Telus Corp. (T), Canada’s third-largest wireless carrier, said a major investor trying to block the company’s plan to scrap a dual-share structure doesn’t have the long-term interests of Telus in mind.
Mason Capital Management LLC, which holds 18.7 percent of the Vancouver-based carrier, yesterday said it will vote against converting all non-voting shares into voting stock on a one-to- one basis at a May 9 shareholder meeting.
New York-based Mason is more interested in turning a quick profit by short-selling the stock, said Telus Chief Financial Officer Robert McFarlane. Investors taking short positions borrow and sell a stock, aiming to profit by repaying the borrowed shares at a lower price.
“They have no net economic interest in Telus,” McFarlane said in an interview yesterday. “They shorted as much as they bought.”
Asked today for his reaction to McFarlane’s comments, a Mason spokesman, Jonathan Gasthalter declined to comment. Mason has or had 10.96 million common shares and 21.67 non-voting shares in short positions, it said in a regulatory filing yesterday. It has 32.7 million long common shares and 602,300 long non-voting shares.
Telus wants boost the appeal of its shares as it competes with BCE Inc. (BCE), Rogers Communications Inc. (RCI/B), and new mobile carriers for a bigger stake of Canada’s wireless market.
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.
Ensuring a large turnout for the vote will be critical to winning the vote, McFarlane said. Telus needs 66.6 percent support in each class to win the resolution and Mason’s stake is a “good chunk” of the one-third of shares plus one needed to block the resolution, he said.
“The more people are educated about what’s being attempted here by someone who doesn’t have an economic interest in the company, hopefully will increase the rate of people wanting to vote and hopefully will vote for the company’s proposal,” McFarlane said.
Non-voting shares of Telus were little changed at C$56.08 at 4:03 p.m. in Toronto as common shares dipped 0.2 percent to C$57.40. The non-voting shares have gained 2.6 percent this year and common shares have dropped 0.4 percent.
Short interest in Telus more than doubled to 40.5 million shares from February 22 to March 22 and by April 9 had dropped to 34.5 million, according to Data Explorers, which tracks short-selling data on a daily basis.
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