By The Star Staff
Seven municipalities plan to appeal before the U.S. Court of Appeals for the First Circuit in Boston the debt settlement between the bankrupt Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions for work performed to restore the island’s electrical grid after it was destroyed by hurricanes Irma and Maria in 2017.
The municipalities of Yabucoa, Guayama, Cayey, Naguabo, Caguas, Humacao and Las Piedras filed a notice as part of PREPA’s Title III bankruptcy last week, informing the court that they are appealing the settlement reached among the parties in July. Under the terms of the settlement agreement, which was approved by U.S. District Judge Laura Taylor Swain, Cobra will receive total settlement proceeds of $188.4 million.
At least 15 municipalities objected to the settlement with Cobra, arguing they were going to lose at least $75 million in construction and municipal taxes. The government said the settlement did not prevent towns from seeking the tax payments owed for the construction work performed by Cobra.
PREPA on July 31 agreed to back Cobra in its municipal tax dispute.
Cobra had initially argued that PREPA owed $406 million, including interest and expenses, for work completed more than five years ago after the back-to-back hurricanes devastated the island.
PREPA recently paid Cobra $150 million and will pay another $20 million once the electrical utility’s bankruptcy plan is confirmed. Another $18.4 million will be paid later.
Cobra CEO Arty Straehla said the Oklahoma City-based company will now maintain a significant cash position on its 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,” he said, referring to Cobra Acquisition’s parent company Mammoth Energy Services Inc.
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