Mason files dissident proxy circular in Telus fight

Date: Tuesday, September 25, 2012
Author: Reuters

Fund seeking to block one-for-one consolidation

Investor meeting set for Oct. 17

Top Telus Corp shareholder Mason Capital Management LLC said on Monday it has filed a dissident proxy circular to block the Canadian telecom company's plan to consolidate its voting and non-voting shares on a one-for-one basis.

The U.S. hedge fund is locked in a bitter dispute with Telus, arguing that voting shareholders paid more, on average, for their stock and should be compensated as the two classes merge. Investors will vote on the matter at an Oct. 17 meeting.

"Telus's actions stand to set a very dangerous precedent in corporate Canada," said Mason principal Michael Martino in a statement that called on shareholders to block the scheme.

Telus has argued that universal voting rights are a good corporate governance practice, and the Vancouver-based company contends that Mason stands to benefit if it can maintain a spread between voting and non-voting shares.

"Mason Capital's dissident circular contains a tremendous amount of skewed information and is just the latest in a series of increasingly desperate attempts to create confusion and uncertainty in an attempt to drive the price of our share classes apart," said Telus spokesman Shawn Hall in an email.

Telus also alleges that the hedge fund has an empty voting strategy as it holds both long positions and short positions in Telus stock. It says Mason has only a 0.02 percent stake in the company once its short position is subtracted from the shares Mason owns.

As of June 30, Telus had about 174.9 million voting shares outstanding and about 178 million non-voting shares outstanding on a diluted basis. Mason's latest disclosure indicated that it has shorted 14.7 million voting shares and 18.0 million non-voting shares, while owning 32.8 million voting shares.

Mason said last week that it had been granted permission to launch an expedited appeal of a court ruling that blocked it from calling its own meeting of Telus shareholders.

If that meeting is held, holders of voting shares could approve a measure to guarantee a premium for their stock in any consolidation. Mason spokesman Peter Block said on Monday the fund is still pursuing the separate meeting.

Telus's voting shares closed up 1.4 percent at C$62.02 on the Toronto Stock Exchange on Monday. Non-voting shares closed up 1.5 percent at C$61.48.