1015-00001 · Graymont Brothers Inc · Registration Statement

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DESCRIPTION OF INDEBTEDNESS

The following is a summary description of the material terms of our outstanding indebtedness as of December 31, 2021. As of that date, Calloway-Briggs Renewables Inc. (the "Company," "CBR," "we," "us," or "our") had total consolidated indebtedness of approximately $1.71 billion, comprising corporate-level credit facilities and project-level financing arrangements. This indebtedness is held at various levels of our corporate structure, including at Calloway-Briggs Renewables Inc., CBR Holdings LLC ("CBR Holdings"), Calloway-Briggs Operating Company LLC ("CB Operating"), and individual project-level special purpose vehicles ("SPVs") established in connection with specific renewable energy projects. Our indebtedness reflects the capital-intensive nature of our business and the customary use of non-recourse project-finance structures in the renewable energy industry.

As described more fully in "Use of Proceeds," we intend to use approximately $200,000,000 of the net proceeds from this offering to repay a portion of the outstanding principal balance under our Corporate Term Loan B (as defined below). In addition, we intend to use approximately $100,000,000 of the net proceeds from this offering to fund a portion of the construction costs of the Cimarron Solar project. The remaining net proceeds of this offering will be used for general corporate purposes, including working capital and potential acquisitions.

The five principal financing arrangements described below are: (1) our Corporate Revolving Credit Facility; (2) our Corporate Term Loan B; (3) the Mesquite Wind Construction-to-Term Facility; (4) the Cimarron Solar Construction-to-Term Facility; and (5) the Tax-Equity Partnership relating to the Solaris West Portfolio. The following descriptions are summaries only and are qualified in their entirety by reference to the definitive agreements governing each facility, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part. Investors should read the complete text of such agreements for a full understanding of our financing arrangements.

1. Corporate Revolving Credit Facility

1.1 Overview and Parties

On January 15, 2021, CB Operating, as borrower, entered into a senior secured revolving credit facility (the "Corporate Revolving Credit Facility" or the "Revolving Credit Facility") pursuant to that certain First Lien Credit Agreement, dated as of January 15, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), among CB Operating, the guarantors party thereto, the lenders from time to time party thereto, and Veltrano National Bank, as administrative agent and collateral agent (in such capacity, the "Administrative Agent"). Veltrano National Bank maintains its principal offices at 1401 McKinney Street, Houston, Texas 77010. The primary contact for matters relating to the Revolving Credit Facility is Thomas Raines, Managing Director, Energy Lending.

The obligations of CB Operating under the Revolving Credit Facility are unconditionally guaranteed by Calloway-Briggs Renewables Inc. and CBR Holdings LLC on a senior secured basis. Each guarantor has guaranteed the full and punctual payment when due of all obligations of CB Operating arising under the First Lien Credit Agreement, whether at stated maturity, by acceleration, or otherwise.

1.2 Commitment and Availability

The Revolving Credit Facility provides for aggregate revolving commitments of $400,000,000. CB Operating may borrow, repay, and reborrow amounts under the Revolving Credit Facility from time to time until the maturity date, subject to compliance with borrowing base requirements and the satisfaction of customary conditions precedent to each borrowing, including the absence of any default or event of default and the accuracy in all material respects of specified representations and warranties. The borrowing base is calculated based on the aggregate value of eligible assets and equity interests pledged as collateral, subject to applicable advance rates and reserves as determined by the Administrative Agent.

The Revolving Credit Facility includes a letter of credit sub-facility in an aggregate face amount of up to $75,000,000. Letters of credit issued under the sub-facility reduce the available revolving commitments on a dollar-for-dollar basis. As of December 31, 2021, CB Operating had drawn approximately $90,000,000 under the Revolving Credit Facility and had approximately $15,000,000 of outstanding letters of credit, leaving approximately $295,000,000 of unused revolving commitments available for future borrowings.

1.3 Maturity. All outstanding borrowings and other obligations under the Revolving Credit Facility, including any accrued and unpaid interest and fees, are due and payable in full on January 15, 2027 (the "Revolving Maturity Date"), unless earlier accelerated pursuant to the terms of the First Lien Credit Agreement following the occurrence and continuance of an event of default.

