Canadian Court Says Mason's Telus Meeting Can Proceed

Date: Monday, October 15, 2012
Author: Reuters

VANCOUVER, British Columbia (Reuters)—Mason Capital Management LLC, the largest shareholder in Telus Corp., said on Friday [Oct. 12] an appeals court in British Columbia had overturned a ruling that had stymied its plan to call a meeting of the Canadian telecommunications company's shareholders.

The U.S. hedge fund has been locked in a bitter dispute with Telus for months over the Vancouver-based company's plan to consolidate its voting and non-voting shares on a one-for-one basis. Telus had backed down on the plan in May, but revived it recently.

Last month, the Supreme Court of British Columbia ruled that Mason could not call a meeting of Telus's voting shareholders. Mason had sought the meeting to get backing for its demand that voting shares be paid a guaranteed premium in any share consolidation.

The hedge fund appealed the ruling, and said on Friday the British Columbia Court of Appeal had decided in its favor.

Despite the victory, it is unclear whether Mason will be able to thwart the company's plan. Telus already has a shareholder meeting scheduled for Wednesday [Oct. 17], at which both voting and non-voting shareholders are set to vote on the share consolidation plan. In light of this, Mason said has it applied to the court to postpone the meeting.

Mason, which held 19 percent of Telus's voting shares as of Aug. 31, argues that voting shareholders paid more, on average, for their stock than non-voting shareholders and should be rewarded for that as the two classes merge.

Telus, for its part, argues that universal voting rights are a good corporate governance practice. It also contends that Mason stands to benefit if it can maintain a spread between the voting and non-voting shares.

The telecom company has accused the hedge fund of running an "empty voting" strategy, as it holds both long and short positions in Telus's stock. It says that Mason has only a 0.02 percent stake in Telus once the fund's short position is subtracted from the shares it owns.

"We're looking forward to our Oct. 17 meeting," said Nick Culo, a spokesman for Telus, in an e-mailed statement.

Telus shares closed 10 Canadian cents higher at C$62.71 ($64.02) on the Toronto Stock Exchange on Friday.