Benzinga | Nov 3, 2021 09:19AM EDT

Mammoth Energy Services Reports Notice Of Proposed Settlement Of Derivative Action

Mammoth Energy Services, Inc. (NASDAQ:TUSK) ("Mammoth" or the "Company") today issued the Notice of Proposed Settlement of Derivative Action to its stockholders ("Notice") relating to the pending derivative action disclosed by Mammoth in its reports filed with the Securities and Exchange Commission, which Notice was given in accordance with the Court order Preliminarily Approving Derivative Settlement and Providing for Notice dated October 28, 2021 ("Preliminary Approval Order").

Preliminary Approval of the Settlement of the Derivative Action

As previously disclosed, in September 2019, four derivative lawsuits were filed, two in the United States District Court for the Western District of Oklahoma and two in the United States District Court for the District of Delaware (the "Court"), purportedly on behalf of Mammoth against its officers and directors, one of which was subsequently dismissed. The other three were consolidated by the Court under the case caption "In re Mammoth Energy Services, Inc. Consolidated Shareholder Litigation," and a consolidated amended complaint was filed on behalf of Nominal Defendant Mammoth (the "derivative action") against Mammoth's directors and executive officers (the "individual defendants") and two largest stockholders (collectively with the individual defendants and Nominal Defendant Mammoth, the "defendants").

On October 5, 2021, the plaintiffs and Nominal Defendant Mammoth entered into the Stipulation and Agreement of Settlement (the "Stipulation") in the derivative action, which was preliminarily approved by the Court on October 28, 2021 in the Preliminary Approval Order, and is subject to final approval by the Court. The terms of the Stipulation require that, in exchange for the full release, discharge and dismissal with prejudice of the claims asserted against the defendants in the derivative action, (1) the individual defendants will cause the insurers under Mammoth's Directors' and Officers' ("D&O") insurance policy (the "D&O insurers") to pay $1.5 million to Mammoth, which Mammoth will use for general corporate purposes; and (2) Mammoth will adopt certain corporate governance reforms, which will further enhance Mammoth's current corporate governance policies. Additionally, the Stipulation provides that the individual defendants will cause the D&O insurers to pay, subject to Court approval, a separate payment of $0.5 million to plaintiffs' counsel for their attorneys' fees and expenses.

The Court has set a hearing date for January 7, 2022 to consider the final approval of the settlement. The final settlement amount is expected to be covered in full under Mammoth's D&O insurance policy. However, until the Court issues a final order approving the settlement, Mammoth cannot assure you that the derivative action will be settled on the terms set forth herein or at all.

The foregoing description of the preliminarily approved settlement is a summary only and is qualified in its entirety by reference to the Notice and the Stipulation. Full copies of the Notice and the Stipulation (with all exhibits thereto) are posted on the Investors page of Mammoth's website, ir.mammothenergy.com.