1.4 Interest Rate and Fees

Borrowings under the Revolving Credit Facility bear interest, at CB Operating's election, at a rate per annum equal to either (a) the Adjusted Term SOFR Rate (as defined in the First Lien Credit Agreement), which is based on the secured overnight financing rate published by the Federal Reserve Bank of New York, plus a credit spread adjustment of 0.10% per annum for one-month interest periods, 0.15% per annum for three-month interest periods, and 0.25% per annum for six-month interest periods, plus an applicable margin, or (b) the Alternate Base Rate (as defined in the First Lien Credit Agreement), which is the greatest of (i) the prime rate of Veltrano National Bank, (ii) the federal funds effective rate plus 0.50%, and (iii) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, in each case plus an applicable margin.

The applicable margin for borrowings under the Revolving Credit Facility ranges from 2.00% to 2.75% per annum for Adjusted Term SOFR Rate borrowings and from 1.00% to 1.75% per annum for Alternate Base Rate borrowings, in each case depending on CB Operating's consolidated total leverage ratio (as defined in the First Lien Credit Agreement) as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered.

CB Operating is required to pay a commitment fee on the average daily unused portion of the revolving commitments at a rate ranging from 0.25% to 0.50% per annum, depending on CB Operating's consolidated total leverage ratio. In addition, CB Operating is required to pay customary letter of credit fees, fronting fees, and administrative fees in connection with the letter of credit sub-facility and the ongoing administration of the Revolving Credit Facility.

1.5 Security and Collateral

The obligations of CB Operating under the Revolving Credit Facility, and the guarantee obligations of Calloway-Briggs Renewables Inc. and CBR Holdings LLC, are secured by a first-priority lien on substantially all of the assets of CBR Holdings LLC and CB Operating, subject to customary exceptions. The collateral includes, without limitation, all accounts receivable, equipment, inventory, intellectual property, deposit accounts, securities accounts, general intangibles, and other personal property of CBR Holdings LLC and CB Operating. In addition, CBR Holdings LLC and CB Operating have pledged the equity interests in CB Operating and certain direct and indirect subsidiary entities (other than project-level SPVs whose assets are ring-fenced under separate project-finance facilities) to secure their obligations under the First Lien Credit Agreement.

The collateral securing the Revolving Credit Facility expressly excludes the assets of project-level SPVs that are pledged as collateral under the separate non-recourse project-finance facilities described below, including the assets of Mesquite Wind Holdings LLC, Cimarron Solar Development LLC, and Solaris West Solar LLC. However, CB Operating's equity interests in each such project-level SPV are pledged as collateral under the First Lien Credit Agreement, meaning that upon a foreclosure by the Administrative Agent, the lenders could potentially acquire ownership of the equity interests in the project-level SPVs, subject to the rights of the project-level lenders and tax-equity investors.

1.6 Key Covenants

The First Lien Credit Agreement contains a number of financial maintenance covenants, negative covenants, and affirmative covenants applicable to CBR, CBR Holdings LLC, CB Operating, and their respective subsidiaries (subject to customary exceptions for non-recourse project-finance subsidiaries).

Financial Maintenance Covenants. CB Operating is required to comply with the following financial maintenance covenants, tested as of the last day of each fiscal quarter:

(a) Consolidated Total Leverage Ratio. CB Operating's consolidated total leverage ratio (the ratio of consolidated total net debt to consolidated adjusted EBITDA, in each case as defined in the First Lien Credit Agreement, for the trailing four fiscal quarter period) may not exceed 5.50:1.00 at any time, stepping down to 5.00:1.00 commencing with the first full fiscal quarter ending after the closing of this offering.

(b) Interest Coverage Ratio. CB Operating's consolidated interest coverage ratio (the ratio of consolidated adjusted EBITDA to consolidated cash interest expense, in each case as defined in the First Lien Credit Agreement, for the trailing four fiscal quarter period) may not be less than 2.00:1.00 at any time.

(c) Minimum Liquidity. CB Operating must maintain minimum liquidity (defined as the sum of unrestricted cash and cash equivalents plus available commitments under the Revolving Credit Facility) of not less than $50,000,000 at all times.

Negative Covenants. The First Lien Credit Agreement contains customary negative covenants that, subject to specified exceptions and qualifications, limit the ability of CB Operating and its restricted subsidiaries to, among other things:

• incur or guarantee additional indebtedness;

• create or permit to exist additional liens on their assets;

• pay dividends on, or make other distributions in respect of, or redeem or repurchase, equity interests (see "Dividend Policy" for a discussion of the impact of these restrictions on the Company's ability to pay dividends following this offering);

• make investments, loans, and advances;

• sell, lease, or otherwise transfer or dispose of assets;

• enter into mergers, consolidations, or similar transactions;

• enter into transactions with affiliates on other than arm's-length terms;

• enter into agreements that restrict the ability of subsidiaries to pay dividends or make other distributions;

• amend or modify the organizational documents of CBR Holdings LLC or CB Operating in a manner materially adverse to the lenders; and

• change the fiscal year of CB Operating.

