If you own non-voting shares in Telus (TSX:T), lucky you. They are expected to increase in value when they are converted to voting shares on February 4.
In a long-running battle, the conversion was approved in October 2012 by shareholders, but Mason Capital Management LLC had been trying to prevent it from happening through a series of court challenges.
But Telus announced Friday that Mason has dropped its litigation, and the conversion will now proceed.
“Telus is proceeding with the share exchange as Mason Capital Management LLC and Telus have agreed to abandon all litigation relating to the court approved plan of arrangement,” Telus said in a press release. “The agreement does not involve the payment of funds to either party.”
Telus announced in the spring of 2012 that it planned to hold a shareholder vote on converting its non-voting shares to voting shares, but had to cancel a planned vote after Mason launched an offensive aimed at preventing the conversion.
As detailed in Business in Vancouver last year, the dual shares are a holdover from when Verizon, an American telecom, owned a significant share of BC Tel.
Since foreign ownership in a Canadian telecom is limited to 33.3%, the non-voting shares were created to stay within the regulations after BC Tel and Telus in Alberta merged.
But Verizon is no longer a major shareholder, and Telus wants to create a single class of shares to improve their liquidity.
With 19% of Telus' common shares, Mason was the largest Telus shareholder outside of Canada and made it known it planned to vote against the conversion plan when it came to a vote in May 2012. Telus needed a two-thirds majority of shareholders to approve the conversion.
Telus accused Mason of trying to profit from short-selling Telus non-voting shares, and the two companies battled it out in the courts. The courts sided with Telus, clearing the way for the vote to proceed, and on Friday, Telus announced the two companies had called a truce.
Approximately 151 million outstanding non-voting Telus shares will be delisted from the New York Stock Exchange (NYSE) by February 5 and from the Toronto Stock Exchange by February 8.
An equivalent number of additional Telus common shares will be listed and start trading on the NYSE by February 5, under the symbol “TU.”
“Our shareholders’ strong support for this exchange was made clear during the shareholder vote on October 17, and we are very pleased that we can now conclude this important and beneficial share exchange,” said Telus CEO Darren Entwistle.
“Having a single class of widely traded shares is going to benefit all of our shareholders through enhanced trading volumes, liquidity and marketability and, as well, Telus common shares will be listed on the New York Stock Exchange for the first time.
“Moreover, the sole class of common shares will further enhance Telus’ track record of excellence in corporate governance.”
Telus shares were down 1% to $65.03 at close of markets Friday following the announcement the vote will proceed.
