Canadian incumbent Telus has received renewed support for its share conversion plan from proxy firm Glass Lewis, following the endorsement from Institutional Shareholder Services (ISS) earlier last week.
Telus’ largest shareholder, Mason Capital, has…
Canadian incumbent Telus has received renewed support for its share conversion plan from proxy firm Glass Lewis, following the endorsement from Institutional Shareholder Services (ISS) earlier last week.
Telus’ largest shareholder, Mason Capital, has been lobbying hard against the proposed change. Telus has proposed the collapse its dual-class share structure in a one-for-one exchange.
Mason – owner of roughly 20% of the operator – has its holdings primarily in voting stock in the company. This class of share has historically traded higher than the non-voting stock and so the New York-based hedge fund has demanded a premium on its shares.
Telus has reiterated that a one-for-one exchange is fair.
In a report Glass Lewis acknowledged that dissident shareholders had some valid points, but said: “We believe the long-term benefits resulting from a simplified share structure outweigh any potential short-term gains from a higher conversion ratio.”
“We believe the overwhelming support from shareholders, excluding Mason, accurately depicts the value that is expected to be unlocked for long-term shareholders following the adoption of a single class share structure.”
Glass Lewis also said that when the proposition was first tabled in May, approximately 92.4% of shareholders that delivered proxies supported Telus’ plan if Mason’s vote was discounted.
Both Mason and Telus are awaiting the decision of an appeal court which will decide whether the hedge fund can hold a shareholder meeting for holders of voting stock on the same day as Telus’ planned EGM where their proposal is set to be voted on.
Mason had called for the separate meeting to vote on a proposal that would guarantee holders of common stock a premium of at least 4.75% more than holders of non-voting stock in the event of Telus successfully mothballing its dual-class structure.
The Supreme Court of British Columbia blocked this after Telus took Mason to court. However Mason was granted an appeal.
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