Information Circular - About TELUS

5 APPrOvAL
The Arrangement
OF THE ArrANGEMENT
At the Meeting, we will ask you to vote to eliminate TELUS’ dual
class share structure, to be effected by way of a court-approved
Arrangement. Each holder of Common Shares and each holder
of Non-Voting Shares will be entitled to vote for or vote against
the Arrangement.
Under the terms of the Arrangement, each Non-Voting
Share outstanding as of the Effective Time, would be converted
into a Common Share on a one-for-one basis. Following the
conversion, the Non-Voting Shares would be eliminated from the
authorized share structure of TELUS. As a result, immediately
following the Effective Time, the Common Shares would be
TELUS’ sole class of outstanding equity securities.
The principal conditions to the effectiveness of the Arrangement
include the receipt of required Shareholder approvals of the
Arrangement Resolution and the receipt of Court approval in
the Final Order. If all conditions to the effectiveness of the
Arrangement, including those set out in the Final Order and the
Arrangement, are satisfied, or to the extent possible, waived,
it is currently contemplated that the Arrangement will be
implemented on or about May 16, 2012.
The description of the Proposal and the Arrangement set out
in this section of the Circular is qualified in its entirety by reference
to the full description of the Proposal and the Arrangement on
pages 92 to 110 of this Circular.
background
TELUS’ dual class share structure was introduced in 1999
to deal with foreign ownership rules at a time when TELUS’
Shareholder base included a significant non-Canadian
Shareholder, namely GTE (which subsequently merged with
Bell Atlantic to create Verizon).
TELUS’ dual class share structure, together with special
rights and ownership restrictions, was an important tool
that enabled TELUS to manage compliance both with the foreign
ownership restrictions prescribed by the Telecommunications
Act, and with foreign ownership restrictions under the
Radiocommunication Act and the Broadcasting Act to which
the Company became subject in 2005 as a result of new
business undertakings.
10 . TELUS 2012 information circular
The principal difference between the Common Shares and
the Non-Voting Shares is that the Non-Voting Shares do not
possess full voting rights. Notwithstanding that both classes
of Shares are entitled to the same dividend, are widely held
and have similar liquidity, the Non-Voting Shares have historically
traded on the TSX and the NYSE at a discount to the trading
price of the Common Shares. Over the past three years, the
average discount in the trading price of the Non-Voting Shares
relative to the trading price of the Common Shares has been
approximately 4.5 per cent. Eliminating the dual class share
structure would eliminate that gap.
The Company therefore determined that a collapse of the
dual class share structure warranted careful consideration.
In the months of December 2011 and January 2012, management
analyzed the matter and prepared a submission to the Board in
relation to the Proposal. The Company consulted Osler with
respect to legal matters relating to the Proposal. The Board in
turn determined on January 25, 2012 that a Special Committee
should be established to carefully consider the implications of
the Proposal, whether to proceed with the Proposal and, if so,
the most appropriate way to implement the Proposal.
recommendations of the Special Committee
and the board of Directors
The Special Committee, which consists of Brian Canfield
(Chair of the Special Committee), Charlie Baillie, John Butler,
Rusty Goepel, John Lacey and Bill MacKinnon, has carefully
considered the implications of the Proposal and the most
appropriate way to implement the Proposal. The Special
Committee retained Scotia Capital as independent financial
advisors to assist it in evaluating the Proposal. In this regard, the
Special Committee and the Board received a Fairness Opinion
from Scotia Capital to the effect that a one-for-one conversion
ratio is fair, from a financial point of view, to the holders of Non-
Voting Shares and to the holders of Common Shares. The
Special Committee unanimously concluded that the Arrangement
is in the best interests of TELUS and is reasonable and fair in
the circumstances. It therefore recommended, based on the
considerations set out in this Circular, that the Board approve
the Arrangement and recommend to Shareholders that they
vote in favour of the Arrangement Resolution.
After considering, among other things, the recommendation
of the Special Committee and the Fairness Opinion, the
Board unanimously concluded that the Arrangement is in