JX 1034 at 2–3. In September, Brigham announced a transaction with a competing bidder. JX 420. Barry told the directors other than Oliver and Stahl that the Company’s bid was “on target” but failed because the Company was not authorized to issue stock. JX 422. He asked whether it was “worth considering a competing bid for Brigham if we get the stock authorization?” Id. The consensus was that the “ship has sailed” and the deal was lost. Id”

    Like

  16. I should have said to reverse the increase in authorized shares, not to reverse the split. Nothing happens unless a split is actually done, so anything to ‘De-authorize’ the number of shares above what is needed for a 3:1 could be a solution.

    Like

  17. On the lawsuit, page 28, reference 10 at the bottom: “The parties, however, submitted a stipulation for entry of a partial final judgment under Rule 54(b) that contemplated a second trial to address damages and to litigate five other issues.”

    Continued on page 29: “Because the parties presented no evidence on damages at the first trial, and because the Delaware Supreme Court ordered me to address that issue on remand, the parties’ stipulation means that I must hold a second trial and receive evidence on damages. For present purposes, the Holifield decision demonstrates that parties can reach agreements that bind the court as to what evidence it must consider.”

    Am I reading it right that the judge is saying that a 2nd trial is REQUIRED to determine damages and that there are five other issues to litigate?

    Is there any possibility at all that there is a smoking gun that required both Barry and Norris to resign? Or a possibility that the judge is requiring the split to be ONLY a stock split that doesn’t dilute everyone or was something Oliver and Stahl were able to agree to? It is disheartening about what the Judge said about Oliver and Stahl’s testimony not being credible. I cannot help but to wonder how the judge would have ruled if those points were moot about talking to other shareholders and such.

    It’s amazing that the stock took a $1.1 billion hit TODAY after it was ruled that the company wouldn’t be required to pay for the investor group’s legal fees and that could be reversed. While I’m really defeated about what I think this ruling means, is there ANY slither of hope for us to still hear things that would be ruled in favor of the investor group? Hoping for a miracle over here….

    Like

Comments are closed.