By The Star Staff
Cobra Acquisitions, a wholly owned subsidiary of Mammoth Energy Services Inc., announced Thursday that on Dec. 1 of this year it entered into an agreement to transfer about $54.4 million of its outstanding receivable with the Puerto Rico Electric Power Authority (PREPA) to SPCP Group LLC in exchange for net proceeds of $46.3 million.
In a statement, Mark Layton, Cobra’s chief financial officer, commented: “We are pleased to enter this agreement with SPCP Group to monetize a portion of our outstanding receivable with PREPA.”
“This deal allows us to increase liquidity and invest in our business,” he said. “We used $26.9 million of the proceeds to pay down borrowings under our revolving credit facility, which is now undrawn. We plan to use the remainder of the proceeds to invest back into our business, which may include upgrading two of our hydraulic fracturing fleets with dual fuel capabilities, as well as for general corporate purposes.”
The Stifel, Nicolaus & Company Inc. Special Situations Team assisted Cobra and SPCP Group in arranging the transaction.
Oklahoma City-based Mammoth is an integrated, growth-oriented energy services company focused on the providing products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserves as well as the construction and repair of the electrical grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses.
For years, Cobra has been trying in court to get millions of dollars in payments from bankrupt PREPA for work it performed to repair the power grid decimated by the 2017 hurricanes Irma and Maria. PREPA recently said it has approved most of a $82 million tranche of invoices from Cobra Acquisitions for work to repair the grid, but the utility disputes about $1.5 million, according to a recent joint status report. Cobra also faces certain bureaucratic hurdles in getting its money. Payments to Cobra were delayed following criminal charges against the company’s former president, Donald Ellison, who ultimately pleaded guilty to offering gratuities to a Federal Emergency Management Agency (FEMA) administrator in exchange for a contract. They have also been delayed because all the PREPA officials with the authority to approve the invoices left when LUMA Energy took over PREPA’s transmission and distribution system.
FEMA has already reimbursed PREPA for the invoices for work completed five years ago after Maria and Irma devastated the island.