Newspaper article The Canadian Press

Hedge Fund Mason Capital Says Telus Voting Shareholders Need Compensation

Newspaper article The Canadian Press

Hedge Fund Mason Capital Says Telus Voting Shareholders Need Compensation

Article excerpt

Telus voting shareholders need more: Mason


A U.S. hedge fund called Telus's plan for a single class of common shares one of Canada's "worst" share collapse deals in years, saying there must be compensation for voting shareholders.

Mason Capital Management and Telus are locked in battle over the Canadian company's plan to convert its dual-class share structure of common shares (TSX:T) that have voting rights and non-voting A shares (NYSE:TU).

The New York-based investment firm said Thursday it wants to protect the value of voting shares, a message it has delivered to the Vancouver telecom company for months.

"This is one of the worst share collapse deals for voting shareholders in Canada since at least the year 2000," said Michael Martino, principal and co-founder of Mason Capital.

Mason Capital said it believes a conversion ratio of 1.08, or an eight-per-cent premium, would be appropriate under the share conversion plan.

"Our view is that there's no noticeable value and the voting shareholders just lose," Martino told a conference call.

"Even if there were some value created by the share collapse, it's our view is that it has to be shared appropriately. It all can't just go or predominantly go to the non-voting shareholders."

The hedge fund defeated Telus's plan last spring to convert its non-voting shares on a one-to-one basis.

Telus chief financial officer Robert McFarlane said the company isn't offering a premium for the share conversion because both classes of shareholders will benefit.

"It will benefit both the voting and the non-voting shares by combining the liquidity and the marketability of the shares, leading to a listing of the voting shares for the first time on the New York Stock Exchange," he said.

Mason Capital owns about 19 per cent of Telus's voting stock, making it the largest voting shareholder. But Mason has also disclosed that it has short sold the company's non-voting shares. Short sellers make a profit when the stock price falls.

Martino also said the hedge fund is legally challenging Telus's assertion that 50 per cent -- not two thirds -- of voting shareholders need to support its share conversion proposal. …

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