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Great Northern Iron Ore Properties Message Board

  • deltaforceover deltaforceover Jun 20, 2010 7:49 AM Flag

    This stock will expire in less than 5 years

    The stock price is kind of high being that it will expire shortly. The Trust, by its terms, will dissolve on April 6, 2015, 20 years after the death of the last survivor named in the original December 7, 1906 Trust Agreement. At the end of the Trust on April 6, 2015, the certificates of beneficial interest (shares) in the Trust will cease to trade on the NYSE and thereafter will represent only the right to receive certain distributions payable to the certificate holders of record at the time of the termination of the Trust.

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    • One thing is sure, Lizaheng is a MLP and trust specialist. I would not argues on the legal aspect of these stocks. The comments remind me of Barnum, but that is what makes the stock and bond markets move. TNH, and BPT are high, those play are good if you can handle ups and down of $3.00 plus per day.

    • I have found Tom to be very knowledgeable, thorough and honest in my prior conversations with him. I would encourage anyone on this board to speak with him directly to clarify any questions they have about GNI's ability sell or not sell real estate or any mineral leases etc.

      I would also encourage anyone to walk him through the maths many people have outlined on this board about all future potential distributions (including the final distribution) in comparison to today's stock price.

    • I will do that and post any info. First call, Tom was talking to another investor. In the afternoon, they usually have two people to answer IR questions.

      FWIW, I have no shares currently. I will wait and see the answer to the termination of trust question. I admit I was naively impressed with 1.5 million shares owning 67,000 acres of land, even if the current mineral leases owned, expire ... now I need to see the price tag is more than the contractual $1, that the lawyers like to use.

    • I strongly suggest you call the CFO Thomas A. Janochoski at the Company (651-224-2385) and ask him about whether or not GNI can dispose of property and whether or not production can ramp up in the final years to justify a quarterly dividend of $15 per share.

    • Yes, I see that, and I still have questions.

      The exact final distribution, though not determinable at this time, will generally consist of the sum of the Trust’s net monies (essentially, total assets less liabilities and properties) and the balance in the Principal Charges account

      ...

      the Principal Charges account balance will most likely fluctuate during the ensuing years and will not be “final” until after the termination and wind-down of the Trust.

      Once again I am left with a few pieces of missing information ... the disposition of property. GNI is ALLOWED to sell it. Typically they don't ... Hibbings has used a condemnation process to acquire land from GNI. But will GNI sell land before the end, or will the "termination and wind-down" involve cash transactions for land. Unfortunately, the transfer is part of the 1906 trust agreement, which I can't find online.

      Also, there is a 30-year supply of ore, and an existing 5 year lease. Will there be a ramp up of production. as the end approaches? That would be another way to justify the current price. The last quarter's divy is at a $15 per year rate. If that doubles ...

    • Please read page 7 of the latest quarterly report. There you will find the following paragraph, which is where I come up with my estimate for $8.53.

      "We have previously provided information in our various Securities and Exchange Commission filings, including our Annual Report, about the final distribution payable to the certificate holders upon the Trust’s termination. The exact final distribution, though not determinable at this time, will generally consist of the sum of the Trust’s net monies (essentially, total assets less liabilities and properties) and the balance in the Principal Charges account, less any and all expenses and obligations of the Trust upon termination. To offer a hypothetical example, without factoring in any expenses and obligations of the Trust upon its termination, and using the financial statement values as of December 31, 2009, the net monies were approximately $7,867,000 and the Principal Charges account balance was approximately $4,931,000, resulting in a final distribution payable of approximately $12,798,000, or about $8.53 per share. After payment of this final distribution, the certificates of beneficial interest (shares) would be cancelled and have no further value. It is important to note, however, that the actual net monies on hand and the Principal Charges account balance will most likely fluctuate during the ensuing years and will not be “final” until after the termination and wind-down of the Trust. The Trust offers this example to further inform investors about the conceptual nature of the final distribution and does not imply or guarantee a specific known final distribution amount."

    • in November 1906, Great Northern Railway directed Superior to transfer its stock in the mining property companies to the Trust known as Great Northern Iron Ore Properties. On December 7, 1906, 1,500,000 Great Northern Iron Ore Properties certificates of beneficial interest (shares) were issued to the stockholders of the Great Northern Railway, and the Trust was immediately quoted on the New York Stock Exchange ("NYSE"). Fifty years later, the restrictive land ownership statute provision was repealed and all of the assets of the liquidated companies were transferred to direct ownership of the Trustees of Great Northern Iron Ore Properties.

      The Registrant is a conventional nonvoting trust organized under the laws of the State of Michigan pursuant to a Trust Agreement dated December 7, 1906.

      I am coming to the conclusion that you are correct.

      But if so, why has GNI been so irresposible with the money in the past?

      For instance:
      "To give a better perspective on magnetic taconite, our engineers estimate that the proven and probable ore reserves of magnetic taconite under lease as of December 31, 2009, were equivalent to approximately 381,221,000 tons of pellets. These ore reserves are developed from exploration drilling (diamond drilling) analyses performed by our lessees (steel and mining companies), with our interaction and assistance"

      Why assist? Why estimate? GNI will be done after shipping another 50 million tons.

      On the one hand I see a clear date that is very endpoint, on the other, I see a large ownership change, for which compensation is not clear.