Affirmative Covenants. The First Lien Credit Agreement also contains customary affirmative covenants requiring CB Operating and its restricted subsidiaries to, among other things:

• deliver annual audited and quarterly unaudited financial statements, together with related officers' compliance certificates;

• maintain insurance on their properties and assets in amounts and of the types customary for companies in the renewable energy industry;

• comply in all material respects with applicable laws, rules, and regulations;

• maintain their corporate existence and material properties;

• provide the Administrative Agent with notice of any defaults, material litigation, and other material events;

• maintain books and records in accordance with GAAP; and

• permit the Administrative Agent and the lenders to inspect properties and books and records, subject to customary limitations.

1.7 Change-of-Control and IPO-Related Provisions

The First Lien Credit Agreement contains a change-of-control provision that requires CB Operating to offer to prepay all outstanding obligations under the Revolving Credit Facility (and the Term Loan B described below) upon the occurrence of a "Change of Control" (as defined therein). A Change of Control is generally defined to include, among other events, (a) any transaction or series of transactions resulting in any person or group acquiring beneficial ownership of more than 50% of the voting equity interests in the Company, (b) the Company ceasing to own, directly or indirectly, 100% of the equity interests in CBR Holdings LLC, or (c) CBR Holdings LLC ceasing to own, directly or indirectly, 100% of the equity interests in CB Operating, in each case subject to certain exceptions.

The proposed initial public offering of common stock of the Company, as described in this prospectus, may constitute, or be deemed to give rise to, a Change of Control or a condition or event requiring consent under the First Lien Credit Agreement. Accordingly, the Company has requested the consent of Veltrano National Bank, as Administrative Agent, and the requisite lenders under the First Lien Credit Agreement to the consummation of the IPO and related transactions. As of the date of this prospectus, such consent has been requested but has not yet been obtained. The Company expects to obtain such consent prior to the closing of this offering, and the closing of this offering is conditioned upon the receipt of such consent. There can be no assurance that such consent will be obtained on terms favorable to the Company or at all. See "Risk Factors — Risks Related to This Offering and Our Indebtedness — We require the consent of our corporate lenders to consummate this offering, and there can be no assurance that such consent will be obtained."

1.8 Events of Default

The First Lien Credit Agreement contains customary events of default, including, without limitation:

(a) failure to make any payment of principal, interest, fees, or other amounts when due under the Revolving Credit Facility (subject, in the case of interest and fees, to a grace period of five business days);

(b) material inaccuracy of any representation or warranty when made or deemed made;

(c) failure to comply with any covenant or agreement in the First Lien Credit Agreement (subject, in the case of certain affirmative covenants, to a cure period of 30 days after notice);

(d) cross-default to other indebtedness of CBR, CBR Holdings LLC, CB Operating, or any of their respective restricted subsidiaries in an aggregate principal amount exceeding $25,000,000, arising from a payment default or acceleration of such indebtedness;

(e) one or more judgments in an aggregate amount exceeding $25,000,000 rendered against CBR, CBR Holdings LLC, CB Operating, or any of their restricted subsidiaries that remain undischarged or unstayed for a period of 60 consecutive days;

(f) certain bankruptcy or insolvency events affecting CBR, CBR Holdings LLC, CB Operating, or any of their material subsidiaries;

(g) the occurrence of a Change of Control;

(h) any guarantee or security interest under the collateral documents ceasing to be in full force and effect (other than in accordance with the terms thereof);

(i) the occurrence of an ERISA event reasonably expected to result in a material adverse effect; and

(j) the occurrence of a material adverse effect (as defined in the First Lien Credit Agreement, which generally means any event, circumstance, or condition that has had, or could reasonably be expected to have, a material adverse effect on (i) the business, operations, assets, or financial condition of CB Operating and its restricted subsidiaries taken as a whole, (ii) the ability of any obligor to perform its payment obligations under the First Lien Credit Agreement, or (iii) the rights or remedies of the Administrative Agent or the lenders under the First Lien Credit Agreement).

