Land trust proxy war ends
The heated fight over a once-sleepy West Texas land trust valued at more than $6 billion is resolved for now as both sides agreed to consider converting the trust into a corporation, which would include a larger board of directors and greater transparency for shareholders.
The fate of the Texas Pacific Land Trust, which holds prime acreage in the Permian Basin oil field, had devolved into a proxy war with lawsuits and hurled insults as the trust’s leadership feuded with top shareholders over how to fill the lone vacancy on the trust’s three-person board. The resolution announced Wednesday involves expanding a newly formed “conversion exploration committee” and giving three of the seven seats on the committee to the shareholder opposition group.
The stated goal is to make recommendations on the future of the land trust by the end of this year. The open trustee seat will remain vacant until the committee concludes its work.
“We are pleased to have come to an amicable resolution,” said trustee John Norris. “It is now time for all of us to come together, put aside our differences,
and determine the best way forward for the trust and all of its shareholders.”
The land trust, headquartered in Dallas, was established 130 years ago to dispose of the large landholdings of a defunct 19th century railroad. It holds about
900,000 acres in the heart of the booming Permian Basin — assets that have sent the value of the trust skyrocketing to $6.2 billion.
The trust has a management structure dating back to the 1880s, led by a board of just three trustees who serve lifetime appointments. The proxy fight was triggered in March when one of the three died, creating a rare opportunity for hedge fund investors
to attempt to pick the next trustee.
The New York investment firm Horizon Kinetics, which owns nearly a quarter of the shares, is leading the efforts of dissident investors to get their own representative on the board, while pushing a potential switch from a trust to a corporate structure.
The fight had escalated into a messy court battle with both sides
accusing each other of fraud. Last month, the trustees offered what appeared to be a compromise by forming the conversion exploration committee to weigh the potential switch from trust to corporation.
The initial five-person committee, however, only offered one seat to the opposition.
The revised committee includes the two existing trustees,
their nominee for the third trustee and an investor of their choosing. The three opposition seats go to Horizon Kinetics Chairman Murray Stahl, the opposition trustee candidate Eric Oliver, and Craig Hodges, CEO of Hodges Capital, another large shareholder.