By Euan Rocha
TORONTO, Oct 17 (Reuters) - Telus Corp shareholders voted on Wednesday in favor of a proposal to exchange the company's non-voting shares for common shares on a one-for-one basis, dealing a blow to top stakeholder Mason Capital, which had argued voting class holders should receive a premium.
Mason Capital Management LLC has been locked in a bitter dispute with Telus for months over the Vancouver-based telecom company's plan to consolidate its voting and non-voting shares on a one-for-one basis.
Mason, which held 19 percent of Telus's voting shares as of Aug. 31, said that voting shareholders paid more, on average, for Telus's stock than non-voting shareholders and should be rewarded for that as the two classes merge. Telus in response argued that universal voting rights are a good corporate governance practice.
"The outcome of today's shareholder vote is distinctly positive for Telus shareholders," Telus Chief Executive Darren Entwistle said in a statement. "Shareholders made clear their desire to enhance shareholder value through improved trading liquidity and augment Telus' already excellent corporate governance by adopting a single class."
Telus said about 81.1 percent of total shares voted were in favor of the company's share exchange proposal.
The telecommunications company has accused the hedge fund of running an "empty voting" strategy, as it holds long and short positions in Telus's stock. It argues that Mason has only a 0.02 percent stake in Telus once the fund's short position is subtracted from the shares it owns.
"Investor views dominated, prevailing over a self-serving hedge fund engaging in a troubling empty voting trading strategy, negative publicity campaign and multiple court challenges to try to defeat this proposal for their own profit," said Entwistle.
A final hearing before the British Columbia Supreme Court to approve the share exchange is set for the week of Nov. 5.
The two sides have been slugging it out in courts for weeks. Mason recently asked a judge to delay the shareholder vote, so that it could ask Telus's voting class of shareholders to approve a change in the company's articles that would have forced the company to pay a premium to voting class holders in the event of any share collapse plan.
The Supreme Court of British Columbia this week ruled that the Telus shareholder meeting could proceed. It said that all votes in favor of the Telus plan would count against Mason's proposal, while all votes against the Telus plan would count in the hedge fund's favor.
Mason has vowed to continue its legal battle against Telus.
Mason lawyer Iain Scott said at the shareholders meeting that the company would appeal the orders Telus obtained from the court this week, which Mason believes disenfranchise voting shareholders.
Telus's voting shares closed at C$62.89 on the Toronto Stock Exchange on Wednesday and non-voting shares closed at C$62.28.