* Hedge fund has been blocking share conversion plan
* Telus says foreign ownership level spiked, fell back
Dec 17 (Reuters) - Canada's Telus Corp said on Monday it believes U.S. hedge fund Mason Capital Management LLC borrowed or "otherwise acquired" the telecom company's shares at the end of November to avoid disclosing a big reduction in its stake.
Telus said the percentage of its shares in foreign hands had dropped to about 15 percent, after applications to buy shares pushed potential foreign ownership above 30 percent in late November. It said it saw a similar pattern at the end of October.
Telus did not say why it believes Mason was behind the changing foreign ownership levels. But according to previous disclosures, Mason owned about 19 percent of voting shares in August, much more than other non-Canadian investor.
Canadian law prohibits foreign ownership of more than 33.3 percent in any large telecom player.
Mason and Telus have been trading press releases for months, as Mason seeks to block a scheme to consolidate Telus' two classes of stock on a one-for-one basis. Mason took simultaneous long and short positions in the company's voting and non-voting shares, and stood to benefit if the consolidation failed.
Vancouver-based Telus said in November that it believed Mason was selling down its position.
Mason could not immediately be reached for a comment.
The fund has said Telus' voting shareholders should be rewarded as the two classes merge, in part because they paid more for their stock in the first place. Telus said universal voting rights improve corporate governance.
Telus investors backed the share conversion plan in October, but British Columbia's Supreme Court is still considering an appeal by Mason.