VANCOUVER, Aug. 21, 2012 /CNW/ - TELUS is rejecting New York hedge fund Mason Capital's August 2 requisition for a meeting of common shareholders to consider resolutions amending TELUS' articles to enshrine mandatory minimum premiums for common shares in any future share consolidation.
"TELUS' Board of Directors carefully reviewed Mason's requisition, and we found it both anti-democratic and invalid and therefore concluded unanimously to reject it," said Brian Canfield, Chair of the Board. "Simply put, Mason's request would have imposed constraints on non-voting shares without giving holders of those shares a say. That is simply wrong."
Darren Entwistle, TELUS President and CEO, added, "Mason Capital's ongoing efforts to frustrate TELUS' share collapse are clearly rooted in their desire to profit from their hedging approach, and not from an interest in supporting TELUS' efforts to create value for shareholders."
TELUS announced a share conversion proposal to shareholders on February 21. Following that announcement Mason Capital quietly acquired approximately 19 per cent or approximately 33 million TELUS common shares, while simultaneously selling short nearly the same number of non-voting and common shares. Mason was voting $1.9 billion worth of TELUS common shares with only an estimated $25 million net economic stake. This discredited 'empty voting' strategy gave Mason far more voting weight than its minimal economic investment in the company should allow. Mason opposed the proposal in an effort to profit from its short trades by widening the spread between the trading price of the two share classes - an interest at odds with other shareholders. Accordingly, TELUS withdrew the proposal since the empty voting tactics of Mason and absence of regulatory oversight of the practice made it apparent that a vote on the proposal at TELUS' 2012 May Annual Meeting would not succeed. Subsequently, Mason disclosed in July that its TELUS common share position was just under 20 per cent.Mason, which previously indicated it had a long-term interest in TELUS and has subsequently backed away from that position, has continued to make numerous attempts to widen the share price spread, which is directly contrary to the interests of shareholders with a true economic interest in the company.