Telus Corp. is holding a meeting in October in which shareholders will be able to vote on a proposal to combine its voting and non-voting shares into one class of stock - and it believes this time a U.S. hedge fund won't be able to block the plan.
In announcing the move Tuesday, the 91原创based telecom giant said it's rejecting demands from Mason Capital Management to call a vote on whether to give voting shareholders a premium once the stock is consolidated.
"We're going to defeat Mason, which will be cheered on by good corporate governance advocates," said chief financial officer Robert McFarlane.
Telus first introduced its share-conversion plan in February, but withdrew the proposal right before its annual general meeting in May when it became apparent that what it calls Mason's "empty voting" tactics would render it unsuccessful.
By accumulating about a 20 per cent stake in Telus in common stock while at the same time short-selling nearly the same amount of non-voting and common Telus stock, Mason was able to vote nearly $2 billion worth of stock with only a $25-million net economic stake, Telus said.
"It brings up a broader issue of corporate law that I think regulators are going move on because of our situation," said McFarlane.
Excluding Mason Capital, proxies representing about 92.4 of Telus shares were cast in favour of the Telus proposal in May.
At the Oct. 17 meeting, like the one in May, Telus will need to garner two-thirds support from non-voting shareholders. However, the threshold for voting shares has been lowered from two thirds to half, which should make it more difficult for Mason to block it again, said McFarlane.
Mason warned Telus that it had until Thursday to send out a notice of a special meeting to vote on the mandatory premium or else it would call a vote itself.
McFarlane said the later announcement of the October meeting should render Mason's request redundant.
Mason principal and cofounder Michael Martino said voting shareholders of Telus must be compensated in the conversion plan because voting shares have always been worth more money. "As a matter of fact, voting shares have unlimited upside vis-脙聽-vis the non-voting shares," Martino said.
Mason is proposing a minimum premium valuation of either 4.75 per cent - the historic average trading premium of the voting shares over the non-voting shares - or a minimum premium of eight per cent.
In a separate statement, Telus said it's rejecting Mason's request.
"Telus's board of directors carefully reviewed Mason's requisition, and we found it both anti-democratic and invalid and therefore concluded unanimously to reject it," said chairman Brian Canfield. "Simply put, Mason's request would have imposed constraints on non-voting shares without giving holders of those shares a say."
