NEW YORK and VANCOUVER – One of Telus’ biggest shareholders is demanding that the telco disclose its current foreign ownership levels to verify that it is in compliance with the Canadian ownership requirements.
U.S. hedge fund Mason Capital Management LLC made public a letter that it sent Telus on Thursday citing information from the proxies submitted for Telus’ recent annual shareholders meeting which it claims shows that approximately 42% of voting shares voted at the meeting were held by shareholders who declared themselves non-Canadian or refused to answer the required declaration as to their residency. Under the Telecommunications Act and other related statutes, non-Canadian ownership of voting shares of Telus is limited to 33.3% of the outstanding voting shares.
“For months now, Telus has avoided any public statements as to its foreign ownership levels”, reads the letter signed by Mason’s principal and co-founder Michael Martino. “Why has Telus not updated the market? Given the negative consequences of non-compliance to Telus (including potential loss of eligibility to carry on business as a Canadian carrier and to bid in the upcoming spectrum auction) and to its shareholders (including potential forced sales of over 20 million shares if non-Canadian ownership levels are at those suggested by the Broadridge reports), prompt and full public disclosure of Telus’ state of compliance is not only appropriate but required under relevant Canadian disclosure rules applicable to the company.”
The letter added that since Telus will soon need to provide additional information in the context of the Globalive-initiated CRTC proceedings, “it is hard to see what justification there could be for any delay by Telus in publicly disclosing such information now for the benefit of its shareholders”.
When contacted by Cartt.ca, a Telus spokesperson called Mason’s allegations “completely unfounded and misleading”.
“Simply put, there is no uncertainty around our compliance with foreign ownership restrictions”, reads the emailed response. “Telus has been and continues to be fully compliant with foreign ownership restrictions, and have our own control processes in place to ensure we remain compliant.”
Referencing Mason’s “empty voting trading tactics” that it says played a role in its move to withdraw a share conversion proposal last month, Telus cautioned that Mason’s comments or allegations “should be viewed as self interested, an attempt to drive the spread between our two share classes wider so they can exit their short and long investment positions in Telus without incurring a loss”.
– Lesley Hunter with files from Greg O’Brien
