A Canadian investment management firm with a four per cent stake in Calgary-based Encana Corp. says it will vote against Encana’s plan to move its headquarters to the United States.
Letko, Brosseau & Associates Inc. says the planned move to Denver would lead to Encana’s removal from S&P/TSX stock indexes.
That would mean investors holding Encana through indexed Canadian funds or with Canadian-only investment policies would have to sell Encana shares, a move the investor says would compound the 70 per cent decline in share price experienced since Sept. 30, 2018.
Encana recently announced the headquarters move as part of a reorganization that would include changing its name to Ovintiv, as well as a share consolidation.
CEO Doug Suttles, a Texan who lives in Denver, says the change in corporate home is meant to help the company tap into deeper pools of U.S. passive investor capital.
The changes require a shareholder vote to be held early next year.
“The proposed move is contrary to Encana’s best interests and reflects a profound absence of concern for the protection and enhancement of shareholder value,” charges Letko Brosseau in a statement.
“Further, Encana did not take or even appear to consider any steps to mitigate the adverse consequences to the company or its Canadian investors.”
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