Foreign hedge funds have been buying Telus Corp. (TSX:T) stock in what the telecommunications giant believes is an attempt to push its Canadian ownership below the 66.66% threshold.
The Canadian government mandates that Telus will be eligible to amalgamate its non-voting shares and common shares only if it has at least two-thirds domestic ownership.
B.C.’s largest public company wants to amalgamate its shares for simplicity’s sake and to extend the right to vote to all shareholders.
The amalgamation will go ahead if:
- Canadian ownership stays above 66.66%;
- Telus common shareholders vote 66.66% in favour of the proposal at a May 9 general meeting; and
- Telus non-voting shareholders vote 66.66% in favour of the proposal at a May 9 general meeting.
The company created non-voting shares when Verizon was a major strategic investor. Verizon sold its last stake in Telus in 2004 and, since then, has had roughly 20% of its shares owned by those outside Canada.
On March 22, Telus announced that its non-Canadian ownership was approximately 24%. However, when approved and pending applications to buy Telus common shares by non-Canadians are factored into the mix, the level of foreign ownership would exceed 33.33%.
That’s a 20 percentage-point increase in non-Canadian ownership since January 31, Telus told the press Thursday.
Telus warned that it might not approve all pending share purchases if the transaction pushed its foreign ownership past the 33.33% level.
“The market trading prices of both Telus common and non-voting shares increased notably upon the announcement of the proposed share class conversion on a one-for-one basis and have remained at levels representing appreciation well beyond that of the overall stock market index,” said Telus executive vice-president Robert McFarlane.
