1015-00001 · Graymont Brothers Inc · Correspondence

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CALDERWOOD & HARKNESS LLP Attorneys at Law

599 Lexington Avenue New York, New York 10022

Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

Brendan Walsh Lead Associate, Capital Markets Direct Dial: (212) 558-4137 Direct Fax: (212) 558-3627

Email: bwalsh@calderwoodharkness.com

Responsible Partner: Jennifer Kwon Direct Dial: (212) 558-4012

C&H Matter No. 1015-00001

May 12, 2022

Via Email (thomas.raines@ridgemontnational.com) and Overnight Courier

Mr. Thomas Raines Managing Director, Energy Lending Veltrano National Bank 1401 McKinney Street Houston, Texas 77010

Re: Proposed Initial Public Offering of Common Stock — Calloway-Briggs Renewables Inc.; Request for Lender Consent Under Corporate Credit Facility

Dear Mr. Raines:

I. Introduction

We write on behalf of our client, Calloway-Briggs Renewables Inc. ("CBR" or the "Company"), a corporation organized under the laws of the State of Delaware and headquartered at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746 (EIN: 83-4027615). Calderwood & Harkness LLP ("C&H") serves as outside counsel to CBR in connection with the Company's proposed initial public offering (the "IPO" or the "Offering") of shares of common stock, par value $0.01 per share (the "Common Stock"), on the New York Stock Exchange under the proposed ticker symbol "CBRI." The aggregate gross proceeds of the Offering are expected to be approximately $600,000,000.

The purpose of this letter is to (a) transmit to Veltrano National Bank ("Veltrano" or the "Bank"), in its capacity as Administrative Agent under each of the credit facilities described below, the enclosed draft lender consent request letter and draft consent form, and (b) respectfully request that Veltrano, as Administrative Agent, review and, following its review, circulate the enclosed consent documents to the lender syndicate for approval. Specifically, the Company seeks the consent and waiver of certain provisions of the following credit agreements in connection with the contemplated Offering:

(i) that certain Revolving Credit Agreement, dated as of January 14, 2022, among CBR, as Borrower, the lenders party thereto from time to time, and Veltrano National Bank, as Administrative Agent, L/C Issuer, and Swing Line Lender (as amended, supplemented, or otherwise modified from time to time, the "Revolving Credit Agreement"), providing for a revolving credit facility in an aggregate commitment amount of $400,000,000 (the "Revolving Facility"), with a stated maturity date of January 14, 2027; and

(ii) that certain Term Loan Credit Agreement, dated as of January 14, 2022, among CBR, as Borrower, the lenders party thereto from time to time, and Veltrano National Bank, as Administrative Agent (as amended, supplemented, or otherwise modified from time to time, the "Term Loan Agreement" and, together with the Revolving Credit Agreement, the "Credit Agreements"), providing for a term loan B facility in an original principal amount of $650,000,000 (the "Term Loan B"), of which approximately $612,500,000 remains outstanding as of the date hereof, with a stated maturity date of January 14, 2029.

Capitalized terms used but not otherwise defined in this letter shall have the meanings ascribed to them in the applicable Credit Agreement.

II. Background on the Proposed IPO

As Veltrano is aware from its longstanding lending relationship with the Company, CBR is a leading developer and operator of utility-scale solar, onshore wind, and battery energy storage projects across the United States. As of the date of this letter, CBR's portfolio consists of approximately 3.8 gigawatts ("GW") of operating renewable-energy generation and storage capacity across twenty-two (22) projects located in the states of Texas, New Mexico, Arizona, California, and Oklahoma. In addition, CBR has approximately 1.4 GW of capacity currently under construction and a development pipeline of approximately 6.2 GW. The Company has experienced significant growth in its operating capacity and revenue base since the inception of the credit facilities, and the IPO represents the next phase of the Company's capital strategy.

Confidential Submission and SEC Review. On April 11, 2022, CBR confidentially submitted a draft registration statement on Form S-1 (the "DRS-1") to the Securities and Exchange Commission (the "SEC") pursuant to the accommodations available to an "emerging growth company" under Title I of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). On May 6, 2022, the SEC Division of Corporation Finance issued a first-round comment letter containing eighteen (18) comments relating primarily to the Company's revenue recognition policies, risk factor disclosures, and certain executive compensation disclosures. The Company filed Amendment No. 1 to the DRS-1 together with a detailed response letter addressing each of the SEC's comments on May 20, 2022. The SEC review process is ongoing, and the Company anticipates additional rounds of comments and amendments before the registration statement is declared effective.

Offering Structure. The Offering is expected to consist of the following components:

• Base Offering: Approximately $521,700,000 in aggregate gross proceeds, consisting of approximately 23,713,636 shares of Common Stock at an assumed midpoint offering price of $22.00 per share, comprised of:

• Primary shares issued by the Company: approximately 16,895,455 shares, representing approximately $371,700,000 in aggregate gross proceeds to CBR; and

• Secondary shares sold by Pinnacle Vista Capital Partners III, LP ("Pinnacle Vista"), the Company's majority stockholder holding approximately 62% of pre-IPO fully diluted Common Stock: approximately 6,818,182 shares, representing approximately $150,000,000 in aggregate gross proceeds to Pinnacle Vista.

