Telus Corp. (TSX:T) said it will go ahead with its plans for a meeting of all voting and non-voting shareholders on Oct. 17, following a B.C. court ruling that said Mason Capital Management LLC isn't entitled to call a separate meeting.
The hedge fund immediately fired back, saying it will appeal the ruling.
Telus and Mason are locked in battle over the Canadian telecom company's plan to convert its dual-class share structure of common shares, which have voting rights, and non-voting stock.
Telus wants just one class of common shares but Mason argues the Vancouver-based company's approach doesn't properly compensate holders of voting shares, including Mason.
The Supreme Court of British Columbia ruled that Mason Capital isn't entitled to call a rival meeting of only voting shareholders on the same day.
In a 28-page decision issued late Tuesday, Justice John Savage generally sided with Telus as he considered the seven reasons it proposed for denying the meeting that Mason wants to hold.
Among the judge's reasons was that the request didn't meet the requirements set out under various parts of the Canada Business Corporations Act. He sided with Mason, however, in deciding that it has a legitimate interest in attempting to protect the value of its investment and not a personal grievance, as Telus argued.
On the whole, however, Savage found numerous reasons to support Telus in blocking Mason's attempt at a calling separate meeting.
"While we are disappointed by the court's decision, on a review of the reasons, we have concluded that there are strong grounds of appeal," Mason said in a statement Wednesday.
"Mason will be pursuing an appeal on an expedited basis to ensure that this important matter is decided before the Oct. 17 meeting of Telus shareholders."
Mason's stated aim in holding the meeting is to set a minimum premium for voting shareholders in any consolidation of the shares.
Among other things, the judge accepted that Mason's attempt was an example of "empty" voting — exercising voting rights without having an interest in the company's economic well-being.
He also found fault with Mason's attempt to hold a meeting for only one class of shareholders — the ones with voting common stock — saying that type of meeting wasn't allowed under the Canada Business Corporations Act.
Savage also said that Mason shouldn't have attempted to have the meeting requisitioned by having an arm of CDS Clearing and Depository Services make the request and that CDS & Co. didn't meet the required standard when it filed.
The latest ruling is part of a months-long power struggle between Mason Capital and the board of Telus, one of Canada's largest telecommunications companies.
Mason owns nearly 20 per cent of Telus' voting shares but it has also "sold short" some of its shares — a stock-trading manoeuvre that Telus argues reduces Mason's true holding to less than one per cent of the company's economic value.
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.
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