Telus Corp. (T), Canada’s third-largest wireless carrier, faces opposition from its largest shareholder in a vote to scrap a dual-share structure.
Mason Capital Management LLC, which holds 18.7 percent of the Vancouver-based telecommunications provider, said it will vote against converting all non-voting shares into voting shares on a one-to-one basis at the annual shareholder meeting scheduled for May 9.
“Mason previously advised Telus that it intends to vote against Telus’ proposal, as currently formulated, to convert all of Telus’ non-voting shares into common shares,” New York-based Mason Capital said in an alternative monthly report today.
Jonathan Gasthalter, a spokesman for Mason Capital, declined to comment.
Non-voting shares have typically traded at a discount to their counterparts with voting rights and Telus is seeking to eliminate the disparity, the company said Feb. 21 in plans for the vote.
If shareholders vote to eliminate the dual-share structure, the common stock would trade in New York as well as Toronto, Telus said then.
Robert G. McFarlane, chief financial officer at Telus, said the company’s bylaws allow non-voting shares to be converted to voting shares on a one-to-one basis because they stem from Canada’s previous rules limiting foreign ownership to 33.3 percent. The rules were changed March 14 to ease the restrictions on smaller carriers.
Verizon Communications Inc. (VZ:US), which was a shareholder when Telus formed, had to hold some non-voting shares so it wouldn’t go over the limit, McFarlane said.
“Combining the shares together into one class means there’s more liquidity, a deeper trading pool to the benefit of all shareholders,” McFarlane said.
MacFarlane said both classes of shares had risen in value since the Feb. 21 announcement and that the same dividend is paid to shareholders of either type.
Telus, along with BCE Inc. (BCE) and Rogers Communications Inc. (RCI/B), is under growing pressure from new operators Wind Mobile, Public Mobile and Mobilicity challenging the three carriers’ dominance of the Canadian wireless market.
Telus closed down 1.1 percent at C$57.54 in Toronto. The stock has dropped 0.17 percent this year. The company’s A class non-voting shares fell C$1.24 to C$56.16 and have gained 2.8 percent this year.
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