• Overallotment Option (Greenshoe): The underwriters will be granted a 30-day option to purchase up to an additional 3,559,091 shares of Common Stock (representing 15% of the base offering shares) at the initial public offering price, less the underwriting discount, for aggregate additional gross proceeds of approximately $78,300,000.

• Total Aggregate Offering (assuming full exercise of the overallotment option): Approximately $600,000,000, consisting of approximately 27,272,727 shares of Common Stock.

Underwriting Syndicate. The Offering will be managed by the following underwriting syndicate:

• Lead-Left Book-Running Manager: Hargrove Keating & Co.

• Joint Book-Running Managers: Linden Pratt Securities LLC and Graymont Brothers Inc.

• Co-Managers: Barfield Stuart & Co. and Crane Whitley Capital LLC

Capitalization. Prior to the IPO, the Company's fully diluted shares outstanding (following a reclassification of the Company's capital stock in connection with the IPO) will total 100,000,000 shares of Common Stock. Following the completion of the base offering (and excluding shares subject to the overallotment option), the Company will have approximately 123,713,636 shares of Common Stock outstanding. Upon full exercise of the overallotment option, the Company will have approximately 127,272,727 shares of Common Stock outstanding.

Pre-IPO Ownership. The Company's current ownership structure is as follows:

III. Intended Use of IPO Proceeds Relevant to Veltrano

The net primary proceeds to the Company from the Offering (after deducting the underwriting discount of 5.50% on the gross spread applicable to primary shares) are expected to be approximately $351,257,850 (calculated as $371,700,000 in aggregate gross proceeds to CBR from primary shares, less the 5.50% underwriting discount of approximately $20,443,500, but before deducting estimated offering expenses). The Company does not receive any proceeds from the sale of secondary shares by Pinnacle Vista.

The Company intends to use the net primary proceeds from the Offering as follows:

(a) Prepayment of Corporate Term Loan B — Approximately $200,000,000. The Company intends to apply approximately $200,000,000 of net primary proceeds to prepay a portion of the outstanding principal balance under the Term Loan B. In accordance with Section 2.05(a) of the Term Loan Agreement, such prepayment will be accompanied by a prepayment premium of 1.00% on the prepaid amount, equal to $2,000,000, payable to Veltrano as Administrative Agent for distribution to the applicable lenders in accordance with the terms of the Term Loan Agreement. Following the application of such prepayment, approximately $412,500,000 of aggregate principal would remain outstanding under the Term Loan B. The Company believes this significant deleveraging will strengthen its balance sheet, improve its net leverage ratio, and enhance its financial flexibility as a newly public company. CBR anticipates that this prepayment, together with the Company's ongoing cash flow generation, will bring the Company's net leverage ratio well within the levels required by the financial covenants set forth in the Credit Agreements.

(b) Construction Funding — Cimarron Solar Project — Approximately $100,000,000. The Company intends to apply approximately $100,000,000 of net primary proceeds to fund the remaining construction costs of the Cimarron Solar project, which is being developed through Cimarron Solar Development LLC, a wholly owned subsidiary of CBR, located in Doña Ana County, New Mexico. The Cimarron Solar project is a 250 MWdc / 200 MWac utility-scale photovoltaic installation with an expected commercial operation date in the third quarter of 2023. As Veltrano is aware, this project is not encumbered by the collateral packages under the Credit Agreements, and the construction funding will flow through the Company's general corporate treasury.

(c) General Corporate Purposes — Approximately $71,700,000. The remaining net primary proceeds, approximately $71,700,000, will be used for general corporate purposes, including working capital, potential development-stage investments, and other capital expenditures in the ordinary course of business.

We note for Veltrano's information that the Term Loan B prepayment described in clause (a) above is a stated use of proceeds in the draft S-1 registration statement and will be prominently disclosed in the final prospectus filed with the SEC at the time of pricing.

IV. Consent and Waiver Request

Based on a thorough review of the Credit Agreements and the structure of the contemplated Offering, the Company has identified the following provisions of the Credit Agreements with respect to which the consent or waiver of Veltrano, as Administrative Agent, and/or the Required Lenders is being requested. Each is discussed in greater detail below.

A. Change of Control

The Offering will result in a change in the direct and indirect beneficial ownership of CBR. As noted above, Pinnacle Vista currently holds approximately 62% of the Company's fully diluted Common Stock. Upon completion of the base offering (assuming no exercise of the overallotment option), Pinnacle Vista's ownership percentage will decrease to approximately 49% of the outstanding Common Stock. If the underwriters exercise the overallotment option in full, Pinnacle Vista's ownership will decrease further to approximately 47% of the outstanding Common Stock.

Section 7.01(i) of each Credit Agreement defines a "Change of Control" to include, among other things, the occurrence of any event as a result of which Pinnacle Vista (or its affiliates) ceases to beneficially own, directly or indirectly, at least 50.1% of the outstanding equity interests of the Borrower entitled to vote for the election of the Board of Directors. A Change of Control constitutes an Event of Default under Section 8.01(h) of each Credit Agreement.

The Company respectfully requests that Veltrano, as Administrative Agent, confirm that the consummation of the IPO, including the sale of secondary shares by Pinnacle Vista and any exercise of the overallotment option, does not constitute a "Change of Control" within the meaning of the Credit Agreements or, to the extent the IPO would constitute or could reasonably be construed to constitute a Change of Control, that Veltrano and the Required Lenders provide a waiver of the Change of Control provision with respect to the IPO and the transactions contemplated thereby. The Company notes that, following the IPO, Pinnacle Vista will remain the single largest stockholder of CBR and will continue to have the right to designate a majority of the members of the Company's Board of Directors pursuant to the terms of a stockholders' agreement to be entered into at the closing of the IPO.

