Paratus Monetizes Mexican Receivables, Bolsters Cash Position

Paratus Energy Services Ltd. (ticker "PLSV") has announced a significant agreement to monetize its outstanding receivables in Mexico, further strengthening its cash position and reinforcing its commitment to shareholder returns. The Bermuda-based company, through its wholly-owned subsidiary Fontis Holdings Ltd., has entered into an agreement with a leading international bank that will facilitate the payment of approximately $209 million of overdue invoices with its client in Mexico. This transaction, subject to an undisclosed upfront fee, is expected to be completed by the end of this month.

The agreement with the international bank will significantly improve Paratus' short-term cash position. As of December 31, 2024, Paratus Group's cash balance stood at approximately $98 million. Following the receipt of the Receivables Payment, Fontis' pro forma receivable balance with the customer will stand at approximately $140 million. This transaction will not only bolster Paratus' cash position but also provide the company with additional flexibility to support operations, optimize its capital structure, and fund shareholder distributions and/or share buybacks.

Paratus' commitment to returning capital to shareholders has been evident in its recent distributions. The company has previously distributed $0.22 per share to its shareholders in connection with both its second and its third quarter 2024 interim results. The monetization of receivables in Mexico will further support Paratus' ability to maintain this policy of providing shareholders with stable, long-term, and sustainable distributions, subject to allowance under its debt agreements.

The upfront fee for the receivables payment agreement is not disclosed, but it is mentioned to be well below 10% of the gross amount. The exact impact of this fee on Paratus' profitability will depend on how the net proceeds are allocated. If the net proceeds are used to support operations, optimize the capital structure, or fund shareholder distributions and/or share buybacks, the overall profitability of the company may be positively affected. However, if the net proceeds are used to cover operational costs or other expenses, the profitability impact may be neutral or even negative.

In summary, Paratus' agreement to monetize its receivables in Mexico significantly improves the company's short-term cash position and strengthens its long-term financial health. The transaction supports Paratus' commitment to returning capital to shareholders and provides the company with additional flexibility to optimize its capital structure and fund shareholder distributions and/or share buybacks. The upfront fee for the agreement may impact Paratus' profitability, depending on how the net proceeds are allocated.