Activist investor Mason Capital has called on Canadian incumbent Telus to disclose its current foreign ownership levels, following issues raised by Globalive last week.
Globalive, a smaller competitor to Telus, cited a report from Broadridge that…
Activist investor Mason Capital has called on Canadian incumbent Telus to disclose its current foreign ownership levels, following issues raised by Globalive last week.
Globalive, a smaller competitor to Telus, cited a report from Broadridge that indicated that up to 48% of the holders of Telus voting stock reside outside Canada. The Telecommunications Act dictates that only 33.33% of Telus’ voting shares can be held by non-Canadians.
Mason, which is reportedly looking to sell its 19% stake in Telus, presented evidence in a letter to Telus’ board supporting Globalive’s suggestion. It also criticised Telus for what it perceives as a lack of transparency.
Broadridge’s report looked at the zip/postal codes of Telus shareholders and deduced from it that Telus may be breaking foreign ownership rules. Telus disputed that, arguing some Canadian shareholders may live outside Canada and that it looked at more accurate formal ownership declarations to determine foreign ownership levels.
However Mason allege that the formal ownership declarations included with Telus’ proxies for a recent shareholder meeting show that roughly 42% of voting shares in the election of the board were held by shareholders who either declared themselves non-Canadian or refused to answer the declaration, contrary to the requirements of the proxy.
Mason also alleges that while Telus has a foreign ownership reservation system, there appeared to be substantial numbers of voting shares held by non-Canadian shareholders who fail to comply with Telus’ control procedures and hold their voting shares outside the reservation system.
Mason says its findings are broadly consistent with Globalive’s claims last week and urged Telus to make a public statement on its foreign ownership levels.
“The uncertainty and risk created by Telus’ lack of disclosure is impeding Mason and presumably other Telus shareholders in evaluating their investment options,” said Mason founder Michael Martino in the letter.
Telus rejected Mason’s allegations and denied that there was any uncertainty around its compliance with foreign ownership restrictions.
The dispute marks the latest run-in between the Vancouver-based telco and the New York hedge fund. In May, Mason effectively blocked Telus’ share consolidation plan, but the telco alleged that the investor used “empty voting”- where one acquires voting rights in a common stock without having any economic interest in the same security.
Mason reportedly hired Blackstone to sell its 19% stake in mid May, which could fetch as much as C$2bn (US$1.95bn).