B. Restricted Payments and Equity Issuances

The Company seeks confirmation that (i) the issuance of primary shares of Common Stock in the Offering, (ii) the facilitation of the sale of secondary shares by Pinnacle Vista, (iii) the application of net proceeds (including the approximately $200,000,000 prepayment of the Term Loan B), and (iv) the payment of the underwriting discount and other Offering-related expenses, in each case, are either (x) expressly permitted under the covenants of the Credit Agreements (including without limitation the covenants set forth in Article VI of each Credit Agreement) or (y) to the extent not expressly permitted, are hereby consented to and waived by the Administrative Agent and the Required Lenders.

The Company further requests confirmation that the $200,000,000 prepayment of the Term Loan B described in Section III(a) above, together with the payment of the associated prepayment premium of $2,000,000, satisfies and is consistent with the voluntary prepayment provisions set forth in Section 2.05(a) of the Term Loan Agreement and does not trigger any additional mandatory prepayment obligations or other consequences under the Credit Agreements.

C. Reporting and Disclosure Covenants

Upon the effectiveness of the registration statement and the completion of the IPO, CBR will become subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and will be required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC. The Company requests that Veltrano acknowledge and confirm that the Company's timely filing of such SEC reports with the SEC (and making such reports publicly available through the SEC's EDGAR filing system or providing notice of their availability to the Administrative Agent) will satisfy the corresponding information-delivery covenants set forth in Section 6.01 of each Credit Agreement, including without limitation the requirements to deliver annual audited and quarterly unaudited financial statements to the Administrative Agent, to the extent such financial statements are included in or incorporated by reference into the applicable SEC filings. To the extent that the information-delivery covenants require the delivery of any information not customarily included in public SEC filings (including, for example, compliance certificates, borrowing base certificates, or budget and forecast deliverables), the Company acknowledges that it will continue to provide such deliverables separately in accordance with the terms of the Credit Agreements.

D. Additional Shares Under Equity Incentive Plans

In connection with the IPO, CBR's Board of Directors has approved the adoption (subject to stockholder approval) of the following equity compensation plans, each to become effective immediately prior to the effectiveness of the registration statement:

(i) the Calloway-Briggs Renewables Inc. 2022 Omnibus Equity Incentive Plan (the "2022 Equity Plan"), with an initial share reserve of 12,727,273 shares of Common Stock (representing approximately 10% of post-IPO outstanding shares on a base offering basis), together with customary annual "evergreen" increase provisions; and

(ii) the Calloway-Briggs Renewables Inc. 2022 Employee Stock Purchase Plan (the "2022 ESPP"), with an initial share reserve of 2,545,455 shares of Common Stock.

The Company requests confirmation that the adoption of the 2022 Equity Plan and the 2022 ESPP, the reservation of shares of Common Stock thereunder, and the issuance of shares of Common Stock (or options, restricted stock units, or other awards convertible into or exercisable for shares of Common Stock) pursuant to such plans in the ordinary course, are permitted under the covenants of the Credit Agreements and do not require any further consent from the Administrative Agent or the lender syndicate.

E. Circulation to the Lender Syndicate

The Company respectfully requests that Veltrano, as Administrative Agent, circulate the enclosed consent request letter and draft consent form to each member of the lender syndicate under the Credit Agreements for approval, and provide written confirmation of the consent and waiver described above at the earliest practicable date. The Company understands that the approval of the Required Lenders (as defined in each Credit Agreement) will be necessary to effectuate certain of the consents and waivers described above and is prepared to engage in discussions with any lender that may have questions regarding the Offering or the consent request.

V. Description of Enclosed Documents

For your review and consideration, we have enclosed the following documents with this letter:

Enclosure 1: Draft Lender Consent Request Letter — CBR to Veltrano National Bank. This is a draft of the formal consent request letter from CBR (to be executed by Priya Anand, Senior Vice President, Finance & Treasurer) to Veltrano National Bank (addressed to you, Thomas Raines, Managing Director, Energy Lending), formally requesting the consent and waiver on behalf of CBR as Borrower under the Credit Agreements. This draft letter sets forth the Company's representations and certifications to be delivered in connection with the consent request, including a certification that no Default or Event of Default (other than any arising solely from the transactions contemplated by the IPO) exists under the Credit Agreements as of the date of the consent request.

Enclosure 2: Draft Consent Form — Veltrano National Bank (Administrative Agent). This is a draft of the consent and waiver agreement to be executed by Veltrano National Bank in its capacity as Administrative Agent under the Credit Agreements, providing for the consent to and waiver of the Credit Agreement provisions described in Section IV above in connection with the IPO.

Please note that both enclosed documents are in draft form and remain subject to further negotiation between the parties. Calderwood & Harkness welcomes any comments, revisions, or proposed modifications from Veltrano or its outside legal counsel. We are committed to working collaboratively with your team to arrive at mutually acceptable documentation in a manner consistent with the anticipated IPO timeline.

