Puerto Rico’s finally come through with payments to Mammoth Energy Services and its wholly owned subsidiary Cobra Acquisitions LLC for the work it performed following the 2017 Hurricane Maria
The Puerto Rico Electric power Authority, according to an announcement by Mammoth Energy of Oklahoma City, made a payment of $18.4 million in accordinance with a previously announced Settlement Agreement.
It took a court fight for Mammoth to get the payments. Under the terms of the Settlement Agreement, which was approved by the United States District Court for the District of Puerto Rico having jurisdiction over PREPA’s bankruptcy proceedings, Cobra is entitled to receive total settlement proceeds of $188.4 million. Of the $188.4 million, Cobra has received $168.4 million. The remaining $20 million is payable to Cobra within seven days following the effective date of PREPA’s plan of adjustment.
“We are pleased to have received the next installment payment under our Settlement Agreement with PREPA and look forward to receiving the final installment of $20 million upon the confirmation of PREPA’s plan of adjustment in their bankruptcy proceedings,” said Arty Straehla, Chief Executive Officer.
“We maintain a significant cash position on our balance sheet, no debt, 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.”
In relation to the receipt of the $18.4 million from PREPA, Mammoth entered into an amendment to its revolving credit agreement and a letter of credit reimbursement agreement, each with Fifth Third Bank, National Association. The Credit Agreement Amendment permits the transactions contemplated by the Reimbursement Agreement, including the issuance of one or more letters of credit to satisfy Cobra’s obligations under the Settlement Agreement.
Under the terms of the Reimbursement Agreement, the Company agreed to hold cash funds totaling at least 105% of the stated amount of all letters of credit issued pursuant to the Reimbursement Agreement in an account maintained by Fifth Third Bank and to which Fifth Third Bank has a first priority security interest. In connection with the receipt of the $18.4 million from PREPA, Cobra instructed Fifth Third Bank to issue a letter of credit to PREPA under the Reimbursement Agreement in the amount of $18.4 million and transferred a total of $19.3 million to a restricted cash account maintained by Fifth Third Bank as collateral for the letter of credit.
