Contract analysis

I. Executive Summary On June 30, 2024, the Portland Metropolitan Water District ("PMWD") and Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") reached a tentative framework on revised terms for the Bull Run Filtration Project concession agreement (the "Revised Framework"). This development represents the most significant substantive progress on the concession renegotiation since PMWD first initiated the proces

II. Background A. The Bull Run Filtration Project Concession — Original Terms The Bull Run Filtration Project is a large-scale municipal water-treatment facility located in the Bull Run watershed area east of Portland, Oregon, serving the greater Portland metropolitan area. The project was conceived as a public-private partnership to address longstanding federal and state regulatory mandates requiring enhanced filtra

III. Summary of the Revised Framework — Key Terms The following is a summary of the key terms of the Revised Framework, based on information available to Calderwood & Harkness as of the date of this memorandum. Our information sources include: (i) a summary term sheet provided by Meridian's counsel, Breckenridge Sloane & Pratt LLP (Charles A. Delacroix), on July 18, 2024; (ii) a limited supplemental briefing from Cas

IV. Preliminary Revenue and EBITDA Impact Analysis This section presents Calderwood & Harkness's preliminary analysis of the revenue and EBITDA impact of the Revised Framework on Cascadia's financial profile, and specifically on the financial metrics upon which the originally agreed enterprise value was predicated. We reiterate that this analysis is based on limited and preliminary information, that the estimates pre

V. Implications for Transaction Valuation A. Originally Agreed Enterprise Value The enterprise value originally agreed under the Equity Purchase Agreement (executed September 15, 2022) was $1,950,000,000 (one billion nine hundred fifty million dollars). This enterprise value was predicated on Cascadia's fiscal year 2021 financial performance, as reflected in the audited financial statements prepared by Halstead & Gre

VI. Additional Considerations A. Information Gaps and Diligence Requirements Calderwood & Harkness has identified a number of significant information gaps that must be addressed before a comprehensive assessment of the Revised Framework's impact on the transaction can be completed. These include:

1. Definitive Concession Amendment Documentation. The Revised Framework is a tentative agreement in principle, and definitive documentation has not been prepared or executed. Calderwood & Harkness will need to review the definitive amendment (or the complete draft thereof) to confirm the accuracy of the summary terms upon which this preliminary analysis is based and to identify any additional provisions that may affe

2. Updated Cascadia Financial Statements. Cascadia's financial performance since FY 2021 has not been updated for co-investor review. Calderwood & Harkness recommends that Ironside request the FY 2022 and FY 2023 audited financial statements, which we understand have been prepared by Halstead & Greer LLP. Additionally, interim 2024 financial data should be requested to provide a current baseline for any reactivation

3. Incremental SB 1567 Compliance Capex Estimates. Cascadia management (CEO Jonathan M. Weir; CFO Sandra K. Llewellyn) has not yet disclosed detailed capital expenditure estimates for SB 1567 compliance to Meridian or to the co-investors. These estimates are essential for assessing the net economic impact of the Revised Framework, particularly the extent to which compliance costs will be borne by Cascadia versus reco

4. Rate Schedule Details. The detailed rate schedules that will govern the revised availability payments and volumetric charges have not been finalized or shared. These schedules are necessary for precise revenue modeling.

5. Capital-Recovery Mechanism Details. The mechanics of the capital-recovery mechanism (including timing, amount, conditions, and any clawback provisions) need to be specified before the net economic benefit to Cascadia can be assessed.

6. Updated Environmental Assessments. To the extent SB 1567 imposes new environmental standards or requires modifications to the Bull Run facility's environmental compliance profile, updated environmental assessments from Clearwater Environmental Consulting Inc. (which prepared the original Phase I and Phase II environmental site assessments for the transaction) may be required.

7. Updated Market and Comparable Analysis. An updated analysis of comparable infrastructure transactions and prevailing valuation multiples would be necessary to inform the discussion of the appropriate EV/EBITDA multiple in any reactivation negotiation. B. Interaction with EPA and Standstill Agreement The Revised Framework's implications must be analyzed in the context of the existing transaction documents, and part