TORONTO - Mason Capital Management has filed and is sending its dissident proxy circular to voting shareholders of Telus Corporation ahead of its general meeting scheduled for October 17, 2012.
Mason has been locked in a bitter dispute with Telus over the telecom’s proposed plan to eliminate its dual-class share structure without paying a premium to voting shareholders, including itself, to reflect their higher value on the open market
The proxy circular filed today includes a letter to voting shareholders, which outlines the reasons Mason believes voting shareholders should vote “No” to Telus’ proposal including:
- Voting Shares are historically and Fundamentally More Valuable than Non-Voting Shares
- Telus One-for-One Share Collapse Proposal Would Dilute the Voting Shareholders Exclusive Voting Control from 100% to 54% for Zero Consideration, and Result in a Permanent Loss of the Market Premium That the Voting Shareholders Have Paid For
- Telus’ Board Demonstrated Clear Corporate Governance Failures
- Telus Board Relied on a Flawed Scotia Fairness
“Telus’ actions stand to set a very dangerous precedent in corporate Canada. The company is closing its eyes to the market premium of the voting shares and the rights of the class of shareholders who paid the premium for those voting rights. Mason urges all of Telus voting shareholders to act now to protect these valuable rights, which were paid for, and to reject Telus’ flawed proposal,” said Michael Martino, Principal and Co-Founder of Mason Capital in a news release.
Martino claims that Mason’s “Effort to protect all voting shareholders is recognized by leading independent governance experts who have confirmed that this proposal, which unfairly transfers value from the voting shareholders and provides it to the non-voting shareholders, is the result of a flawed and conflicted process. The lack of a proper process was only exacerbated by the fact that the holdings of management and the Board are heavily weighted towards the non-voting shares.”
Telus continues to maintain that its share exchange proposal is fair to all shareholders, widely supported by shareholders with a true economic stake in Telus, and consistent with the principles of good corporate governance.
"Mason Capital’s dissident circular contains a tremendous amount of skewed information and is just the latest in a series of increasingly desperate attempts to create confusion and uncertainty in an attempt to drive the price of our share classes apart so Mason can profit, or at least mitigate its losses from their empty voting strategy," writes Telus spokesperson Shawn Hall.
Mason insists it will continue its efforts to redress “Telus’ failures of corporate governance to ensure that voting shareholders receive the benefit of a fair exchange ratio in a dual-class collapse transaction.”
It appears however that not all “leading independent governance experts” believe Mason is acting in the best interests of Telus shareholders. Last week New York-based Wachtell, Lipton, Rosen & Katz issued a memo on the Telus situation in which they called Mason’s empty voting “deeply pernicious.”
“British Columbia’s Supreme Court has correctly identified the deeply pernicious nature of a shareholder exercising the fundamental voting franchise for reasons entirely at odds with promoting the interests of the company or the value of the shares to which the voting rights belong,” said Wachtell Lipton’s lawyers in the memo.
“We continue to urge the SEC to undertake comprehensive regulatory reform to address the ongoing abuse of derivative and other arrangements by investors who seek to avoid public disclosure of their investments or their true nature or to obtain influence over company governance and policy without commensurate economic exposure.”
Mason is holding a conference call for analysts, investors and other interested parties on Thursday, September 27, 2012 at 11:00 a.m. (EDT). The participant dial-in numbers are: 647-427-7450 (local/Toronto) 888-231-8191 (toll free/North America) or view online.