Fund asks Telus investors to reject share vote

Mon Apr 23, 2012 7:56pm EDT
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By Alastair Sharp

TORONTO (Reuters) - A major investor in Telus Corp (T.TO: Quote) who opposes its move to scrap a dual-class share structure said the move would unfairly discriminate against holders of voting stock.

Mason Capital Management LLC, a New York-based fund, said the proposed move would also lower the level of foreign ownership allowed and crimp the liquidity of the stock.

Shareholders in Telus, Canada's third largest wireless carrier, will vote on the measure to convert its non-voting shares Ta.TO into voting shares on a one-for-one basis at an annual meeting on May 9. Two-thirds of shareholders in each class must vote in favor for the proposal to be adopted.

"As proposed, the transaction will seriously compromise the interests of the voting class and confer a windfall benefit on the non-voting class," Michael Martino, the managing director of Mason Capital, wrote in a letter to the Canadian telecom company's shareholders on Monday.

Martino said in the letter that Mason would like to see a revised proposal that pays a premium for the voting stock, based on the 4 to 5 percent historical difference in trading price between the two types of shares.

Telus has no intention to negotiate a premium, its chief financial officer, Robert McFarlane, said. He said that most major investors in the voting stock had expressed support for the one-for-one conversion.

The spread has narrowed since Telus announced the proposal.

Mason owned 18.7 percent of Telus' voting shares at the end of March and has borrowed a much larger number of non-voting shares, it said earlier this month.   Continued...