A major shareholder in Canadian telco Telus has revealed that it intends to vote against the company’s planned change to its share structure.
In a regulatory filing, the New York-based hedge fund Mason Capital Management said that it had informed…
A major shareholder in Canadian telco Telus has revealed that it intends to vote against the company’s planned change to its share structure.
In a regulatory filing, the New York-based hedge fund Mason Capital Management said that it had informed Telus that it plans to vote against the proposed conversion of the company’s non-voting shares into voting common shares.
Mason said that, together with its “joint actors”, it holds 18.7% of Telus’s common shares and 0.4% of its non-voting shares.
It said that the securities had been acquired “for investment purposes and in pursuit of Mason’s investment objectives”.
Telus’ planned change would see each non-voting share converted into a single common share.
The change would depend on the company receiving the approval of two thirds of the holders of both its common shares and non-voting shares.
According to a Telus statement in February, the company originally designed the dual share structure over 10 years ago in order to deal with Canada’s foreign ownership rules. These restrict foreign ownership of the parent company of a telecoms operator to 33.3%.
Telus said in February that its shareholder base had changed since then and estimated that less than 20% of its shares were held by non-Canadians.
But in March, the company revealed that the non-Canadian ownership of its common shares was 24%. If it included approved or pending applications to acquire common shares, the figure would go up to over 33%.
Telus said at the time that it was examining the situation and that its transfer agent may not be able to approve all new or pending applications.
The company said that the catalyst for its announcement was buying interest from non-Canadian investment firms. It claimed that one of the main tactics being used was acquiring the company’s common shares and shorting the non-voting shares.
“The result is little to no real net economic interest in TELUS. The sole purpose appears to be to exert influence over the proposed share conversion and to increase the share trading spread for near term profit,” Telus said in a statement on 22 March.
Telus is being advised in the process by three law firms: Osler, Hoskin & Harcourt; Farris, Vaughan, Wills & Murphy; and Skadden, Arps, Meagher & Flom.
Scotiabank also provided a fairness opinion on the proposed share conversion.
