US hedge fund Mason Capital Management confirmed in a statement this afternoon that it has won the latest legal round in a proxy fight with Telus (TSX:T) over a proposed share-consolidation plan by the telecom company.
A three-judge panel from the British Columbia Court of Appeal on Friday overturned an earlier decision by the province’s Supreme Court preventing Mason Capital from calling a general meeting of Telus shareholders later this month.
U.S. hedge fund Mason Capital is locked in a dispute with Telus over the company’s revived plan to consolidate its voting and non-voting stock on a one-for-one basis.
The fund, which holds around 19 per cent of Telus’s voting shares, has also “sold short” some of its shares — a stock-trading maneuver that Telus argued reduces Mason’s true holding to less than one per cent of the company’s economic value.
“We are pleased by the Court’s ruling, which fully vindicates our position that the voting shareholders of Telus should have the opportunity to vote on a fair exchange ratio share in a share collapse transaction,” Mason said in a statement.
“Telus has refused to consider the concerns of its voting shareholders and has demonstrated that it was prepared to go to almost any length to force through its one-to-one proposal.
“Now voting shareholders will have the opportunity to have a say on the critical issue of a fair minimum premium for the Telus voting shares in a share conversion.”
Mason cited the Court’s reasons for the judgement, where the Honourable Mr. Justice Groberman stated that despite its hedged position, Mason “does hold an economic interest in Telus.”
“Further, its contention that the historic premium that has applied to the Telus common shares should be preserved in any share exchange is a cogent position that could reasonably be advanced by any holder of common shares.
“In the exchange proposed by Telus, the common shareholders will see a massive dilution of their voting power without any direct economic compensation or benefit,” the judge said.
Mason said it will be applying to the court for directions with respect to the holding of the meeting, as well as a postponement of the shareholder meetings of Telus currently slated for October 17.
Generally, an investor or group of investors with at least five per cent of a company’s stock are entitled to demand, or requisition, a meeting of a Canadian public company’s shareholders.
In August, Mason Capital called a shareholder meeting on October 17 – the same day as Telus planned to hold a meeting of its own – prompting Telus to say it would ask a court to intervene on its behalf.