VI. Key Contacts for CBR

To facilitate efficient communications regarding this matter, we set forth below the principal contacts at CBR for your reference:

Legal Matters: Sandra Haverford General Counsel & Corporate Secretary Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746 Telephone: (512) 617-3200

Email: shaverford@calloway-briggs.com

Financial and Credit Facility Matters: Priya Anand Senior Vice President, Finance & Treasurer Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746 Telephone: (512) 617-3245

Email: panand@calloway-briggs.com

All communications from Veltrano and its counsel regarding this consent request may also be directed to the undersigned at the contact information set forth above.

VII. Timing and Next Steps

We respectfully request that Veltrano review the enclosed draft documents at its earliest convenience. As noted above, the SEC review process for the registration statement is ongoing and the Company anticipates that additional amendments may be filed in the coming weeks. CBR intends to be in a position to commence the Offering promptly upon the SEC's declaration of effectiveness of the registration statement and favorable market conditions. While the precise timing of the Offering remains subject to market conditions and the SEC review timeline, the Company's current expectation is that the Offering could occur as early as the third quarter of 2022. The Company believes that obtaining the requisite lender consent in advance of the pricing of the Offering is a critical-path item and appreciates Veltrano's attention to this request.

To that end, we respectfully request that Veltrano indicate any initial comments, questions, or concerns regarding the enclosed consent documents by return correspondence within ten (10) business days of receipt of this letter (i.e., by no later than May 26, 2022). We recognize that the lender syndicate approval process may require additional time, and we are prepared to work with Veltrano on a reasonable timeline to secure the necessary approvals.

In addition, we would be pleased to arrange a conference call or in-person meeting among Veltrano (and its counsel, if desired), CBR management (including Priya Anand, SVP, Finance & Treasurer), and Calderwood & Harkness to discuss any questions Veltrano may have regarding the Offering, the proposed use of proceeds, or the consent request. Please do not hesitate to contact the undersigned to coordinate scheduling at your convenience.

Finally, we wish to express the Company's willingness to coordinate with Veltrano's legal counsel regarding any required amendments to the Credit Agreements or any additional documentation that Veltrano or the lender syndicate may require in connection with the consent. The Company is committed to a transparent and cooperative process and will make available such additional information as Veltrano may reasonably request.

VIII. Confidentiality Notice

We wish to remind Veltrano that the proposed IPO, the draft registration statement on Form S-1, the SEC review process, and the matters described in this letter are strictly confidential at this time. As noted above, the registration statement was submitted to the SEC on a confidential basis under the JOBS Act and has not yet been publicly filed. Accordingly, the existence and terms of the proposed Offering constitute material nonpublic information concerning the Company.

We respectfully request that Veltrano National Bank treat this correspondence and the enclosed documents as confidential and limit the distribution of these materials to those persons within Veltrano and at Veltrano's outside legal counsel who have a bona fide need to know in connection with the evaluation and processing of the consent request. We further note that the confidentiality provisions set forth in Section 10.08 of each of the Credit Agreements apply to the information contained herein and in the enclosed documents, and we request that Veltrano ensure compliance with such provisions in connection with the circulation of the consent request to the lender syndicate.

The Company anticipates that the registration statement will be publicly filed with the SEC prior to or concurrently with the commencement of the roadshow for the Offering. Until such time, we ask that Veltrano and each lender receiving the consent request take appropriate steps to maintain the confidentiality of the information contained herein, including by establishing appropriate information barriers and restricting trading in any securities of the Company or its affiliates.

We appreciate Veltrano's longstanding relationship with CBR and your willingness to consider this request. We believe that the IPO represents a transformative milestone for the Company and that the contemplated use of proceeds — particularly the substantial prepayment of the Term Loan B — will meaningfully benefit the lender syndicate by reducing credit exposure and strengthening the Company's balance sheet. We look forward to working with you and your team to bring this consent to a successful conclusion.

Should you have any questions or wish to discuss any aspect of this letter or the enclosed documents, please do not hesitate to contact the undersigned at (212) 558-4137 or bwalsh@calderwoodharkness.com, or our supervising partner, Jennifer Kwon, at (212) 558-4012 or jkwon@calderwoodharkness.com.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Brendan Walsh Lead Associate, Capital Markets

Telephone: (212) 558-4137

Email: bwalsh@calderwoodharkness.com

cc: (via email)

Jennifer Kwon, Partner, Capital Markets, Calderwood & Harkness LLP Sandra Haverford, General Counsel & Corporate Secretary, Calloway-Briggs Renewables Inc. Priya Anand, Senior Vice President, Finance & Treasurer, Calloway-Briggs Renewables Inc. Marcus Yoon, Chief Financial Officer, Calloway-Briggs Renewables Inc.

Enclosures:

Enclosure 1: Draft Lender Consent Request Letter — Calloway-Briggs Renewables Inc. (Priya Anand, SVP, Finance & Treasurer) to Veltrano National Bank (Thomas Raines, Managing Director, Energy Lending)

Enclosure 2: Draft Consent Form — Veltrano National Bank (Administrative Agent)

CONFIDENTIAL — This letter and the enclosed documents contain confidential information. Distribution is limited to those with a need to know. Please refer to the confidentiality notice contained herein.

