VANCOUVER - Proxy advisory firm Glass Lewis & Co is backing Telus’ shareholder consolidation plan as its ongoing dispute with U.S. hedge fund Mason Capital Management drags on ahead of an October 17th meeting where investors will vote on the proposal.
In Telus’ most recent news release, it says Glass Lewis & Co is recommending that its institutional investor clients vote in favour of the telecom’s proposal to exchange its non-voting shares into common shares on a one-for-one basis. This follows a similar recommendation made last week from Institutional Shareholder Services (ISS), another proxy advisory firm.
In its report Glass Lewis stated “The company notes that, excluding Mason's holdings, approximately 92.4% of shareholders that delivered proxies supported the initial proposal, a clear indication that the company's shareholders recognize and support the long-term benefits of a share conversion on a one-for-one basis.”
The Glass Lewis report concludes “We believe the overwhelming support from shareholders, excluding Mason, accurately depicts the value that is expected to be unlocked for long-term shareholders following the adoption of a single class share structure.”
It adds that “Here, we believe the long-term benefits resulting from a simplified share structure outweigh any potential short-term gains from a high conversion ratio. Notably, as of October 4, 2012, the company’s common shares and non-voting shares had increased in price by 13.3% and 16.9%, respectively, since the announcement, likely, in some part, reflecting these benefits. The long-term enhanced access to capital, increased attractiveness for new investors and potential increase in liquidity resulting from the simplified share structure and possible NYSE listing outweigh the upside of a theoretical higher exchange ratio in light of the highly unique nature of the Company’s articles, share structure and shareholder base. Accordingly, we recommend that shareholders vote for this proposal.”
Glass Lewis also commented on Mason’s “empty voting tactics” stating “Regardless of the terminology used to describe Mason's position, it remains clear that Mason has no long-term interest in the company's non-voting shares and will ultimately reap significant gains if the proposed conversion does not garner sufficient shareholder support.”
Mason on Friday sent a letter to Telus’ shareholders in which it urged investors to vote no to the Telus proposal to “protect the value of [their] investment and preserve [their] voting power.”
“If approved, Telus’ flawed proposal would result in you giving up the premium that you paid for your voting shares and a 46% reduction in your voting power - with no compensation whatsoever. In fact, Telus’ proposal would rank among the worst Canadian share collapse transactions,” contends Mason in their letter.