In the battle for control of Rogers Communications Inc., experts say Edward Rogers is more likely to win, but not without a fight.
He controls a powerful trust created by his late father, but Edward’s opponents, including his mother Loretta and sisters Martha Rogers and Melinda Rogers-Hixon, are preparing to fight in court.
It could happen soon: The Star learned that Edward plans to petition the British Columbia Supreme Court on Tuesday, and that his attorney has written a letter to Rogers Communications asking them to join in asking the courts to hear the matter this way. week. .
Rogers shares slumped nearly six percent on Monday and at least one top banking analyst downgraded the stock amid the uncertainty.
That came after Edward Rogers announced Sunday night that he had been re-elected chairman of a newly formed board that met on Friday, after being removed from that position late last week.
Martha Rogers took to Twitter over the weekend and tweeted on monday that a headline in a story about this might be “Ed’s perpetual tantrums when he doesn’t get his way.”
The corporate board that was in place last week says the changes Edward made require a shareholders meeting and that his board is “invalid.” Melinda Rogers-Hixon’s attorneys agree, but they could be facing an uphill battle.
“I think (Edward Rogers) is likely to be successful” in the court fight, said Richard Leblanc, professor of governance, law and ethics at York University. He based that assessment on his reading of public information about the family trust that owns 97 percent of Rogers Communications’ voting shares.
When the company’s founder, Ted Rogers, died in 2008, under the terms of his estate agreements, his voting shares went into the trust, which has been chaired by his son Edward ever since. It is this role that has emerged as the locus of Edward’s power in the ongoing dispute, because it entitles him to cast the votes attached to all voting shares controlled by the family trust.
Edward maintains that this means he has the power to remove and replace the directors of the board through a written resolution, which he introduced on Friday.
Now he wants a judge to confirm that he is right.
Edward’s Vancouver-based attorney asked Rogers Communications in a letter to join a request to the court for the matter to be heard this week in BC, noting that the situation is attracting intense media scrutiny and downgrades from analysts.
(The matter will be taken to the courts in British Columbia, as that is where Rogers was brought in.)
The letter also said that it would be beneficial to the company to see the dispute resolved quickly, in light of the fact that Edward has received inquiries from the Ontario Securities Commission.
Crystal Jongeward, a spokeswoman for the regulator, said Monday, “as a matter of general policy, we do not comment on issues related to specific issuers.”
“The outcome seems inevitable: Edward Rogers and the controlling trust will eventually affect changes at the board,” Scotia Capital analyst Jeff Fan said in a report Monday. He said Edward will either win the day in court or make the changes through a shareholders meeting. “The only difference is the timing.”
Fan looks at the company from an investor’s perspective and said it would look forward to a “faster resolution of the conflict”, to give Rogers Communications the opportunity to focus on the business and complete its $ 20 billion acquisition of Shaw Communications Inc. .
But a longer legal process could give other actors in the drama a chance to negotiate a compromise or even make changes in the leadership of the family trust.
Walied Soliman, Canadian partner and president of Norton Rose Fulbright, represents Rogers-Hixon and said in an appearance on BNN Bloomberg television on Monday that he believes the family will finally work this out between them. Still, he was adamant in his opinion that Edward will lose the court case.
“I think the concept that a single shareholder can replace all the independent directors of one of the largest public companies in the country at a stroke is inconceivable. I find it quite regrettable, ”Soliman said.
“I wonder if Ted Rogers did the right thing by putting all the authority in one person. You don’t give everyone all the marbles, ”Leblanc said. “It is very unusual for one person to be able to unilaterally vote all voting shares and I think Mr. Rogers is not incentivized to commit.”
Removing Edward as president of the family trust would require the support of seven out of 10 members of an advisory committee.
Edward has had the votes of advisers Phil Lind and Alan Horn, who endorsed him in a public statement last week. That means his sisters and mother, who are also on the committee, would have to influence two other family members, in addition to Thomas Hull (a childhood friend of Ted Rogers) and Toronto Mayor John Tory.
Meanwhile, chaos at the company has spooked investors, prompting the sale of the shares on Monday and RBC Capital Markets analyst Drew McReynolds downgrading the company.
“In the absence of an immediate and final resolution to the ongoing dispute between the family and the Board, we see two sources of collateral damage regardless of the final resolution,” McReynolds said, arguing that Rogers’ management team is likely to be less cash than usual due to distractions and that it will be challenging to restore investor confidence in the corporate governance of the company.
“This is unprecedented,” said Alexander Dyck, a finance professor at the Rotman School of Management, who couldn’t think of any situation in Canada “where there have been two boards that seem to exist at the same time for a publicly traded company. ”
Family-controlled companies make up a larger share of the top public companies in Canada than they do in the US or UK, he said, and that structure can be problematic.
“You don’t see it rearing its ugly head often, but this is a circumstance where we do it,” Dyck said. “This situation is unsustainable. Either the president or CEO has to leave, and both may have to leave to move forward. “
Reference-www.thestar.com