Efficient Capital Structures, the activist investor seeking to force a restructuring of Vodafone, yesterday claimed a significant breakthrough as a prominent US investor group published a report backing its proposals.
Glass Lewis, one of the two biggest corporate governance groups in the US, which claims to have about
80 per cent of US investment institutions as clients, said it would recommend that shareholders support ECS's restructuring resolutions at the annual general meeting of the mobile phone group next week.
ECS is demanding that Vodafone returns up to £38 billion ($98 billion) to shareholders through a shakeup of the business that would see it significantly increase gearing and spin off its 45 per cent stake in Verizon Wireless, the US mobile phone company.
Vodafone has rejected the proposals and promised to vehemently oppose ECS's resolution at the AGM. However, Glass Lewis issued a lengthy report yesterday calling on shareholders to support ECS.
It said: "We believe shareholders have offered a compelling argument for altering the ownership structure regarding its Verizon Wireless interest and that the company has not stated a specific strategy to counter this argument."
The group held a conference call with more than 100 Vodafone shareholders last week, at which it presented its plans to recommend the restructuring package.
ECS's proposals have raised eyebrows in the City, because the group is backed by John Mayo, the former deputy chief executive of Marconi, the telecoms company that collapsed several years ago after a heavy borrowing programme which was used to finance acquisitions.
Several of Vodafone's biggest shareholders in the UK, including Morley Fund Management, M&G and Insight Investments, have already indicated publicly that they will support the board and vote against ECS's proposals.
Even so, the support of Glass Lewis represents a significant coup for ECS, because the adviser is hugely influential in the US, where 30 per cent of Vodafone's shareholders are based.
- INDEPENDENT
