Lion Long Term Partners LP, a Significant Shareholder of Texas Pacific and Land Corporation, Urges Shareholders to Vote Against Proposal 4 at Upcoming Annual Meeting
October 25 2022 - 6:53PM
Lion Long Term Partners LP, a significant shareholder of 50,600
shares of Texas Pacific Land Corporation (NYSE: TPL) urges
shareholders to vote against Proposal 4 at the Company’s upcoming
annual meeting of stockholders on November 16, 2022.
Proposal 4 asks shareholders “To approve an amendment to the
Company’s Certificate of Incorporation increasing the authorized
shares of common stock from 7,756,156 shares to 46,536,936
shares.”
Item 4 is not “routine business”. Its adoption would allow the
Board and current management to dramatically change TPL’s business
strategy, in effect for over 100 years, of collecting royalty
rights, selling land assets, and using the proceeds to repurchase
outstanding shares, thus enhancing stockholder value. The
stockholders are not being asked to approve this change in TPL’s
business strategy.
The Company says that the newly authorized shares will be used,
in large part:
- for a 3 for 1 stock split (for which the increase would only
need to be from 7,756,156 shares to 23,268,468), and
- to enable the company to make strategic acquisitions using
stock as consideration
This proposal appears specifically designed to fit into the
guidelines of major proxy advisory firms, which normally recommend
a “For” vote on a stock split and share issuance authorizations if
it results in the company having twice the number of shares
outstanding after the split. Management and the current Board
undoubtedly are hoping that this proposal will slip through with
ETF and Index funds following normal procedures on “routine” items.
But, given the long history of TPL, this “blank check”
authorization for management and the current Board to dramatically
change the business strategy of TPL is anything but “routine.”
If item 4 is approved, management and the current Board will
have twenty-three million shares, each one worth today $668 (post
split) at their disposal to spend on buying up assets, subject only
to stockholder approval if, under NYSE rules, a future share
issuance exceeds 20% of the shares outstanding. This is far from
being business as usual. It’s scary. The advantages of a stock
split are minimal in comparison with the dangers of allowing
management and the current Board to dramatically change the
business strategy of TPL without effective stockholder input.
For 134 years TPL has collected rights, royalties and sold land,
the cash proceeds used to re-purchase shares. From 1992 to 2017 the
Company retired on average 3% of the shares outstanding per year
reducing the total share count by approximately 53%, whilst acreage
owned declined by about 1% per year.
For historical perspective, see this article from the New York
Times dated 6 November 1904:
NY Times subscribers:https://nyti.ms/3CDBZHA
Non-NY Times subscribers: Favorable Position of Some Land
Holding Companies' Stock Reduced More Rapidly Than Assets
For a company that has spent 134 years reducing its share count
to suddenly ask stockholders to approve an increase from 7,756,156
to 46,536,936 is shocking. It is quite the opposite of routine; it
represents a 180 degree turn in strategy.
There are many long-term holders of TPL. We do not believe these
long-term stockholders want TPL to change its century-old strategy.
Furthermore, we believe many stockholders are concerned by the lack
of transparency and the time and money devoted by TPL since 2019 to
litigation with its major stockholders.
We stockholders have not been asked to approve a dramatic shift
in the business strategy that TPL has followed for over 100 years.
The Board has a fiduciary responsibility to stockholders to act in
their best interests. We do not believe approval of a dramatic
increase in the authorized number of shares of TPL is in the best
interests of its stockholders.
Your Vote Counts: We urge you to vote Against Proposal
4.
Sincerely
/s/ Stephen N. Walker
Stephen N. WalkerGeneral Partner Lion Long Term Partners LP
THIS IS NOT A SOLICITATION OF AUTHORITY TO VOTE YOUR
PROXY. DO NOT SEND US YOUR PROXY CARD. LION LONG TERM PARTNERS LP
IS NOT ABLE TO VOTE YOUR PROXY, NOR DOES THIS COMMUNICATION
CONTEMPLATE SUCH AN EVENT. WE URGE TPL’S STOCKHOLDERS TO VOTE
AGAINST PROPOSAL 4 BY FOLLOWING THE INSTRUCTIONS PROVIDED BY
MANAGEMENT IN ITS PROXY MAILING.
THE VIEWS EXPRESSED ABOVE ARE THOSE OF LION LONG TERM
PARTNERS LP. THE INFORMATION PROVIDED IN THIS COMMUNICATION MAY NOT
BE RELIED UPON AS INVESTMENT ADVICE, NOR BE CONSIDERED AS A
RECOMMENDATION TO BUY OR SELL SHARES OF TPL. THIS COMMUNICATION IS
FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A
RESEARCH REPORT.
Contact:
John Glenn GrauInvestorCom LLC(203) 295-7841
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