KEY POINTS:
Two new candidates for Telecom's board of directors say their bid has become blurred by calls for structural separation from their sponsor - US based hedge fund Elliott International.
Mark Cross and Mark Tume were yesterday distancing themselves from the controversial US hedge fund which holds 3 per cent of Telecom stock and which has lobbied against the present business structure.
The Two Marks - as they have been dubbed by Elliott portfolio manager James Smith - said yesterday they were standing to be independents representing all shareholders, not just Elliott.
Mark Cross - who recently returned from heading the Deutsche Bank acquisitions team in London - said nominations and debate about structure were separate.
"A vote for new directors is not in my mind a referendum for separation - it's just a vote for new directors."
But with the operational separation at the centre of Telecom's extraordinary challenges, the prospect of a board with divided views on the structure is being greeted with concern in the industry.
In an unusual move Elliott lobbied the Government in 2006 for a full structural split of Telecom, against the submissions of the company.
Yesterday, Communications Minister David Cunliffe defended the approach.
"Structural separation was thoroughly considered but was judged not to provide the sort of competitive outcomes relative to the level of market disruption," Cunliffe said.
NZ Shareholders Association chairman Bruce Sheppard says linking nominations with demands for a wider break-up of Telecom will hurt shareholder support for Cross and Tume.
Telecom refused to comment on the Elliott plans to build shareholder support for nominees in advance of the Telecom annual meeting on October 2. Nominations for the board close today but it will not be clear for some time whether incumbents whose terms are complete - Patsy Reddy and Rod McGeoch - will be standing for the board again.
Tume - who is a director of Infratil, Transpower and NZ Refining Company - declined to comment on whether Elliott's statement through public relations firm company Sweeney Vesty on Monday had harmed prospects for the board seats.
Asked whether he and Tume would be focused on the issue of structural separation, Mark Cross said: "I think we will be more focused on our own independence.
"We will join if shareholders believe that they could do with some added capacity to the board.
"Elliott's view of structural separation is well known and well documented but we are not Elliott's seats on the board."
Asked why Elliott - a hedge fund sceptical about the structure of the firm - would support their nominations, he said: "That is the risk they take nominating directors who respect the fiduciary duties and consider themselves to be independent.
"They believe that Telecom could usefully do with extra capacity and fresh talent."
Asked whether the issue of separation was fundamental to the business plan Cross said he had an open mind.
Both Cross and Tume said they had no previous relationship with Elliott.
Telecom shares closed up 5c at $3.38.
