Canadian telco Telus has withdrawn its share consolidation plan following staunch opposition from Mason Capital, a shareholder in the company. Telus accused the US hedge fund of “empty voting”.
It is the latest episode in a row between the two…
Canadian telco Telus has withdrawn its share consolidation plan following staunch opposition from Mason Capital, a shareholder in the company. Telus accused the US hedge fund of “empty voting”.
It is the latest episode in a row between the two sides that has been raging for weeks.
Telus had planned to convert each non-voting share into a single common share, subject to shareholder approval.
Telus claimed that by acquiring Telus shares while simultaneously short selling them, Mason accumulated voting rights equalling US$1.9bn of Telus’ common shares while only having a US$25m net economic stake in the company. This tactic is known as “empty voting”.
“The empty voting trading tactics of hedge fund Mason Capital and lack of regulatory oversight of the practice make it apparent a vote to be held at Telus’ annual general and special meeting of shareholders on May 9 would not succeed,” said Telus in a statement.
Mason has opposed the conversion plan arguing it would dilute the value of its shares. The hedge fund said in a statement last month that it does not believe the 1:1 conversion rate offered by Telus reflects the “superior value” of the existing common shares, which have historically traded 4%-5% higher than the non-voting shares.
Telus is being advised in the process by three law firms: Osler, Hoskin & Harcourt; Farris, Vaughan, Wills & Murphy; and Skadden, Arps, Meagher & Flom.
