(Reuters) - Telus Corp (T.TO), Canada’s No.2 telecommunications provider, said it is withdrawing its proposal to convert its non-voting shares to common shares, following a run-in with dissident shareholder Mason Capital.
Telus earlier asked the British Columbia Securities Commission to force Mason Capital Management LLC to say when it acquired 19 percent of the voting shares and at what price. It also wanted Mason to detail all its trading in the stock.
The regulator rejected the Telus request on May 3.
“The empty voting trading tactics of hedge fund Mason Capital and lack of regulatory oversight of the practice make it apparent a vote to be held at annual general and special meeting of shareholders on May 9 would not succeed,” Telus said in a statement.
Empty voting is buying shares to vote them while simultaneously short selling shares in the same company, according to Telus.
Based on the practice, Mason Capital was voting $1.9 billion worth of Telus’ common shares with only a $25 million net economic stake, the company said.
The dual-share setup was designed to comply with laws limiting foreign control of Canadian telecom companies at a time when U.S.-based Verizon Communications Inc (VZ.N) was a major investor in Telus.
Mason, for its part, believes scrapping the dual-share structure would unfairly discriminate against the voting stock’s holders, who paid a premium, by diluting the value of the class.
Reporting by Sakthi Prasad; Editing by David Cowell