Glass Lewis backs Telus in Mason fight

* Canadian telecom wants to merge share classes

* Mason Capital seeking to block one-for-one consolidation

* Proxy advisor backs Telus ahead of Oct. 17 meeting

Oct 5 (Reuters) - Proxy advisory firm Glass Lewis & Cobacked Telus Corp in its dispute with top investor MasonCapital Management LLC on Friday, with a report viewed byReuters that recommended that investors approve a proposed shareconsolidation.

The Canadian telecom company wants to convert all non-votingTelus shares to voting shares, on a one-for-one basis. Investorswill vote on the matter at an Oct. 17 meeting.

"We believe the overwhelming support from shareholders,excluding Mason, accurately depicts the value that is expectedto be unlocked for long-term shareholders following the adoptionof a single class share structure," said the report.

The report follows a similar recommendation from rival proxyadvisor Institutional Shareholder Services, made public onMonday.

Telus has argued that creating a single class of shares willmake the stock more liquid, and thus more valuable. Glass Lewissaid the consolidation would likely improve liquidity and accessto capital. Telus has also said that universal voting rights area good corporate governance practice.

Mason contends that voting shareholders paid more, onaverage, for their stock and should be compensated as the twoclasses merge. In a statement on Friday, the U.S. hedge fundurged investors to reject the one-for-one exchange.

"Telus' flawed proposal would result in you giving up thepremium that you paid for your voting shares and a 46 percentreduction in your voting power - with no compensationwhatsoever," it said.

Telus says Mason has only a 0.02 percent stake in thecompany once its short position is subtracted from the shares itowns.

The fund's recent disclosure shows it has shorted 14.7million voting shares and 18.0 million non-voting shares, whileowning 32.8 million voting shares, or about 19 percent of thecompany. The fund would likely profit if the price spreadbetween the two classes widens.

Telus's voting shares closed up 0.11 percent at C$63.42 onthe Toronto Stock Exchange on Friday. Non-voting shareswere up 0.05 percent at C$62.93.

(Reporting by Allison Martell; Editing by Tim Dobbyn)

((allison.martell@thomsonreuters.com)(+1 416 941 8196)(ReutersMessaging: allison.martell.thomsonreuters.com@reuters.net))

Keywords: TELUS MASON/

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