US hedge fund Elliott International is pulling out all stops to get its rebel nominees on to the Telecom board of directors at its annual meeting next Thursday.
Elliott has contacted shareholders calling them to vote for "the two Marks" - professional director Mark Tume and Mark Cross
before the deadline on Tuesday.
Despite owning just 3 per cent of shares Elliott is making a big effort for its independent nominees to join the board - it has even started a website, www.newdirectionstelecom.co.nz
The fund, which has a reputation for shareholder activism, is pointing to Telecom's poor performance over the past four years.
At the meeting Tume and Cross will go up against official board nominees Rod McGeoch and Kevin Roberts.
NZ Shareholders Association chairman Bruce Sheppard said he doubted Tume and Cross would gain the votes to supplant McGeoch, who is seeking re-election
Elliott says there need not be a choice of the two Telecom nominees or Tume and Cross.
Four directors can be voted on to the Telecom board (resulting in a nine member board).
"But a nominee must receive a majority (at least 50.1 per cent) of the votes cast at the AGM to win appointment to the board so your vote is critical," Elliott told shareholders.
Telecom chairman Wayne Boyd - who is backing McGeoch and Roberts - is likely to win the support of New Zealand's mum and dad investors.
Sheppard said proxy advisers were telling offshore institutional investors to back the board nominees McGeoch and Roberts.
Telecom is in the midst of being restructured to operational separation and a new business plan with big capital outlay. Elliott is promoting the idea that it should go one step further with structural separation, an option that might see a one-off dividend from the sale of the retail division.
But after years of negotiation planning operational separation the structural idea is being resisted by Boyd.
"We strongly believe voting the two new, local independent candidates, Mark Tume and Mark Cross, is the first step to improving the company's current state of affairs and restoring shareholder value," Elliott said in a letter to shareholders.
Telecom shares closed up 4c yesterday at $2.84.
