Mason Capital Sends Letter to TELUS Shareholders

  Mason Capital Sends Letter to TELUS Shareholders

Urges TELUS Voting Shareholders to Vote the BLUE Proxy and Reject the Proposal

Business Wire

NEW YORK -- October 05, 2012

Mason Capital Management LLC (“Mason”) today sent a letter to voting
shareholders of TELUS Corporation (TSX:T) regarding the proposed dual
share-class collapse transaction which is to be voted on at a general meeting
of TELUS on October 17, 2012.

(Graphic: Business Wire)

(Graphic: Business Wire)

The letter outlines the rationale for Mason’s opposition to TELUS’ proposal to
exchange all of its non-voting shares for voting shares on a one-for-one basis
and discusses significant flaws in TELUS’ process.

The text of the October 5, 2012 letter follows:

Dear Fellow TELUS Voting Shareholder:

TELUS’ October 17^th shareholder meeting is rapidly approaching. Act now to
protect the value of your investment and preserve your voting power by voting
NO toTELUS' proposal to convert its non-voting shares into voting stock on a
one-for-one basis. Please vote your BLUE proxy or voting instruction form
prior to 12:00 noon (EDT) on October 15, 2012.

If approved, TELUS’ flawed proposal would result in you giving up the premium
that you paid for your voting shares and a 46% reduction in your voting power
– with no compensation whatsoever. In fact, TELUS’ proposal would rank among
the worst Canadian share collapse transactions.

Professor Ronald Gilson of Stanford Law School and the Columbia School of Law
has stated that “voting rights attached to shares are valuable” and that “the
premium associated with TELUS voting common shares is well recognized by the
market.” Professor Gilson notes that TELUS’ proposal would have the effect of
“transferring value from the existing holders of common shares with voting
rights to the existing holders of non-voting shares.”^1

With such clear negative implications for an entire class of shareholders, we
cannot help but question the motives behind TELUS’ proposal.


TELUS claims that its commitment to “good corporate governance” is one of the
driving forces behind its proposed share collapse. We are not opposed to a
share collapse, provided there is a fair exchange ratio that would treat ALL
shareholders fairly. But TELUS’ proposal ignores the fact that voting shares
are historically – and fundamentally – more valuable than non-voting shares.
Despite shareholder concerns and repeated attempts to engage TELUS to discuss
conversion options and an exchange ratio that would treat ALL shareholders
fairly, TELUS’ board and management have stubbornly refused to consider
anything beyond the flawed and oppressive one-for-one exchange. How could such
complete disregard for an entire class of shareholders possibly be considered
“good corporate governance”?

The directors of a publicly-traded company have an overriding duty to protect
the interests of ALL shareholders and to ensure that any changes that
implemented are done so in a fair and equitable manner. The TELUS board has
failed in that regard. It did not establish a process whereby the interests of
each class would be fully and independently considered and never obtained an
independent fairness opinion for the voting class. Even in this second attempt
at pushing through the same oppressive proposal, they have not even attempted
to provide a fairness opinion for the voting shareholders.

What could possibly be driving TELUS’ fixed mindset and unwillingness to
fairly compensate voting shareholders in its proposed share collapse?

One possible explanation is a conflict of interest, as noted by Bernard Black,
Professor of Law at Northwestern University’s Law School and Kellogg School of
Management.^2 The majority of TELUS’ management team and board’s holdings are
tied to the non-voting shares. As a group, the management team and board hold
approximately $150 million more in non-voting shares than voting shares and
stand to make a windfall – which Mason estimates at more than $4 million – at
the expense of voting shareholders if this proposal is approved.


Shareholder voting is the primary means by which shareholders can exercise
their basic rights of ownership and influence the direction of a company. It
is a fundamental concept that lies at the very core of our corporate system
and is absolutely essential for good corporate governance. But, rather than
respecting the rights afforded to shareholders by allowing the vote to play
out fairly, TELUS is attempting to tip the scales in its favor by engaging in
“vote buying”.