Stockholder	Approximate Ownership (Pre-IPO, Fully Diluted)
Pinnacle Vista Capital Partners III, LP	~62%
Co-founders and management	~24%
Earlier-stage investors and employees	~14%

CALDERWOOD & HARKNESS LLP Attorneys at Law
599 Lexington Avenue New York, New York 10022
Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
Brendan Walsh Lead Associate, Capital Markets Direct Dial: (212) 558-4137 Direct Fax: (212) 558-3627
Email: bwalsh@calderwoodharkness.com
Responsible Partner: Jennifer Kwon Direct Dial: (212) 558-4012
C&H Matter No. 1015-00001
May 12, 2022
Via Email (thomas.raines@ridgemontnational.com) and Overnight Courier
Mr. Thomas Raines Managing Director, Energy Lending Veltrano National Bank 1401 McKinney Street Houston, Texas 77010
Re: Proposed Initial Public Offering of Common Stock — Calloway-Briggs Renewables Inc.; Request for Lender Consent Under Corporate Credit Facility
Dear Mr. Raines:
I. Introduction
We write on behalf of our client, Calloway-Briggs Renewables Inc. ("CBR" or the "Company"), a corporation organized under the laws of the State of Delaware and headquartered at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746 (EIN: 83-4027615). Calderwood & Harkness LLP ("C&H") serves as outside counsel to CBR in connection with the Company's proposed initial public offering (the "IPO" or the "Offering") of shares of common stock, par value $0.01 per share (the "Common Stock"), on the New York Stock Exchange under the proposed ticker symbol "CBRI." The aggregate gross proceeds of the Offering are expected to be approximately $600,000,000.
The purpose of this letter is to (a) transmit to Veltrano National Bank ("Veltrano" or the "Bank"), in its capacity as Administrative Agent under each of the credit facilities described below, the enclosed draft lender consent request letter and draft consent form, and (b) respectfully request that Veltrano, as Administrative Agent, review and, following its review, circulate the enclosed consent documents to the lender syndicate for approval. Specifically, the Company seeks the consent and waiver of certain provisions of the following credit agreements in connection with the contemplated Offering:
(i) that certain Revolving Credit Agreement, dated as of January 14, 2022, among CBR, as Borrower, the lenders party thereto from time to time, and Veltrano National Bank, as Administrative Agent, L/C Issuer, and Swing Line Lender (as amended, supplemented, or otherwise modified from time to time, the "Revolving Credit Agreement"), providing for a revolving credit facility in an aggregate commitment amount of $400,000,000 (the "Revolving Facility"), with a stated maturity date of January 14, 2027; and
(ii) that certain Term Loan Credit Agreement, dated as of January 14, 2022, among CBR, as Borrower, the lenders party thereto from time to time, and Veltrano National Bank, as Administrative Agent (as amended, supplemented, or otherwise modified from time to time, the "Term Loan Agreement" and, together with the Revolving Credit Agreement, the "Credit Agreements"), providing for a term loan B facility in an original principal amount of $650,000,000 (the "Term Loan B"), of which approximately $612,500,000 remains outstanding as of the date hereof, with a stated maturity date of January 14, 2029.
Capitalized terms used but not otherwise defined in this letter shall have the meanings ascribed to them in the applicable Credit Agreement.
II. Background on the Proposed IPO
As Veltrano is aware from its longstanding lending relationship with the Company, CBR is a leading developer and operator of utility-scale solar, onshore wind, and battery energy storage projects across the United States. As of the date of this letter, CBR's portfolio consists of approximately 3.8 gigawatts ("GW") of operating renewable-energy generation and storage capacity across twenty-two (22) projects located in the states of Texas, New Mexico, Arizona, California, and Oklahoma. In addition, CBR has approximately 1.4 GW of capacity currently under construction and a development pipeline of approximately 6.2 GW. The Company has experienced significant growth in its operating capacity and revenue base since the inception of the credit facilities, and the IPO represents the next phase of the Company's capital strategy.
Confidential Submission and SEC Review. On April 11, 2022, CBR confidentially submitted a draft registration statement on Form S-1 (the "DRS-1") to the Securities and Exchange Commission (the "SEC") pursuant to the accommodations available to an "emerging growth company" under Title I of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). On May 6, 2022, the SEC Division of Corporation Finance issued a first-round comment letter containing eighteen (18) comments relating primarily to the Company's revenue recognition policies, risk factor disclosures, and certain executive compensation disclosures. The Company filed Amendment No. 1 to the DRS-1 together with a detailed response letter addressing each of the SEC's comments on May 20, 2022. The SEC review process is ongoing, and the Company anticipates additional rounds of comments and amendments before the registration statement is declared effective.
Offering Structure. The Offering is expected to consist of the following components:
•  Base Offering: Approximately $521,700,000 in aggregate gross proceeds, consisting of approximately 23,713,636 shares of Common Stock at an assumed midpoint offering price of $22.00 per share, comprised of:
•  Primary shares issued by the Company: approximately 16,895,455 shares, representing approximately $371,700,000 in aggregate gross proceeds to CBR; and
•  Secondary shares sold by Pinnacle Vista Capital Partners III, LP ("Pinnacle Vista"), the Company's majority stockholder holding approximately 62% of pre-IPO fully diluted Common Stock: approximately 6,818,182 shares, representing approximately $150,000,000 in aggregate gross proceeds to Pinnacle Vista.
•  Overallotment Option (Greenshoe): The underwriters will be granted a 30-day option to purchase up to an additional 3,559,091 shares of Common Stock (representing 15% of the base offering shares) at the initial public offering price, less the underwriting discount, for aggregate additional gross proceeds of approximately $78,300,000.
•  Total Aggregate Offering (assuming full exercise of the overallotment option): Approximately $600,000,000, consisting of approximately 27,272,727 shares of Common Stock.
