Telus Corp. is moving full steam ahead with its share-conversion plan after it secured a definitive victory in its lengthy proxy battle with U.S. hedge fund Mason Capital Management LLC.
The Vancouver-based telco announced Friday that the conversion of its non-voting shares to voting shares on a one-for-one basis would take effect one minute after midnight Pacific Time on Feb. 4.
Chief executive officer Darren Entwistle said Telus and Mason reached an agreement earlier this week that resulted in the hedge fund dropping its legal appeals related to the plan. Although the exact terms of that deal are being kept private, he confirmed that no cash changed hands.
"There were no financial repercussions as it relates to this agreement," Mr. Entwistle said in a telephone interview.
"From my perspective, the share exchange and going down to a single class is going do some things that, from an attributes perspective, are quite attractive for our shareholders."
Specifically, having a single class of shares would result in a "significant improvement" in liquidity, enhanced trading volumes and improved marketability of Telus's shares, he said, adding the move was consistent with good corporate governance.
Once the share conversion is complete, Telus estimates it will have roughly 326 million voting shares trading on the Toronto Stock Exchange and the New York Stock Exchange. The conversion will mark the debut of Telus's voting shares on the NYSE. (Only its non-voting shares currently trade in New York.)
"Our shares [will] trade better over the longer term as a single class. And from a valuation perspective, that is a non-trivial consideration for our shareholders," Mr. Entwistle said.
A spokesman for Mason Capital declined comment on Friday. At the end of December, the hedge fund had an ownership stake in Telus of roughly 3.39 per cent. That's down considerably from the nearly 20-per-cent voting block it held last year.
Telus first announced its share-conversion proposal in February, 2012 and has been locking horns with Mason over the terms of that plan since last spring.
Mason had previously argued that voting shareholders deserved a premium to reflect the historical price difference between the two share classes.
For its part, Telus argued that Mason's hedged trading strategy constituted "empty voting" or voting without economic interest – an issue that Mr. Entwistle hopes regulators will address in the future.
"We believe that this is a positive development for Telus shareholders … the Mason issue seems to have acted as an unnecessary overhang and may be one reason why the shares have underperformed peers over the last three months," said Dvai Ghose, an analyst with Canaccord Genuity, in a note to clients.
Since Telus unveiled its share-conversion plan last February, its voting and non-voting shares have risen 18 per cent and 22 per cent, respectively.