Rogers Plunges as Cable Scion Heads to Court to Seal Power
(Bloomberg) -- Shares of Rogers Communications Inc. suffered their worst decline since the pandemic market crash of 2020 after a weekend of open hostilities within the Rogers family left it unclear who’s in control of the board.
Canada’s largest wireless firm fell 5.8% to C$56.55 after Edward Rogers, the only son of late founder Ted Rogers, asserted that he’s the chairman and said he’ll try to get a Canadian court to agree that he has the right to choose the 14-person board.
It was the biggest share drop since March of last year.
The company and other members of the family -- including his mother, Loretta Rogers -- say Edward’s new board is illegitimate and that former AT&T executive John MacDonald is still chairman.
A court filing by Edward Rogers is expected on Tuesday, according to people familiar with the matter. His lawyers are seeking a hearing this week, according to a letter they sent to Rogers Communications’ legal counsel that cited the share price as a reason to move quickly.
“You will also have seen that, in addition to the stock price falling, analysts are now downgrading RCI’s stock in response to the uncertainty of the current situation,” says the text of the letter. “Again, that demonstrates it is in the best interests of RCI that it be resolved with all due dispatch.”
As chairman of a family trust that controls about 97% of the voting shares in Rogers Communications, Edward Rogers has more voting power than other members of his family.
“We think Edward Rogers will retain control of the family trust, and therefore the company,” BMO Capital Markets analyst Tim Casey said in a note to investors, cutting his target on Rogers stock to C$68 from C$72. He predicted more turmoil ahead: “There will almost certainly be management changes at Rogers.”
Until the matter is decided, the fate of Chief Executive Officer Joe Natale and other senior executives hangs in the balance. Edward Rogers tried to replace Natale last month but was blocked by directors including his mother and two of his sisters, Melinda Rogers-Hixon and Martha Rogers.
“I think they’ll be able to convince the judge that this is rather urgent,” Michael Binetti, a lawyer with Affleck Greene McMurtry LLP, said about the pending court case in an interview on BNN Bloomberg Television.
In a sign of how nasty the family battle has become, Martha Rogers continued to taunt her brother on Twitter. She accused Edward Rogers of “perpetual tantrums when he doesn’t get his way” and said his claim that he’s now the chairman of Rogers Communications “should be taken as seriously as if he appointed himself the King of England.”
Walied Soliman, the lawyer representing Melinda Rogers-Hixon in the case, said the Supreme Court of British Columbia should shut down Edward Rogers’ attempt to replace five directors, including MacDonald, using a shareholder resolution.
“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 on BNN Bloomberg.
He also suggested that the family could resolve the matter on its own. “I think ultimately this family, like other families, will resolve this at the kitchen table,” he said.
“There’s no animus by Melinda toward her brother,” Soliman added. “There’s only a difference in perspective on advancing the business. I don’t believe for one second that Edward is an ill-intentioned man. I think that he’s wrong in how he’s approaching this.”
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