Mason Capital Management LLC (“Mason”) today sent a letter to voting shareholders of TELUS Corporation (TSX:T) regarding the proposed dual share-class collapse transaction which is to be voted on at a general meeting of TELUS on October 17, 2012.
(Graphic: Business Wire)
The letter outlines the rationale for Mason’s opposition to TELUS’ proposal to exchange all of its non-voting shares for voting shares on a one-for-one basis and discusses significant flaws in TELUS’ process.
The text of the October 5, 2012 letter follows:
Dear Fellow TELUS Voting Shareholder:
TELUS’ October 17
shareholder meeting is rapidly approaching. Act now to protect the value of your investment and preserve your voting power by voting NO to TELUS' proposal to convert its non-voting shares into voting stock on a one-for-one basis. Please vote your BLUE proxy or voting instruction form prior to 12:00 noon (EDT) on October 15, 2012.
If approved, TELUS’ flawed proposal would result in you giving up the premium that you paid for your voting shares and a 46% reduction in your voting power – with no compensation whatsoever. In fact, TELUS’ proposal would rank among the worst Canadian share collapse transactions.
Professor Ronald Gilson of Stanford Law School and the Columbia School of Law has stated that “voting rights attached to shares are valuable” and that “the premium associated with TELUS voting common shares is well recognized by the market.” Professor Gilson notes that TELUS’ proposal would have the effect of “transferring value from the existing holders of common shares with voting rights to the existing holders of non-voting shares.”
With such clear negative implications for an entire class of shareholders, we cannot help but question the motives behind TELUS’ proposal.