Underwriting Syndicate. The Offering will be managed by the following underwriting syndicate:
•  Lead-Left Book-Running Manager: Hargrove Keating & Co.
•  Joint Book-Running Managers: Linden Pratt Securities LLC and Graymont Brothers Inc.
•  Co-Managers: Barfield Stuart & Co. and Crane Whitley Capital LLC
Capitalization. Prior to the IPO, the Company's fully diluted shares outstanding (following a reclassification of the Company's capital stock in connection with the IPO) will total 100,000,000 shares of Common Stock. Following the completion of the base offering (and excluding shares subject to the overallotment option), the Company will have approximately 123,713,636 shares of Common Stock outstanding. Upon full exercise of the overallotment option, the Company will have approximately 127,272,727 shares of Common Stock outstanding.
Pre-IPO Ownership. The Company's current ownership structure is as follows:
III. Intended Use of IPO Proceeds Relevant to Veltrano
The net primary proceeds to the Company from the Offering (after deducting the underwriting discount of 5.50% on the gross spread applicable to primary shares) are expected to be approximately $351,257,850 (calculated as $371,700,000 in aggregate gross proceeds to CBR from primary shares, less the 5.50% underwriting discount of approximately $20,443,500, but before deducting estimated offering expenses). The Company does not receive any proceeds from the sale of secondary shares by Pinnacle Vista.
The Company intends to use the net primary proceeds from the Offering as follows:
(a) Prepayment of Corporate Term Loan B — Approximately $200,000,000. The Company intends to apply approximately $200,000,000 of net primary proceeds to prepay a portion of the outstanding principal balance under the Term Loan B. In accordance with Section 2.05(a) of the Term Loan Agreement, such prepayment will be accompanied by a prepayment premium of 1.00% on the prepaid amount, equal to $2,000,000, payable to Veltrano as Administrative Agent for distribution to the applicable lenders in accordance with the terms of the Term Loan Agreement. Following the application of such prepayment, approximately $412,500,000 of aggregate principal would remain outstanding under the Term Loan B. The Company believes this significant deleveraging will strengthen its balance sheet, improve its net leverage ratio, and enhance its financial flexibility as a newly public company. CBR anticipates that this prepayment, together with the Company's ongoing cash flow generation, will bring the Company's net leverage ratio well within the levels required by the financial covenants set forth in the Credit Agreements.
(b) Construction Funding — Cimarron Solar Project — Approximately $100,000,000. The Company intends to apply approximately $100,000,000 of net primary proceeds to fund the remaining construction costs of the Cimarron Solar project, which is being developed through Cimarron Solar Development LLC, a wholly owned subsidiary of CBR, located in Doña Ana County, New Mexico. The Cimarron Solar project is a 250 MWdc / 200 MWac utility-scale photovoltaic installation with an expected commercial operation date in the third quarter of 2023. As Veltrano is aware, this project is not encumbered by the collateral packages under the Credit Agreements, and the construction funding will flow through the Company's general corporate treasury.
(c) General Corporate Purposes — Approximately $71,700,000. The remaining net primary proceeds, approximately $71,700,000, will be used for general corporate purposes, including working capital, potential development-stage investments, and other capital expenditures in the ordinary course of business.
We note for Veltrano's information that the Term Loan B prepayment described in clause (a) above is a stated use of proceeds in the draft S-1 registration statement and will be prominently disclosed in the final prospectus filed with the SEC at the time of pricing.
IV. Consent and Waiver Request
Based on a thorough review of the Credit Agreements and the structure of the contemplated Offering, the Company has identified the following provisions of the Credit Agreements with respect to which the consent or waiver of Veltrano, as Administrative Agent, and/or the Required Lenders is being requested. Each is discussed in greater detail below.
A. Change of Control
The Offering will result in a change in the direct and indirect beneficial ownership of CBR. As noted above, Pinnacle Vista currently holds approximately 62% of the Company's fully diluted Common Stock. Upon completion of the base offering (assuming no exercise of the overallotment option), Pinnacle Vista's ownership percentage will decrease to approximately 49% of the outstanding Common Stock. If the underwriters exercise the overallotment option in full, Pinnacle Vista's ownership will decrease further to approximately 47% of the outstanding Common Stock.
Section 7.01(i) of each Credit Agreement defines a "Change of Control" to include, among other things, the occurrence of any event as a result of which Pinnacle Vista (or its affiliates) ceases to beneficially own, directly or indirectly, at least 50.1% of the outstanding equity interests of the Borrower entitled to vote for the election of the Board of Directors. A Change of Control constitutes an Event of Default under Section 8.01(h) of each Credit Agreement.
The Company respectfully requests that Veltrano, as Administrative Agent, confirm that the consummation of the IPO, including the sale of secondary shares by Pinnacle Vista and any exercise of the overallotment option, does not constitute a "Change of Control" within the meaning of the Credit Agreements or, to the extent the IPO would constitute or could reasonably be construed to constitute a Change of Control, that Veltrano and the Required Lenders provide a waiver of the Change of Control provision with respect to the IPO and the transactions contemplated thereby. The Company notes that, following the IPO, Pinnacle Vista will remain the single largest stockholder of CBR and will continue to have the right to designate a majority of the members of the Company's Board of Directors pursuant to the terms of a stockholders' agreement to be entered into at the closing of the IPO.
B. Restricted Payments and Equity Issuances
