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The TPLT Proxy War

TP-ticketA couple of years ago I wrote about the history of Texas Pacific Land Trust (TPLT), one of the largest landowners in Texas.  The trust was formed out of the bankruptcy of Texas Pacific Railroad, which received 3.5 million acres of land in West Texas in consideration for building the T&P Railway across the state. It went into bankruptcy in 1888, and its land was put in a trust to sell of to pay the railroad’s bondholders. Those certificates of trust were later listed on the New York Stock Exchange, where they trade under the ticker TPL. Its shares closed today at $786.44 per share, a market cap of $6.2 billion.

TPLT now owns some 888,000 acres of land. The minerals under its land were spun off into a separate company and acquired by Texaco, now Chevron – now one of the largest mineral owners in the Permian. TPLT has royalty interests under about 500,000 of those acres, in El Paso, Hudspeth, Culberson, Reeves, Pecos, Winkler, Ector, Midland and Glasscock Counties. In addition to collecting royalties the trust makes money granting easements and collecting damages from oil companies operating on its land, and has recently begun a business supplying water to the industry.TP-lands

Since its founding the trust has been managed by a three-member board of trustees. When a trustee dies or resigns, the remaining board members name his replacement, subject to shareholder approval. But now some investors want to change that, modernizing its management and converting it to a corporation. One of its trustees died in March, and those investors want to elect their own member rather than the nominee chosen by the other trustees.

The New York investment firm Horizon Kinetics, leading the dissident group, owns more than 23 percent of the trust shares and has nominated its own candidate for trustee.  The trust’s nominee is Donald Cook, a retired Air Force four-star general who was a commander of Randolph Air Force Base near San Antonio. He has served on boards of major corporations such as Burlington Northern Santa Fe railroad and the USAA Federal Savings Bank.

TPLT has postponed the shareholder meeting scheduled to elect its new trustee. It also filed a lawsuit in federal court in Dallas, accusing Eric Oliver, the nominee of the dissident shareholders, of violating securities laws.

Another chapter in the history of the T&P Railway.




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