Photo: Michael Ciaglo, Staff / Houston Chronicle
The heated fight over a once-sleepy West Texas land trust that’s now valued at more than $6 billion is resolved for now as both sides will come together to consider converting the trust into a corporation.
The fate of the Dallas-based Texas Pacific Land Trust 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” so that three of the seven committee members are from the shareholder opposition group.
The new stated goal is to reach a resolution and make recommendations on the future of the land trust by the end of this year.
“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 130-year-old land trust holds about 900,000 acres in the heart of the booming Permian Basin — assets that have sent the value of the trust skyrocketing. The trust, established to dispose of the large landholdings of a defunct 19th century railroad, has an unusual structure dating back to the 1880s with a board operated by 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 by dissident investors to get their own representative on the board, while pushing a potential switch from a trust to a corporate structure, which would include a larger board of directors and greater transparency to shareholders.
The fight had devolved into a messy court battle with both sides accusing each other of fraud. Last month, the trustees offered what what appeared to be a compromise by forming the conversion exploration committee to weigh the a potential switch from trust to corporation.
However, the initial five-person committee only offered one seat to the opposition. The expanded committee gives them three seats.
So 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, a large trust shareholder.