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Texas Pacific Land Trust Investors Accuse Trustees of Misconduct

Texas Pacific Land Trust Investors Accuse Trustees of Misconduct

(Bloomberg) -- A group of dissident Texas Pacific Land Trust investors has filed counter-claims against two incumbent trustees at the company, accusing them of breaching their fiduciary duties by giving themselves sizable raises and buying a private plane before spending millions on a proxy fight.

The group, which includes SoftVest LP, Horizon Kinetics LLC and ART-FGT Family Partners, is asking a federal court judge in Dallas to rule that a May 22 shareholder vote was valid and that its nominee, Eric Oliver, won. The group is seeking an order barring the trust’s two incumbent trustees from disputing Oliver’s election or meeting without him, according to a court filing Tuesday.

Texas Pacific Land Trust said last week that it believed the vote was invalid.

The dissident group also accuses the two trustees -- David Barry and John Norris III -- of “rampant misconduct” during the proxy fight and deviating from their authorized mandate prior to it, according to the filing.

“Without shareholder or court approval, the incumbent trustees have created a water operating company and multiple other subsidiaries, one of which recently purchased a fixed wing multi-engine aircraft, engaged in complex land and royalty trading transactions, reinvested nearly $100 million of shareholder capital annually, and given themselves a raise of more than 5,000%,” the investors said in the filing.

A representative for Texas Pacific Land Trust wasn’t immediately available for comment.

Texas Pacific is a land bank created out of a railroad bankruptcy more than a century ago. Its shares have surged in recent years, giving it a market capitalization of $6.6 billion, as shale drillers and firms seeking fresh water for use in fracking seek land in West Texas. The dissident investors, including the trust’s largest shareholder -- Horizon Kinetics -- are pushing for a change in its corporate structure and more disclosure about its operations.

The counter-claims are latest salvo in the acrimonious battle at the company. Last week, Texas Pacific Land Trust postponed a special shareholders meeting indefinitely and sued Oliver, accusing him of violating securities laws related to the proxy contest and secretly working with other parties including Santa Monica Partners and Universal Guaranty Life Insurance Co.

Oliver denied those allegations in Tuesday’s response to the lawsuit.

The dissident group accuses the company in the filing of spending an estimated $5 million on the proxy fight to elect management’s nominee for the trusteeship, Donald Cook. The group argues that the company postponed the meeting indefinitely and filed the lawsuit against Oliver after it became clear it was going to lose the proxy fight, according to the filing.

Preliminary totals showed Oliver had won more than 47% of the eligible votes, compared with 25.7% for Cook, the group said in the filing.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Liana Baker

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