Mason Capital Management LLC ("Mason") today reiterated several serious concerns with the actions of TELUS Corporation (TSX:T, T.A; NYSE: TU) relating to its proposal to exchange all of its non-voting shares for voting shares on a one-for-one basis. The proposal is scheduled to be voted on at an October 17 meeting of TELUS shareholders.
TELUS voting shares historically are more valuable than non-voting shares and have traded at a premium. In the 13 years prior to TELUS’ initial proposal in February 2012, $98 billion in TELUS voting shares traded at an average premium of 4.83% relative to the non-voting shares, with the premium reaching as high as 15.23%. This proposal, if passed, will result in a loss of substantial value to the class of voting shareholders, which Mason estimates at approximately $200 million based on the elimination of the historical premium. In addition, voting shareholders will be forced to relinquish 46% of their voting power and will receive no compensation. Leading proxy advisory firm Institutional Shareholder Services Inc. (“ISS”) recognizes the flaws associated with TELUS’ proposal, stating that: “The proposed exchange ratio… in veering off from the well-established, enduring market ratio, is a cause for concern, and should legitimately be scrutinized by shareholders.” 1
Michael Martino, Mason’s principal and co-founder, said: “It is imperative that all voting shareholders arm themselves with the facts about the true economic implications of TELUS’ proposal, which based on precedents, is one of the worst offers for holders of shares with superior voting rights in a share collapse seen in Canada in over a decade. Mason would support a share collapse at an exchange ratio that accounts for the superior value of the voting shares in the same way the market has accounted for that superior value for over 13 years. We urge shareholders to reject this oppressive proposal and force TELUS management to come back with an exchange ratio that provides voting shareholders with the compensation they deserve.”