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Post-April 6, 2015 Financial Reports and Correspondence
Termination of the Trust of Great Northern Iron Ore Properties
The terms of the Great Northern Iron Ore Properties Trust Agreement, created December 7, 1906, state that the Trust shall continue for twenty years after the death of the last survivor of eighteen persons named in the Trust Agreement. The last survivor of these eighteen persons died on April 6, 1995. Accordingly, the Trust terminated twenty years from April 6, 1995, that being April 6, 2015, and is now proceeding with its wind-down process.
The certificates of beneficial interest (“certificates” or “shares”) in the Trust ceased to trade on the New York Stock Exchange (“Exchange”) at the close of business on April 6, 2015, the Trust’s termination date. The closing price for the Trust’s certificates as of April 6, 2015, was $8.10 per share. The Exchange, on the Trust’s behalf, filed Form 25 with the Securities and Exchange Commission (“SEC”) shortly after the Trust’s termination date to delist the Trust’s certificates from the Exchange and deregister the Trust’s certificates under Section 12(b) of the Securities Exchange Act of 1934. Following this delisting and deregistration of the certificates, the Trust filed Form 15 with the SEC to suspend the Trust’s reporting obligations. Certificates as of the close of business on April 6, 2015, now only represent the right to receive a final distribution payable to the certificate holders of record as of April 6, 2015.
Once the Trust’s wind-down process is completed (as further described below), the Trust is obligated to distribute ratably to the certificate holders of record as of April 6, 2015, the net monies remaining in the hands of the Trustees (i.e., all remaining cash on hand after paying or providing for all expenses and obligations allocable to the certificate holders incurred through the Trust’s termination and wind-down process), plus the balance in the Principal Charges account (this account is explained in the Trust’s Annual Report sent to all certificate holders every year). This final distribution amount must be approved by the Ramsey County District Court in St. Paul, Minnesota (“Court”) and is subject to the Trust’s filing of its final accounting with the Court and the Court’s approval of the Trust’s final accounting. Under the terms of the Trust Agreement, all other Trust property (most notably the Trust’s mineral properties and active leases) must be conveyed and transferred to the reversioner (which, effective January 1, 2015, is Glacier Park Iron Ore Properties LLC, a wholly owned subsidiary of ConocoPhillips Company and successor in interest to Glacier Park Iron Ore Holdings LLC, successor in interest to Glacier Park Company, which is a wholly owned subsidiary of ConocoPhillips Company), without further payment or remuneration to the certificate holders.
The wind-down process of the Trust is anticipated to extend into calendar year 2016 in order to complete the various year-end audits, court and regulatory filings, tax returns, conveyances of non-cash properties to the reversioner, etc., relative to winding down the Trust. Subject to the guidance and approval of the Court and assuming the wind-down process with the reversioner proceeds efficiently and that no other complications arise during this time period, it is anticipated that the wind-down process, final distribution and dissolution of the Trust will be completed by the end of 2016.
The Trust has previously provided information in its various Securities and Exchange Commission filings, including its Annual Report, about the final distribution payable to the certificate holders upon the Trust’s termination and after the wind-down process is completed. The exact final distribution to the certificate holders of record as of April 6, 2015, as discussed above, cannot be determined at this time. However, to offer a hypothetical example, without factoring in all expenses and obligations allocable to the certificate holders to be paid or provided for during the Trust’s termination and wind-down process, and using the financial statement values as of December 31, 2015, the net monies (essentially, cash less liabilities relative to the certificate holders) were approximately $6,793,000 and the Principal Charges account balance was approximately $5,527,000, which would theoretically result in a final distribution payable of approximately $12,320,000, or about $8.21 per share. It is important to note, however, that the actual “net monies remaining in the hands of the Trustees” and the balance in the Principal Charges account will fluctuate and will not be “final” until after the completion of the Trust’s termination and wind-down process. It is likely the final distribution amount approved by the Court will be less than the hypothetical example shown above given that certain future operating and wind-up expenses, as well as a possible additional final pension contribution, which are allocable to the certificate holders, would reduce the net monies available for the final distribution. The Trust offers this example to further inform certificate holders about the conceptual nature of the final distribution and does not imply or guarantee a specific or known final distribution amount.
By a letter dated September 12, 2014, certificate holders of record as of September 8, 2014, and the reversioner were notified of a hearing on October 7, 2014, in Ramsey County District Court for the purpose of requesting from the Court instructions and guidance regarding the Trustees’ powers, duties, responsibilities and authority relative to the operations and assets of the Trust and the wind-down process subsequent to April 6, 2015, for approval of the Trustees’ Wind-Up Plan, and for instructions and guidance pertaining to the appropriate allocation of the Trust’s termination and wind-down expenses between the certificate holders and the reversioner. The hearing was not completed on October 7, 2014, and the Court ordered a continuation of the hearing on November 24, 2014.
Pursuant to the Court’s Findings of Fact, Conclusions of Law and Order for Judgment filed on January 26, 2015 (“Court Order”), the Trustees’ Petition for Instructions was approved by the Court and, consistent with the Trust Agreement, the Trustees are to immediately proceed with winding up the affairs of the Trust upon its termination date of April 6, 2015, and to undertake the tasks and actions outlined in the Trustees’ Wind-Up Plan. The Court further ordered that the Trustees will retain possession and control of the Trust’s cash and non-cash assets (and books and records related thereto), that they are authorized to enter into temporary employment agreements with the current Trust employees to assist the Trustees during the wind-down process, that the Trustees’ compensation shall continue during the wind-down period until they are discharged by the Court, and that the Trust’s termination and wind-up expenses and costs (including attorneys’ fees) incurred after December 2013 shall be allocated between the certificate holders and the reversioner depending on the nature of the expense as set forth in the Court Order. Expenses incurred after December 2013 and through the Trust’s termination date that are allocated to the reversioner will be charged to the Principal Charges account. Finally, the Court Order required that an informal interim status report be submitted to the Court by the Trustees on November 15, 2015, that an annual audit and annual report for the year 2015 be completed and filed with the Court for approval by March 2016, and, as soon as practicable after the Court’s approval of this annual report, that the Trustees prepare final audited financial statements for filing with the Court for the approval of the Trustees’ final accounting and discharge. Final distributions and conveyances to the Trust’s beneficiaries (the certificate holders and the reversioner) shall be made upon the order of the Court.
Pursuant to the Court Order, the Trustees provided to the Court an informal interim status report on November 13, 2015, which included an update of the status of the Wind-Up Plan summarizing the procedures completed to-date, those that are still in process and those which remain that are still expected to be completed before the end of 2016, barring any unforeseen issues.