Canadian incumbent Telus is facing a fresh confrontation with activist investor Mason Capital after the New York firm took new steps to block Telus’ latest attempt to collapse its dual-class share structure.
Currently Telus has two types of share, one…
Canadian incumbent Telus is facing a fresh confrontation with activist investor Mason Capital after the New York firm took new steps to block Telus’ latest attempt to collapse its dual-class share structure.
Currently Telus has two types of share, one with voting rights and another without. The operator plans to convert non-voting shares into common shares on a one-for-one basis subject to a shareholder vote.
An earlier attempt to put a similar plan to a shareholder vote was abolished in May this year due to resistance from Mason.
The hedge fund announced today it is to hold its own meeting of Telus shareholders on 17 October – the same day as the operator has planned to hold a meeting of its shareholders to vote on abolishing the current share structure.
Mason’s meeting centres on a proposition it announced earlier in the month: to give holders of voting stock a guaranteed premium of at least 4.75% more than holders of non-voting stock in the event of Telus successfully collapsing its dual-class structure.
Telus’ board rejected this plan recently so now Mason is attempting to put it to a vote. Telus said at the time of the rejection its board of directors had reviewed the requisition and found it anti-democratic and invalid.
Mason opposed the earlier share conversion plan arguing that Telus common shares have historically traded 4%-5% higher than the non-voting shares and therefore it should be compensated by Telus. Mason says if the two different classes of shares are being merged the voting shares will become less valuable and Mason will incur a short-term loss.
“Given the oppressive actions taken by Telus to disenfranchise an entire class of shareholders, it is critical that voting shareholders have the opportunity to vote on a binding change to Telus’ articles to establish an appropriate minimum premium to be paid in any dual-class collapse transaction,” said Mason partner Michael Martino in a statement published today.
“Mason will continue to vigorously oppose Telus’ latest attempt to take value from voting shareholders and transfer it to non-voting shareholders, who include Telus’ board of directors and company executives, whose personal economic interests are directly tied to the non-voting stock,” Martino said.
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