Nearly 7 years after Cobra Acquisitions LLC, a wholly-owned subsidiary of Oklahoma City-based Mammoth Energy Services, performed hurricane power recovery in Puerto Rico, it’s been paid $150 million in an initial payment of a settlement over a legal fight.
The payment from the Commonwealth of Puerto Rico was in accordance with the settlement agreement with the Puerto Rico Electric Power Authority, known as PREPA.
“We are happy to have received the initial $150 million in settlement proceeds,” said Arty Straehla, Chief Executive Officer.
“With this first installment, we intend to extinguish all outstanding obligations under our term credit facility on or before October 16, 2024 and we expect the remaining amount of approximately $98.8 million, along with the $38.4 million still owed to us through the remaining installments, will have a transformative impact on our business going forward.”
Straehla said the payment helps Mammoth maintain what he called a “significant cash position” on the company’s balance sheet “and we will take a meticulous and strategic approach when deploying this capital. We intend to pursue accretive, value-enhancing opportunities as we strive to strengthen Mammoth for the future.”
Under the terms of the Settlement Agreement, which was approved by Judge Laura Taylor Swain, Cobra will receive total settlement proceeds of $188.4 million. Of the $38.4 million still owed to Cobra, $18.4 million relates to funds PREPA has received from the Federal Emergency Management Agency but are currently withholding.
The agreement laid out the terms of the payments.
The proceeds of the Settlement Agreement will be paid to Cobra through three installments: (i) $150.0 million on the later of (A) ten business days following approval of the Settlement Agreement by the Title III Court and (B) August 31, 2024; (ii) $20.0 million within seven days following the effective date of PREPA’s plan of adjustment; and (iii) $18.4 million in the Withheld FEMA Funds within either (A) ten business days after the deadline for appealing the entry of the settlement order by the Title III Court under the applicable bankruptcy rules of procedure if no such appeal is filed, or (B) if the provisions of the settlement order allowing PREPA to release the Withheld FEMA Funds to Cobra without retaining any liability to the Specified Municipalities are appealed by the Specified Municipalities, within ten business days of the filing of the notice of such appeal.