A hedge fund, Mason Capital, has made a proposal to purchase Ascent Resources, a major gas drilling company involved in a legal dispute with a Middle Eastern sovereign wealth fund. The case revolves around accusations that a U.S. private equity firm, Energy & Minerals Group (EMG), engaged in self-dealing.
Ascent Resources is one of the largest privately held natural gas drilling companies in North America. Recently, the Abu Dhabi Investment Council, which is the sovereign wealth fund, filed a lawsuit to prevent EMG from transferring its significant stake (over 30%) in Ascent between two funds it manages, claiming that this move would undervalue the company and benefit EMG disproportionately.
Additionally, the Abu Dhabi Investment Council accused EMG of pressuring investors to agree to this internal transfer by downplaying Ascent’s chances of being sold to an external buyer or going public. As of now, EMG has agreed to pause the transaction as the dispute is set to be resolved in a Delaware court.
Mason Capital, which has around $2 billion in assets, has an existing stake in Ascent Resources due to its investment during the company’s 2018 bankruptcy. The hedge fund is using this offer to push for a complete sales process for Ascent. Mason stated that it is prepared to pay more than the valuation of EMG’s proposed transfer and aims to avoid any delays in the purchase.
In a letter to Ascent’s board, Mason Capital expressed its readiness to make a fully financed cash offer that would exceed EMG’s suggested deal. The hedge fund suggested that Ascent’s board should actively pursue the highest possible offer within a structured 45-day process to maximize value for all stakeholders.
Both Mason Capital and the Abu Dhabi Investment Council declined to comment on the ongoing legal matters, and Ascent Resources has not yet responded to requests for comment.