Myth vs. Fact

+ Myth 1: Oversight board "does not control accounts payable"

• MYTH: “The Oversight Board generally has the authority to approve and establish PREPA’s annual budgets, but it does not control accounts payable … The Oversight Board’s main concern is to ensure PREPA’s financial stability and avoid a liquidity crisis.”

• FACT: In testimony before the U.S. House of Representatives’ Committee on Natural Resources in June 2020, Ms. Jaresko stated, “The Board reviews major contracts before they can be ratified to ensure both consistency with the certified fiscal plans and budgets, as well as to ensure they promote market competition. This process has brought much-needed transparency, with all responses and analyses posted in the Board's website. The Board was established by law to create the conditions for fiscal responsibility in Puerto Rico and restore access to capital markets. One element of this mandate has been to take opportunities to support the Government of Puerto Rico in its efforts to pursue prudent actions to promote economic stability and create the conditions for growth. FOMB is dedicated to the development of the Island and honoring it commitments to all stakeholders, including residents, retirees, and creditors.”

+ Myth 2: "Oversight board needs to know contents of the review process" before approving payment

• MYTH: “For the Oversight Board to support the allowance of an administrative claim, it will need to know all the facts that are being discussed between the parties in the Review Process (defined below) and make sure that Cobra’s charges are not subject to valid contract defenses or clawback, including as a result of the pending criminal proceedings against Cobra’s former president.”

• FACT: The ongoing trial involves no current employees of Cobra. Mammoth is and will continue cooperating with the investigation. Even United States District Judge Laura Swain, who oversees the debt restructuring case in the Puerto Rican government-debt crisis, has declared that, “PREPA’s contractual arguments may well be strained.”

In fact, since 2017, Mammoth has since been awarded contracts by multiple utilities that were funded by the Federal Emergency Management Agency (FEMA) for natural disaster recovery and been re-paid for every single one, except for Puerto Rico post-Maria.

1. Hurricane Harvey – 2017 – South Texas
2. Hurricane Irma – 2017 – Florida
3. Hurricane Maria – 2017 – Puerto Rico
4. Hurricane Beryl – 2018 – Puerto Rico
5. Hurricane Michael – 2018 – Florida
6. Hurricane Florence – 2018 – North Carolina
7. PGE – 2017-2020- California (Brim Wildfires)
8. Oregon Department of Forestry – Oregon 2017 – Present – Oregon (Brim)
9. Hurricane Sally – 2020 - Louisiana
10. Hurricane Laura – 2020 - Louisiana
11. Ice Storms Oklahoma and Texas – 2020
12. Hurricane Hanna – 2020 – Texas
13. Tropical Storm Isaias – 2020 – Northeast United States
14. Derecho – 2020 – Midwest United States
15. Ice Storms – 2021 – Kentucky and Ohio
16. Ice Storm 2021 – Texas
17. Hurricane Ida – 2021 – Louisiana and Mississippi

+ Myth 3: "PREPA and Cobra have held bi-weekly meetings"

• MYTH: “PREPA has informed the Oversight Board that for the past several months, representatives of PREPA and Cobra have held bi-weekly meetings to review remaining discrepancies regarding Cobra’s invoices (the ‘Review Process’) … PREPA has informed us this process has been productive and collaborative, and significant progress has been made. The Review Process is continuing and will hopefully be completed shortly.”

• FACT: The “review process” has been taking place for more than two and one-half years with no end in sight. The review process has uncovered the fact that the invoices have been provided multiple times by Cobra to PREPA.

+ Myth 4: "PREPA does not have funds on hand to pay Cobra"

• MYTH: “Moreover, based on reporting we receive from PREPA, PREPA does not have funds on hand to pay Cobra through previous allocations from FEMA.”

• FACT: This statement is in direct conflict with PREPA’s own attorneys, who in a June 2021 court filing declared, “FEMA has not yet issued a Determination Memorandum with respect to the services provided under the second contract, although FEMA has obligated approximately $250 million for the costs incurred under this contract. Further, all of the costs invoiced by Cobra to PREPA (other than invoices for interest, but including invoices which are disputed by PREPA) have been submitted to FEMA for reimbursement.”

Furthermore, if PREPA is insolvent and unable to pay their portions of cost share and interest, they should no longer be considered a functioning entity.

+ Myth 5: PREPA will pay "when the parties’ Review Process is complete"

• MYTH: “PREPA will submit charges under the second contract for FEMA approval when the parties’ Review Process is complete.”

• FACT: Before the United States District Court for the District of Puerto Rico on June 4, 2021, PREPA stated, “all of the costs invoiced by Cobra to PREPA (other than invoices for interest, but including invoices which are disputed by PREPA) have been submitted to FEMA for reimbursement.”

+ Myth 6: Payment will occur "when those amounts are settled after the completion of the Review Process"

• MYTH: “We believe the Review Process now taking place and pending requests for FEMA funding weigh in favor of paying remaining amounts duly owed to Cobra when those amounts are settled after the completion of the Review Process, from all available funding provided by FEMA as opposed to PREPA’s cash on hand.”

• FACT: For its work in Puerto Rico after Hurricane Maria, Cobra was awarded two separate contracts by FEMA. There is no dispute on contract #1(PW 251), and yet amounts on that contract go unpaid. For example, Cobra has been waiting almost three years for the tax gross up it is owed by PREPA. Cobra paid taxes up front to the Commonwealth and then applied for the reimbursement yet $61.6 mm goes unpaid. Additionally, contract #2 breaks down to 90 – 10 cost share between FEMA and PREPA respectively. Ten percent is not reliant upon FEMA for reimbursement, yet that 10 percent remains unpaid.