      Upon termination, the Trust is obligated to
      distribute ratably to these certificate holders the net monies (essentially, total assets less liabilities and
      properties) remaining in the hands of the Trustees (after paying and providing for all expenses and
      obligations of the Trust), plus the balance in the Principal Charges account (primarily representing the
      costs of surface lands acquired over the years). After payment of this final distribution, the Certificates of Beneficial Interest (shares) would be cancelled and have no further value. All other Trust property (most notably the Trust's mineral properties and the active leases) must be conveyed and transferred to
      the reversioner under the terms of the Trust Agreement.

      So what are the terms of the trust agreement? If the terms are transferred without compensation, then it is open and shut, if it is transfer title for market price, then it is different.

      The property was transferred in, to create a shell, owned by the shares, owned by the railroad, but the transfer out would just be a windfall for COP.
      But the final distribution:
      (essentially, total assets less liabilities and properties)

    • 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 named in the Trust Agreement died April 6, 1995. Accordingly, the Trust terminates twenty years from April 6, 1995.



      At the end of the Trust, that being April 6, 2015, the certificates of beneficial interest (shares) in the Trust will cease to trade on the New York Stock Exchange and thereafter will represent only the right to receive certain distributions payable to the certificate holders of record at the time of the termination of the Trust. Upon termination, the Trust is obligated to distribute ratably to these certificate holders the net monies remaining in the hands of the Trustees (after paying and providing for all expenses and obligations of the Trust), plus the balance in the Principal Charges account (this account is explained in the Trust’s Annual Report within the Notes to Financial Statements). All other Trust property (most notably the Trust’s mineral properties) must be conveyed and transferred to the reversioner (currently Glacier Park Company, a wholly owned subsidiary of ConocoPhillips) under the terms of the Trust Agreement.



      The exact final distribution, though not determinable at this time, will generally consist of the sum of the Trust’s net monies (essentially, total assets less liabilities and properties) and the balance in the Principal Charges account, less any and all expenses and obligations of the Trust upon termination. To offer a hypothetical example, without factoring in any expenses and obligations of the Trust upon its termination, and using the financial statement values as of December 31, 2009, the net monies were approximately $7,867,000 and the Principal Charges account balance was approximately $4,931,000, resulting in a final distribution payable of approximately $12,798,000, or about $8.53 per share. After payment of this final distribution, the certificates of beneficial interest (shares) would be cancelled and have no further value. It is important to note, however, that the actual net monies on hand and the Principal Charges account balance will most likely fluctuate during the ensuing years and will not be “final” until after the termination and wind-down of the Trust. We offer this example to further inform investors about the conceptual nature of the final distribution and do not imply or guarantee a specific known final distribution amount.


      © 2010 Great Northern Iron Ore Properties

    • And yet it is up $6.00 in one day?

      Rhyme?

      Reason?

    • LOL. I won't cease to trade. When the trust dissolves, the assets go up for sale and trustholders get the proceeds. The only thing that's dissolving is the paper-based ownership structure, not the underlying iron properties.

      Look at WTU for a current example of this same thing happenning.

      • 5 Replies to lxstocks
      • thank you for your information. I've been reading the same messages regarding this stock for years now. I did a school report on it about 4-5 years ago, and was going to buy it then, but then didn't because of all the messages questioning why it kept rising when the value ...etc. Now I have lost out on who knows how much over the last few years because I didn't buy! I'm so glad to read your post. :-)

      • It will not be like WTU.
        If you read the releases from the company, you would know that the rights revert back to Conoco Phillips in 2015. There will be no asset sale and no distribution of proceeds to unitholder (apart from cash amounts in the trust's accounts which will be small).

        So the value of this trust is equal to the sum of distributions over the next 4 1/2 years. Which is probably less than half the current market valuation.

        It's going to be interesting watching the price head down to zero over the next 4 years.

      • I don't think that's right - the trust assets on hand are distributed and trust returns to prior owner - there is no 'liquidation'

        At the end of the Trust on April 6, 2015, the certificates of beneficial interest (shares) in the Trust will cease to trade on the New York Stock Exchange and thereafter will represent only the right to receive certain distributions payable to the certificate holders of record at the time of the termination of the Trust. Upon termination, the Trust is obligated to distribute ratably to these certificate holders the net monies remaining in the hands of the Trustees (after paying and providing for all expenses and obligations of the Trust), 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). All other Trust property (most notably the Trust’s mineral properties and the active leases) must be conveyed and transferred to the reversioner (currently Glacier Park Company, a wholly owned subsidiary of ConocoPhillips) under the terms of the Trust Agreement.

      • I don't follow this trust very closely but I believe you are wrong there. After the trust terminates in April 2015, the mineral rights revert back to Conoco Philips. They will not be sold and nothing will be distributed except a small amount of petty cash left in the trust account. All unit holders get is distributions between now and then. WTU was a different trust structure.
        So perhaps you can see why this is so overvalued. The value of this is the sum of distributions between now and April 2015 AND THAT IS ALL. You can verify this for yourself by reading the annual report.

      • I mean, it'll cease to trade after the liquidation sale proceeds are distributed.

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GNI
22.71+0.52(+2.34%)Aug 19 4:00 PMEDT

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