The Company seeks confirmation that (i) the issuance of primary shares of Common Stock in the Offering, (ii) the facilitation of the sale of secondary shares by Pinnacle Vista, (iii) the application of net proceeds (including the approximately $200,000,000 prepayment of the Term Loan B), and (iv) the payment of the underwriting discount and other Offering-related expenses, in each case, are either (x) expressly permitted under the covenants of the Credit Agreements (including without limitation the covenants set forth in Article VI of each Credit Agreement) or (y) to the extent not expressly permitted, are hereby consented to and waived by the Administrative Agent and the Required Lenders.
The Company further requests confirmation that the $200,000,000 prepayment of the Term Loan B described in Section III(a) above, together with the payment of the associated prepayment premium of $2,000,000, satisfies and is consistent with the voluntary prepayment provisions set forth in Section 2.05(a) of the Term Loan Agreement and does not trigger any additional mandatory prepayment obligations or other consequences under the Credit Agreements.
C. Reporting and Disclosure Covenants
Upon the effectiveness of the registration statement and the completion of the IPO, CBR will become subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and will be required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K with the SEC. The Company requests that Veltrano acknowledge and confirm that the Company's timely filing of such SEC reports with the SEC (and making such reports publicly available through the SEC's EDGAR filing system or providing notice of their availability to the Administrative Agent) will satisfy the corresponding information-delivery covenants set forth in Section 6.01 of each Credit Agreement, including without limitation the requirements to deliver annual audited and quarterly unaudited financial statements to the Administrative Agent, to the extent such financial statements are included in or incorporated by reference into the applicable SEC filings. To the extent that the information-delivery covenants require the delivery of any information not customarily included in public SEC filings (including, for example, compliance certificates, borrowing base certificates, or budget and forecast deliverables), the Company acknowledges that it will continue to provide such deliverables separately in accordance with the terms of the Credit Agreements.
D. Additional Shares Under Equity Incentive Plans
In connection with the IPO, CBR's Board of Directors has approved the adoption (subject to stockholder approval) of the following equity compensation plans, each to become effective immediately prior to the effectiveness of the registration statement:
(i) the Calloway-Briggs Renewables Inc. 2022 Omnibus Equity Incentive Plan (the "2022 Equity Plan"), with an initial share reserve of 12,727,273 shares of Common Stock (representing approximately 10% of post-IPO outstanding shares on a base offering basis), together with customary annual "evergreen" increase provisions; and
(ii) the Calloway-Briggs Renewables Inc. 2022 Employee Stock Purchase Plan (the "2022 ESPP"), with an initial share reserve of 2,545,455 shares of Common Stock.
The Company requests confirmation that the adoption of the 2022 Equity Plan and the 2022 ESPP, the reservation of shares of Common Stock thereunder, and the issuance of shares of Common Stock (or options, restricted stock units, or other awards convertible into or exercisable for shares of Common Stock) pursuant to such plans in the ordinary course, are permitted under the covenants of the Credit Agreements and do not require any further consent from the Administrative Agent or the lender syndicate.
E. Circulation to the Lender Syndicate
The Company respectfully requests that Veltrano, as Administrative Agent, circulate the enclosed consent request letter and draft consent form to each member of the lender syndicate under the Credit Agreements for approval, and provide written confirmation of the consent and waiver described above at the earliest practicable date. The Company understands that the approval of the Required Lenders (as defined in each Credit Agreement) will be necessary to effectuate certain of the consents and waivers described above and is prepared to engage in discussions with any lender that may have questions regarding the Offering or the consent request.
V. Description of Enclosed Documents
For your review and consideration, we have enclosed the following documents with this letter:
Enclosure 1: Draft Lender Consent Request Letter — CBR to Veltrano National Bank. This is a draft of the formal consent request letter from CBR (to be executed by Priya Anand, Senior Vice President, Finance & Treasurer) to Veltrano National Bank (addressed to you, Thomas Raines, Managing Director, Energy Lending), formally requesting the consent and waiver on behalf of CBR as Borrower under the Credit Agreements. This draft letter sets forth the Company's representations and certifications to be delivered in connection with the consent request, including a certification that no Default or Event of Default (other than any arising solely from the transactions contemplated by the IPO) exists under the Credit Agreements as of the date of the consent request.
Enclosure 2: Draft Consent Form — Veltrano National Bank (Administrative Agent). This is a draft of the consent and waiver agreement to be executed by Veltrano National Bank in its capacity as Administrative Agent under the Credit Agreements, providing for the consent to and waiver of the Credit Agreement provisions described in Section IV above in connection with the IPO.
Please note that both enclosed documents are in draft form and remain subject to further negotiation between the parties. Calderwood & Harkness welcomes any comments, revisions, or proposed modifications from Veltrano or its outside legal counsel. We are committed to working collaboratively with your team to arrive at mutually acceptable documentation in a manner consistent with the anticipated IPO timeline.
VI. Key Contacts for CBR
To facilitate efficient communications regarding this matter, we set forth below the principal contacts at CBR for your reference:
Legal Matters: Sandra Haverford General Counsel & Corporate Secretary Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746 Telephone: (512) 617-3200
Email: shaverford@calloway-briggs.com
Financial and Credit Facility Matters: Priya Anand Senior Vice President, Finance & Treasurer Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746 Telephone: (512) 617-3245
Email: panand@calloway-briggs.com
All communications from Veltrano and its counsel regarding this consent request may also be directed to the undersigned at the contact information set forth above.
VII. Timing and Next Steps
We respectfully request that Veltrano review the enclosed draft documents at its earliest convenience. As noted above, the SEC review process for the registration statement is ongoing and the Company anticipates that additional amendments may be filed in the coming weeks. CBR intends to be in a position to commence the Offering promptly upon the SEC's declaration of effectiveness of the registration statement and favorable market conditions. While the precise timing of the Offering remains subject to market conditions and the SEC review timeline, the Company's current expectation is that the Offering could occur as early as the third quarter of 2022. The Company believes that obtaining the requisite lender consent in advance of the pricing of the Offering is a critical-path item and appreciates Veltrano's attention to this request.
To that end, we respectfully request that Veltrano indicate any initial comments, questions, or concerns regarding the enclosed consent documents by return correspondence within ten (10) business days of receipt of this letter (i.e., by no later than May 26, 2022). We recognize that the lender syndicate approval process may require additional time, and we are prepared to work with Veltrano on a reasonable timeline to secure the necessary approvals.
In addition, we would be pleased to arrange a conference call or in-person meeting among Veltrano (and its counsel, if desired), CBR management (including Priya Anand, SVP, Finance & Treasurer), and Calderwood & Harkness to discuss any questions Veltrano may have regarding the Offering, the proposed use of proceeds, or the consent request. Please do not hesitate to contact the undersigned to coordinate scheduling at your convenience.
Finally, we wish to express the Company's willingness to coordinate with Veltrano's legal counsel regarding any required amendments to the Credit Agreements or any additional documentation that Veltrano or the lender syndicate may require in connection with the consent. The Company is committed to a transparent and cooperative process and will make available such additional information as Veltrano may reasonably request.
VIII. Confidentiality Notice
We wish to remind Veltrano that the proposed IPO, the draft registration statement on Form S-1, the SEC review process, and the matters described in this letter are strictly confidential at this time. As noted above, the registration statement was submitted to the SEC on a confidential basis under the JOBS Act and has not yet been publicly filed. Accordingly, the existence and terms of the proposed Offering constitute material nonpublic information concerning the Company.
We respectfully request that Veltrano National Bank treat this correspondence and the enclosed documents as confidential and limit the distribution of these materials to those persons within Veltrano and at Veltrano's outside legal counsel who have a bona fide need to know in connection with the evaluation and processing of the consent request. We further note that the confidentiality provisions set forth in Section 10.08 of each of the Credit Agreements apply to the information contained herein and in the enclosed documents, and we request that Veltrano ensure compliance with such provisions in connection with the circulation of the consent request to the lender syndicate.
The Company anticipates that the registration statement will be publicly filed with the SEC prior to or concurrently with the commencement of the roadshow for the Offering. Until such time, we ask that Veltrano and each lender receiving the consent request take appropriate steps to maintain the confidentiality of the information contained herein, including by establishing appropriate information barriers and restricting trading in any securities of the Company or its affiliates.
We appreciate Veltrano's longstanding relationship with CBR and your willingness to consider this request. We believe that the IPO represents a transformative milestone for the Company and that the contemplated use of proceeds — particularly the substantial prepayment of the Term Loan B — will meaningfully benefit the lender syndicate by reducing credit exposure and strengthening the Company's balance sheet. We look forward to working with you and your team to bring this consent to a successful conclusion.
Should you have any questions or wish to discuss any aspect of this letter or the enclosed documents, please do not hesitate to contact the undersigned at (212) 558-4137 or bwalsh@calderwoodharkness.com, or our supervising partner, Jennifer Kwon, at (212) 558-4012 or jkwon@calderwoodharkness.com.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Brendan Walsh Lead Associate, Capital Markets
Telephone: (212) 558-4137
Email: bwalsh@calderwoodharkness.com
cc: (via email)
Jennifer Kwon, Partner, Capital Markets, Calderwood & Harkness LLP Sandra Haverford, General Counsel & Corporate Secretary, Calloway-Briggs Renewables Inc. Priya Anand, Senior Vice President, Finance & Treasurer, Calloway-Briggs Renewables Inc. Marcus Yoon, Chief Financial Officer, Calloway-Briggs Renewables Inc.
Enclosures:
Enclosure 1: Draft Lender Consent Request Letter — Calloway-Briggs Renewables Inc. (Priya Anand, SVP, Finance & Treasurer) to Veltrano National Bank (Thomas Raines, Managing Director, Energy Lending)
Enclosure 2: Draft Consent Form — Veltrano National Bank (Administrative Agent)
CONFIDENTIAL — This letter and the enclosed documents contain confidential information. Distribution is limited to those with a need to know. Please refer to the confidentiality notice contained herein.
Stockholder | Approximate Ownership (Pre-IPO, Fully Diluted)
Pinnacle Vista Capital Partners III, LP | ~62%
Co-founders and management | ~24%
Earlier-stage investors and employees | ~14%

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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