TELUS is paying dealer solicitation fees for votes by retail holders TELUS
voting shares in favor of the proposal. Vote buying – which is illegal in the
U.S. and other countries around the world – flies in the face of the
fundamental function of a shareholder vote and shows TELUS’ complete disregard
for its voting shareholders and their rights.

Furthermore, TELUS voting shareholders have already spoken on this matter.
This past May, TELUS was forced to withdraw its share conversion proposal
because it faced certain rejection by shareholders. Now, TELUS has returned to
shareholders with the same proposal, except this time, TELUS has lowered the
historical voting threshold in an effort to force through the transfer of
wealth and voting rights to the holders of the non-voting shares. This tactic
is oppressive to voting shareholders and raises serious fiduciary concerns. It
begs the question, just how far will TELUS go to advance the interests of
non-voting shareholders over voting shareholders?


We are not seeking to influence management decisions, change the composition
of the TELUS board or seek other changes relating to the underlying
enterprise. To the contrary, Mason’s position is a very simple one: we believe
that voting shareholders deserve to be treated fairly and that any dual-class
share collapse should be implemented in a manner that does not result in the
transfer of both wealth and voting power to the non-voting shareholders
without providing compensation to the voting class.

We urge all voting shareholders to arm themselves with the facts about the
true economic implications of TELUS’ proposal, and to consider how little
regard TELUS has shown for both shareholders rights and the fairness and
sanctity of the corporate system. We urge you to exercise your FULL voting
power while you still can and vote the BLUE proxy to reject TELUS’ proposal
and force TELUS to either come back with a fair exchange ratio, or drop its
proposal altogether.

Yours truly,
Michael E. Martino
Principal and Co-Founder

Mason’s dissident proxy circular is available on TELUS’ company profile on


                            PLEASE VOTE ONLY YOUR
                              BLUE PROXY TODAY.

       Any questions and requests for assistance may be directed to the
                          Proxy Solicitation Agent:

                          Shareholder Services Inc.

                              The Exchange Tower
                130 King Street West, Suite 2950, P.O. Box 361
                               Toronto, Ontario
                                   M5X 1E2

                       North American Toll Free Phone:


                           Facsimile: 416-867-2271
                     Toll Free Facsimile: 1-866-545-5580
     Outside North America, Banks and Brokers Call Collect: 416-867-2272

^1 Affidavit of Ronald J. Gilson; September 24, 2012; No. S125864, Vancouver

^2 “Equity Decoupling and Empty Voting: The Telus Zero-Premium Share Swap,”
Bernard C. Black; September 28, 2012

Forward looking statements:

This letter to shareholders contains statements about expected future events
that are forward-looking. By their nature, forward-looking statements require
Mason to make assumptions and predictions and are subject to inherent risks
and uncertainties. Whether actual results and developments will conform with
our expectations and predictions is subject to a number of risks, assumptions
and uncertainties, many of which are beyond our control, and the effects of
which can be difficult to predict, including, without limitation, risks,
assumptions and uncertainties related to: the approval of the Proposal by
shareholders, the consummation of the Proposal by TELUS; actions taken by
TELUS to frustrate Mason’s actions or objectives; changes in market
conditions; the market value and trading price of the Common Shares; the level
of foreign ownership of TELUS; actions taken by TELUS to remedy a breach of
the foreign ownership levels; intervention by regulators or the courts; and
other factors set out in TELUS’ Management Circular. In evaluating any
forward-looking statements in this letter to shareholders, we caution readers
not to place undue reliance on any forward-looking statements. Readers should
specifically consider the various factors which could cause actual events or
results to differ materially from those indicated by our forward-looking
statements. There is significant risk that the forward-looking statements will
not prove to be accurate. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to update or
revise any forward-looking statements contained in this letter to shareholders
to reflect subsequent information, events, results or circumstances or

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