(Graphic: Business Wire)

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)

(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 th 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.” 1

With such clear negative implications for an entire class of shareholders, we cannot help but question the motives behind TELUS’ proposal.


TELUS claims that its commitment to “good corporate governance” is one of the driving forces behind its proposed share collapse. We are not opposed to a share collapse, provided there is a fair exchange ratio that would treat ALL shareholders fairly. But TELUS’ proposal ignores the fact that voting shares are historically – and fundamentally – more valuable than non-voting shares. Despite shareholder concerns and repeated attempts to engage TELUS to discuss conversion options and an exchange ratio that would treat ALL shareholders fairly, TELUS’ board and management have stubbornly refused to consider anything beyond the flawed and oppressive one-for-one exchange. How could such complete disregard for an entire class of shareholders possibly be considered “good corporate governance”?

The directors of a publicly-traded company have an overriding duty to protect the interests of ALL shareholders and to ensure that any changes that implemented are done so in a fair and equitable manner. The TELUS board has failed in that regard. It did not establish a process whereby the interests of each class would be fully and independently considered and never obtained an independent fairness opinion for the voting class. Even in this second attempt at pushing through the same oppressive proposal, they have not even attempted to provide a fairness opinion for the voting shareholders.

What could possibly be driving TELUS’ fixed mindset and unwillingness to fairly compensate voting shareholders in its proposed share collapse?

One possible explanation is a conflict of interest, as noted by Bernard Black, Professor of Law at Northwestern University’s Law School and Kellogg School of Management. 2 The majority of TELUS’ management team and board’s holdings are tied to the non-voting shares. As a group, the management team and board hold approximately $150 million more in non-voting shares than voting shares and stand to make a windfall – which Mason estimates at more than $4 million – at the expense of voting shareholders if this proposal is approved.


Shareholder voting is the primary means by which shareholders can exercise their basic rights of ownership and influence the direction of a company. It is a fundamental concept that lies at the very core of our corporate system and is absolutely essential for good corporate governance. But, rather than respecting the rights afforded to shareholders by allowing the vote to play out fairly, TELUS is attempting to tip the scales in its favor by engaging in “vote buying”.

TELUS is paying dealer solicitation fees for votes by retail holders TELUS voting shares in favor of the proposal. Vote buying – which is illegal in the U.S. and other countries around the world – flies in the face of the fundamental function of a shareholder vote and shows TELUS’ complete disregard for its voting shareholders and their rights.

Furthermore, TELUS voting shareholders have already spoken on this matter. This past May, TELUS was forced to withdraw its share conversion proposal because it faced certain rejection by shareholders. Now, TELUS has returned to shareholders with the same proposal, except this time, TELUS has lowered the historical voting threshold in an effort to force through the transfer of wealth and voting rights to the holders of the non-voting shares. This tactic is oppressive to voting shareholders and raises serious fiduciary concerns. It begs the question, just how far will TELUS go to advance the interests of non-voting shareholders over voting shareholders?


We are not seeking to influence management decisions, change the composition of the TELUS board or seek other changes relating to the underlying enterprise. To the contrary, Mason’s position is a very simple one: we believe that voting shareholders deserve to be treated fairly and that any dual-class share collapse should be implemented in a manner that does not result in the transfer of both wealth and voting power to the non-voting shareholders without providing compensation to the voting class.

We urge all voting shareholders to arm themselves with the facts about the true economic implications of TELUS’ proposal, and to consider how little regard TELUS has shown for both shareholders rights and the fairness and sanctity of the corporate system. We urge you to exercise your FULL voting power while you still can and vote the BLUE proxy to reject TELUS’ proposal and force TELUS to either come back with a fair exchange ratio, or drop its proposal altogether.

Yours truly,/s/Michael E. MartinoPrincipal and Co-FounderMASON CAPITAL MANAGEMENT LLC

Mason’s dissident proxy circular is available on TELUS’ company profile on SEDAR at http://www.sedar.com.



Any questions and requests for assistance may be directed to theProxy Solicitation Agent:

KINGSDALEShareholder Services Inc.

The Exchange Tower130 King Street West, Suite 2950, P.O. Box 361Toronto, OntarioM5X 1E2 www.kingsdaleshareholder.com

North American Toll Free Phone:


Email: contactus@kingsdaleshareholder.com Facsimile: 416-867-2271 Toll Free Facsimile: 1-866-545-5580 Outside North America, Banks and Brokers Call Collect: 416-867-2272

1 Affidavit of Ronald J. Gilson; September 24, 2012; No. S125864, Vancouver Registry

2 “Equity Decoupling and Empty Voting: The Telus Zero-Premium Share Swap,” Bernard C. Black; September 28, 2012

Forward looking statements:

This letter to shareholders contains statements about expected future events that are forward-looking. By their nature, forward-looking statements require Mason to make assumptions and predictions and are subject to inherent risks and uncertainties. Whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation, risks, assumptions and uncertainties related to: the approval of the Proposal by shareholders, the consummation of the Proposal by TELUS; actions taken by TELUS to frustrate Mason’s actions or objectives; changes in market conditions; the market value and trading price of the Common Shares; the level of foreign ownership of TELUS; actions taken by TELUS to remedy a breach of the foreign ownership levels; intervention by regulators or the courts; and other factors set out in TELUS’ Management Circular. In evaluating any forward-looking statements in this letter to shareholders, we caution readers not to place undue reliance on any forward-looking statements. Readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by our forward-looking statements. There is significant risk that the forward-looking statements will not prove to be accurate. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements contained in this letter to shareholders to reflect subsequent information, events, results or circumstances or otherwise.

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX