Who will win the battle to control Rogers? Experts say Edward has the upper hand

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 set up by his late father, but Edward’s opponents, including his mother Loretta and sisters Martha Rogers and Melinda Rogers-Hixon, are preparing to fight it in court. It could happen soon: The Star has learned that Edward plans to file a petition in the British Columbia Supreme Court on Tuesday, and that his lawyer has written a letter to Rogers Communications asking that they join in asking the courts to hear the matter this week. Rogers shares plunged almost six per cent on Monday and at least one major bank analyst downgraded his rating on the stock amid the uncertainty. That came after Edward Rogers announced Sunday evening that he had been re-elected chair of a newly constituted board he assembled on Friday, after he had been voted out of that role late last week. Martha Rogers took to Twitter over the weekend and tweeted on Monday that a headline on a story about this could be “Ed’s perpetual tantrums when he doesn’t get his way.”The corporate board that was in place as of last week says the changes Edward made require a shareholder meeting and that his board is “invalid.” Lawyers for Melinda Rogers-Hixon agree — but they could be facing an uphill battle. “I think it is likely that (Edward Rogers) will succeed,” 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 per cent of the voting shares of Rogers Communications.When company founder Ted Rogers died in 2008, by the terms of his estate arrangements, his voting shares passed to 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 gives him the right to exercise the votes attached to all of the voting shares the family trust controls. Edward maintains that this means he has the power to remove and replace board directors using a written resolution, which he submitted on Friday.He now wants a judge to confirm that he is right. Edward’s Vancouver-based lawyer asked Rogers Communications in a letter to join in a request to the court to have the matter heard this week in B.C., noting that the situation is attracting intense media scrutiny and analyst downgrades.(The matter will be taken to the B.C. courts as that’s where Rogers was incorporated.)The letter also said it would be in the best interest of the company to see the conflict resolved quickly, in light of the fact that Edward has received inquiries from the Ontario Securities Commission.Crystal Jongeward, a spokesperson for the regulator said Monday, “as a matter of general policy, we do not comment on matters relating to specific issuers.”“The outcome seems inevitable: Edward Rogers and the control trust will eventually effect the board changes,” Scotia Capital analyst Jeff Fan said in a report on Monday. He said Edward will either win the day in court or make the changes through a shareholder meeting. “The only difference is timing.”Fan looks at the company from the perspective of investors and said he would hope for a “faster resolution to the conflict,” to give Rogers Communications a chance to focus on the business and completing its $20-billion acquisition of Shaw Communications Inc. But a longer legal process could give other players in the drama a chance to negotiate a compromise or even make changes to the leadership of the family trust. Walied Soliman, partner and Canadian chair at Norton Rose Fulbright, represents Rogers-Hixon and said in an appearance on BNN Bloomberg television Monday that he believes the family will ultimately resolve this between themselves. Still, he was adamant in his view that Edward will lose the court case. “I think the concept of a single shareholder being able to replace all the independent directors of one of the largest public companies in the country by a stroke of a pen is unconscionable. I find it quite regrettable,” Soliman said.“I’m questioning whether Ted Rogers did the right thing by putting all of the authority in one person. You don’t give everybody all the marbles,” said Leblanc. “It’s very unusual for one person to be able to unilaterally vote all of the voting shares and I think Mr. Rogers is not incented to compromise.” Removing Edward as chair of the family trust would require the support of seven out of 10 members of an advisory committee. Edward has locked in the votes of longtime advisers Phil Lind and Alan Horn, who supported him in a public statement last week. That means his sisters and mother, who are also on the committee, would have to sway two other family members as well as Thomas Hull (a childhood friend of Ted Rogers) and Toronto Mayor John Tory. In the meantime, chaos at the company has spooked investors, leading to t

Who will win the battle to control Rogers? Experts say Edward has the upper hand

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 set up by his late father, but Edward’s opponents, including his mother Loretta and sisters Martha Rogers and Melinda Rogers-Hixon, are preparing to fight it in court.

It could happen soon: The Star has learned that Edward plans to file a petition in the British Columbia Supreme Court on Tuesday, and that his lawyer has written a letter to Rogers Communications asking that they join in asking the courts to hear the matter this week.

Rogers shares plunged almost six per cent on Monday and at least one major bank analyst downgraded his rating on the stock amid the uncertainty.

That came after Edward Rogers announced Sunday evening that he had been re-elected chair of a newly constituted board he assembled on Friday, after he had been voted out of that role late last week.

Martha Rogers took to Twitter over the weekend and tweeted on Monday that a headline on a story about this could be “Ed’s perpetual tantrums when he doesn’t get his way.”

The corporate board that was in place as of last week says the changes Edward made require a shareholder meeting and that his board is “invalid.” Lawyers for Melinda Rogers-Hixon agree — but they could be facing an uphill battle.

“I think it is likely that (Edward Rogers) will succeed,” 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 per cent of the voting shares of Rogers Communications.

When company founder Ted Rogers died in 2008, by the terms of his estate arrangements, his voting shares passed to 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 gives him the right to exercise the votes attached to all of the voting shares the family trust controls.

Edward maintains that this means he has the power to remove and replace board directors using a written resolution, which he submitted on Friday.

He now wants a judge to confirm that he is right.

Edward’s Vancouver-based lawyer asked Rogers Communications in a letter to join in a request to the court to have the matter heard this week in B.C., noting that the situation is attracting intense media scrutiny and analyst downgrades.

(The matter will be taken to the B.C. courts as that’s where Rogers was incorporated.)

The letter also said it would be in the best interest of the company to see the conflict resolved quickly, in light of the fact that Edward has received inquiries from the Ontario Securities Commission.

Crystal Jongeward, a spokesperson for the regulator said Monday, “as a matter of general policy, we do not comment on matters relating to specific issuers.”

“The outcome seems inevitable: Edward Rogers and the control trust will eventually effect the board changes,” Scotia Capital analyst Jeff Fan said in a report on Monday. He said Edward will either win the day in court or make the changes through a shareholder meeting. “The only difference is timing.”

Fan looks at the company from the perspective of investors and said he would hope for a “faster resolution to the conflict,” to give Rogers Communications a chance to focus on the business and completing its $20-billion acquisition of Shaw Communications Inc.

But a longer legal process could give other players in the drama a chance to negotiate a compromise or even make changes to the leadership of the family trust.

Walied Soliman, partner and Canadian chair at Norton Rose Fulbright, represents Rogers-Hixon and said in an appearance on BNN Bloomberg television Monday that he believes the family will ultimately resolve this between themselves. Still, he was adamant in his view that Edward will lose the court case.

“I think the concept of a single shareholder being able to replace all the independent directors of one of the largest public companies in the country by a stroke of a pen is unconscionable. I find it quite regrettable,” Soliman said.

“I’m questioning whether Ted Rogers did the right thing by putting all of the authority in one person. You don’t give everybody all the marbles,” said Leblanc. “It’s very unusual for one person to be able to unilaterally vote all of the voting shares and I think Mr. Rogers is not incented to compromise.”

Removing Edward as chair of the family trust would require the support of seven out of 10 members of an advisory committee.

Edward has locked in the votes of longtime advisers Phil Lind and Alan Horn, who supported him in a public statement last week. That means his sisters and mother, who are also on the committee, would have to sway two other family members as well as Thomas Hull (a childhood friend of Ted Rogers) and Toronto Mayor John Tory.

In the meantime, chaos at the company has spooked investors, leading to the sell-off of the stock on Monday and RBC Capital Markets analyst Drew McReynolds downgrading his rating for the company.

“In the absence of an immediate and definitive resolution to the ongoing family-Board dispute, we see two sources of collateral damage irrespective of the ultimate resolution,” McReynolds said, arguing the Rogers management team is likely to be less effective than usual because of the distractions and that it will be challenging to restore investor confidence in the company’s corporate governance.

“This is unprecedented,” said Alexander Dyck, a professor of finance at the Rotman School of Management, who could not think of any situation in Canada “where there’s been two boards that seem to exist at the same time for a publicly traded firm.”

Family-controlled companies make up a higher proportion of major public firms in Canada than in the U.S. or the U.K., he said, and that structure can be problematic.

“You don’t often see it rear its ugly head, but this is one circumstance where we do,” Dyck said. “This situation is untenable. Either the chair or the CEO has to leave — and it’s possible both of them have to leave to move forward.”