Cobra enters into a settlement agreement with PREPA

Cobra Acquisition, a wholly owned subsidiary of Mammoth Energy Services, announced that it has entered into a release and settlement agreement with the Puerto Rico Electric Power Authority, or PREPA, and the Financial Oversight and Management Board for Puerto Rico, in its capacity as Title III representative for PREPA, or FOMB, to settle all outstanding matters between Cobra and PREPA. Arty Straehla, CEO, commented, “We are pleased to have reached this resolution with PREPA and look forward to receiving the money for work we concluded over five years ago. We plan to use a portion of the $188.4M in settlement proceeds to pay off our term credit facility, which had a balance of approximately $49.3M as of June 30. The remaining amount of approximately $139.1M will be cash on our balance sheet to be used to invest back into our business and for general corporate purposes.” Under the terms of the Settlement Agreement, Cobra will have an allowed administrative expense claim against PREPA of $170.0M, plus the $18.4M in the Withheld FEMA Funds. Cobra’s allowed claim will be paid through three installments: $150.0M on the later of ten business days following approval of the Settlement Agreement by the Title III Court and, August; $20.0M within seven days following the effective date of PREPA’s plan of adjustment; and $18.4M in the Withheld FEMA Funds within either 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 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. The Settlement Agreement was approved by the Company’s Board of Directors on July 22, and was also approved by the PREPA Board and by the FOMB. As a result of the Settlement Agreement, the Company will record a non-cash, pre-tax charge of approximately $170.7M in the Q2 to reduce its accounts receivable balance from PREPA to the amount expected to be received from the Settlement Agreement.