#USA #New York #Mason Capital #Ascent Resources #EMG

Mason Capital Management's Concerns Regarding Ascent Resources

In a recent letter addressed to the litigation counsel for the Board of Managers of Ascent Resources, Mason Capital Management LLC has reiterated its serious concerns over the transactions involving the company. Mason Capital, a long-standing and substantial investor in Ascent, argues that the Board's actions have facilitated a sale of interests to continuation vehicles controlled by The Energy Minerals Group LP (EMG) and First Reserve Corporation. This arrangement allegedly ignored better alternatives and undermined the interests of minority stakeholders.

Mason has pointed out that the actions of EMG and First Reserve have led to a suppression of market prices, which has deterred other potential bidders, placing affiliated sponsors at a favorable advantage over minority investors. The firm noted that the Board has been uncooperative in engaging with stakeholders, which has raised questions regarding its commitment to fulfilling its fiduciary duties. If the Board does not engage positively to address these concerns, Mason is prepared to explore all legal options to ensure stakeholder rights are protected.

In its correspondence, Mason elaborates on a series of transactions executed by First Reserve that transferred a significant stake (approximately 35%) of Ascent. Following this, EMG initiated another similar transaction, which, when viewed in conjunction, restricted market activity and maintained control. Mason warns that these tactics sidestep the necessity of a control premium that typically accompanies such transactions, potentially breaching Delaware law regarding conflicted controller actions.

The company's silence on the matter, along with the apparent suppression of viable alternatives, raises serious allegations of bad faith conduct by the Board. Mason Capital emphasizes that transactions that suppress pricing and self-deal against minority interests are not merely business strategy failures but legal infringements that may invoke personal liability for managers involved.

Despite the board's claims of exploring appropriate strategic alternatives, Mason asserts that its efforts for a constructive dialogue have gone largely unanswered. This unwillingness to engage hints at deeper systematic issues within the governance framework of Ascent Resources. They express that good faith requires genuine engagement rather than mere silence, particularly concerning investors who hold significant financial stakes.

In the face of these developments, Mason Capital has laid out the parameters for a discussion to address their contractual and economic rights, hoping to avoid unnecessary litigation. To facilitate this, they have requested a complete copy of their operating agreement. The expectation is set that Ascent would respond by a specific deadline to confirm willingness to engage on these critical issues.

While waiting for the Board’s response, Mason has indicated their readiness to escalate matters further if their rights are not respected and if substantive discussions do not materialize. The implications of this situation go beyond immediate financial concerns, indicating potential shifts in investor relations and governance practices within Ascent Resources as minority stakeholders fight for their rights.

As tenants of an evolving corporate landscape, the conduct of the Board of Managers will be under scrutiny from both investors and legal entities, highlighting the importance of transparency and accountability in corporate governance. The outcome of this dispute may set critical precedents for how similar situations are handled in the future.