(Bloomberg) -- One of the largest investors in Encana Corp. said it will vote against the Canadian oil producer’s plan to move its headquarters to the U.S.

Letko, Brosseau & Associates Inc., which has a stake of about 4%, said Tuesday the proposal would force investors holding Encana shares through indexed Canadian funds or via Canadian-only investment policies to sell the stock. It also questioned Encana’s argument that new U.S. index fund investors would replace Canadian shareholders.

Key Takeaways

  • Encana’s planned move south of the border hit the headlines last month as it encapsulated the gloom enveloping the Canadian oil industry and anxieties about losing major domestic companies.
  • Letko, Brosseau is so far the only investor to publicly oppose the plan but its strongly worded statement may encourage others to break cover. It called Encana’s effort to re-domicile “reflects a profound absence of concern for the protection and enhancement of shareholder value.”

Market Reaction

  • The shares were little-moved immediately after Letko, Brosseau issued its statement. Encana was down 3.8% at C$5.29 at of 1:11 p.m. in Toronto trading.

Get More

  • Click here for the full statement from the investor.

To contact the reporter on this story: Simon Casey in New York at scasey4@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada

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