Telus Corp. investor Mason Capital Management LLC is seeking a meeting of shareholders in a bid to counter a potential move by Canada’s third-largest wireless carrier to eliminate its dual-class stock structure.
Mason Capital, a New York-based hedge fund, objects to the so-called one-for-one proposal, which would extend voting rights to both classes of stock. At the meeting, investors with voting shares would decide whether to create a minimum premium valuation of either 4.75 percent -- the historic average trading premium of the voting shares over the nonvoting shares -- or a premium of 8 percent, Mason Capital said today.
“A one-for-one proposal unfairly takes value away from voting shareholders who have paid for it and gives it to nonvoting shareholders for free, including Telus’s board and senior management whose personal economic interests in Telus are heavily weighted to the nonvoting shares,” Mason Capital said in a statement.
On May 9, Telus withdrew a plan to convert its nonvoting shares to common stock hours before shareholders were set to vote on the proposal. The company said the initiative wouldn’t succeed because Mason Capital opposed the plan. Telus Chief Executive Officer Darren Entwistle said in May that he remains committed to a one-for-one share conversion and plans to introduce a new proposal “in due course.”
A Telus spokesman, Shawn Hall, said Mason is trying to conduct empty voting -- a practice that gives a fund more ballot power than its economic stake warrants. Telus, based in Vancouver, said in May that Mason Capital was voting C$1.9 billion ($1.9 billion) worth of common shares with only a C$25 million net holding.
“Mason is trying to advance its voting strategy,” Hall said in an interview today. “From our perspective, it’s just another nuisance play.”
Telus is required to hold the meeting of shareholders within four months from today, according to Mason Capital.