Telus, Mason spar over voting rights in stock plan

Wed Aug 22, 2012 9:08am EDT
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(Reuters) - Telus Corp's (T.TO: Quote) largest investor has sharply criticized the Canadian telecom company's revived plan to consolidate its two classes of stock on a one-for-one basis, saying Telus made unfair procedural changes to clear the way for approval.

Earlier this year U.S. hedge fund Mason Capital Management LLC derailed Telus's initial effort to win backing for the plan, which would give non-voting shares the same rights as voting shares.

The dispute increasingly turns on which class of investors should have final say over the change.

The Vancouver-based company's original plan called for the approval of two-thirds of votes cast by voting and non-voting shareholders, with each class voting separately.

Mason held 19 percent of Telus's voting shares as of March 31, according to Thomson Reuters data, giving it an edge in that class.

With Mason planning to block the plan, Telus withdrew it in May. But on Tuesday Telus revived the plan while changing the ground rules for the shareholder vote.

The new proposal seeks two-thirds of non-voting shares, but only a simple majority of voting shares, because, Telus said, their legal rights will not change under the proposal. But the new rules would limit Mason's power to block the consolidation.

"Telus' new proposal to collapse the shares on a one-for-one ratio is the very same proposal that was rejected by shareholders a few short months ago, except that Telus appears to be attempting to circumvent the protections afforded to the voting shareholders under the law," said Mason Principal Michael Martino in a statement late on Tuesday.

Telus Chief Executive Darren Entwistle said the company - which competes with Rogers Communications Inc and BCE Inc's Bell Canada - was responding to "overwhelming" support from shareholders.   Continued...

A pedestrian is reflected in the window of a Telus store while using a mobile phone in Ottawa February 11, 2011. REUTERS/Chris Wattie