A New York investment fund’s plans to profit from the failure of Telus’ plan to convert non-voting shares to voting shares is acceptable, according to the BC Securities Commission.
Next week, Telus (TSX:T) shareholders will be asked to vote in favour of a plan to convert non-voting shares to voting shares, which are worth more because they carry voting rights.
Mason Capital Management, a major shareholder, plans to vote against the move and has been waging a public campaign to convince other Telus shareholders to reject the plan.
Mason has stated that converting the lower valued non-voting shares to voting shares – something Telus said will create better liquidity – is a “gift” to non-voting shareholders.
Mason, meanwhile, has been short-selling the non-voting shares, according to Telus.
Telus said Mason has $1.9 billion worth of voting rights, but because of its short position, the value of Mason’s Telus holdings is much lower than that.
This creates an “empty vote” scenario that Telus wanted its shareholders to be apprised of before next week’s vote.
Telus had asked the BCSC for a hearing and was hoping the commission would require Mason to update its disclosure on its position with respect to both voting and non-voting shares.
But the BSCA informed Telus last night that Mason has contravened no securities regulation and that a hearing will not be held.
“In our view, Telus shareholders have a right to understand the full story in respect of Mason’s holdings and their economic interest in the vote,” Telus spokesman Shawn Hall said.
“It’s disappointing the BCSC is not going to require Mason to enhance its disclosure to enable a better understanding by investors. However, this in no way reflects on the more essential issue of whether Mason’s empty voting strategy is proper.”
