Two advisory firms recommend share consolidation: TelusJENNIFER ROBERTS/The Globe and Mail
The battle to gain the favour of shareholders has escalated between Telus Corp. and Mason Capital, the New York-based hedge fund that wants to stop Telus' plan to create a single class of common shares.
Telus said Tuesday it has received the support of two independent proxy advisory firms in its quest to complete the share combination.
Both Institutional Shareholder Services Inc. and Glass Lewis & Co. will recommend that their institutional clients vote in favour of the plan, the telecommunications company said.
"It is an important validation of the soundness of the company's proposal that the two principal proxy advisory firms that institutional investors look to for independent advice have supported our conversion proposal after a detailed and thorough review of the facts," said Telus president and chief executive officer Darren Entwistle.
The announcement came after Mason Capital emerged late Monday with new details it said gave reason not to support Telus' plan, suggesting it could push non-Canadian shareholders out, which might negatively affect liquidity.
Mason Capital did say it would consider a revised proposal that paid "an appropriate premium for the voting shares" that also didn't have a major impact on liquidity.
Non-voting shares tend to trade at a discount to common shares, but when Telus revealed its combination plan, both classes of stock started to fall in line with each other in anticipation of the arrangement being a success. That gave a financial benefit the holders of non-voting shares.
On Tuesday, Mason Capital quickly fired back calling the proxy advisory firms' support "premature."
"ISS and Glass Lewis did not have the benefit of the reasons for voting against Telus' proposed share reorganization," the firm said.
"Glass Lewis has retracted their report and ISS will review our analysis and rationale and update their recommendation accordingly."
However, a spokesman for Glass Lewis said that version of the events is a mischaracterization, and that it's not retracting its analysis, but rather looking at the latest developments.
"We are pulling back the report because it is now incomplete," Jaron Schneider said in a phone interview.
"We didn't know Mason was going to file the contested proxy, so when that happened we filed protocol and took down our recommendations ... [to]make sure our analysis is still sound."
A spokesman for ISS was unable to provide immediate comment.
Mason Capital has been trying to block Telus' plan to rid itself of a dual-class share structure, a move which needs the support of at least two-thirds of its shareholders to move forward.
The money manager already owns a fifth of the shares, and could conjure up enough support from other shareholders.
Telus has said the move to combine the two classes of shares is consistent with good governance. It would give each shareholder one vote for every one share they own.
Rita Trichur