If an event of default occurs and is continuing, the Administrative Agent may, and at the request of the requisite lenders shall, declare all outstanding obligations under the Revolving Credit Facility to be immediately due and payable, terminate the revolving commitments, and exercise remedies with respect to the collateral. In the case of certain bankruptcy-related events of default, all outstanding obligations are automatically accelerated and the revolving commitments are automatically terminated without any action by the Administrative Agent or the lenders.

2. Corporate Term Loan B

2.1 Overview and Parties

On January 15, 2021, concurrently with the closing of the Revolving Credit Facility, CB Operating, as borrower, entered into a senior secured term loan facility (the "Corporate Term Loan B" or the "Term Loan B") under the First Lien Credit Agreement. The Term Loan B is governed by the same First Lien Credit Agreement described above in Section 1 with respect to the Revolving Credit Facility. Veltrano National Bank serves as the Administrative Agent and collateral agent for the Term Loan B. The Term Loan B was initially syndicated among a group of institutional lenders, including Veltrano National Bank and other financial institutions. The obligations of CB Operating under the Term Loan B are unconditionally guaranteed by Calloway-Briggs Renewables Inc. and CBR Holdings LLC on a senior secured basis, on the same terms and conditions as the guarantee of the Revolving Credit Facility.

2.2 Principal Amount

The Term Loan B was originally issued in an aggregate principal amount of $650,000,000. After giving effect to scheduled amortization payments through December 31, 2021, the outstanding principal amount of the Term Loan B as of December 31, 2021 was $612,500,000. No voluntary prepayments of the Term Loan B had been made as of that date.

2.3 Maturity. The outstanding principal balance of the Term Loan B, together with all accrued and unpaid interest and other amounts due thereunder, is due and payable in full on January 15, 2029 (the "Term Loan Maturity Date"), unless earlier prepaid or accelerated pursuant to the terms of the First Lien Credit Agreement. The Term Loan Maturity Date is two years later than the Revolving Maturity Date, reflecting the differing structural characteristics of the two tranches.

2.4 Interest Rate

Borrowings under the Term Loan B bear interest, at CB Operating's election, at a rate per annum equal to either (a) the Adjusted Term SOFR Rate plus an applicable margin of 3.25% per annum, or (b) the Alternate Base Rate plus an applicable margin of 2.25% per annum. Unlike the Revolving Credit Facility, the applicable margin for the Term Loan B is fixed and does not fluctuate based on CB Operating's consolidated total leverage ratio. The Term Loan B also includes a SOFR floor of 0.50% per annum, such that if the Adjusted Term SOFR Rate at any time is less than 0.50% per annum, the Adjusted Term SOFR Rate shall be deemed to be 0.50% per annum for purposes of calculating the interest rate on the Term Loan B.

As of December 31, 2021, the weighted average interest rate on borrowings under the Term Loan B was approximately 3.60% per annum, based on the then-prevailing Adjusted Term SOFR Rate plus the applicable margin.

2.5 Amortization. The Term Loan B requires quarterly amortization payments in an aggregate annual amount equal to 1.00% of the original principal amount of the Term Loan B (i.e., $6,500,000 per year, payable in quarterly installments of $1,625,000 each), with the remaining outstanding principal balance due and payable in full on the Term Loan Maturity Date. Through December 31, 2021, CB Operating had made aggregate amortization payments of $37,500,000 under the Term Loan B.

In addition, the First Lien Credit Agreement requires CB Operating to make mandatory excess cash flow prepayments on an annual basis, commencing with respect to the fiscal year ending December 31, 2021. The excess cash flow prepayment amount is equal to 50% of excess cash flow (as defined in the First Lien Credit Agreement) for the applicable fiscal year, subject to step-downs to 25% if the consolidated total leverage ratio is less than 4.50:1.00 and to 0% if the consolidated total leverage ratio is less than 3.50:1.00. Excess cash flow prepayments are applied to reduce the remaining scheduled amortization payments of the Term Loan B in direct order of maturity. As of the date of this prospectus, the Company has not determined whether any excess cash flow prepayment will be required with respect to the fiscal year ended December 31, 2021.

2.6 Prepayment. Voluntary Prepayment. CB Operating may voluntarily prepay the Term Loan B in whole or in part at any time, subject to the payment of a prepayment premium. Voluntary prepayments of the Term Loan B made on or prior to January 15, 2023 are subject to a prepayment premium equal to 1.00% of the principal amount of the Term Loan B being prepaid. After January 15, 2023, voluntary prepayments may be made without premium or penalty (other than customary breakage costs in connection with SOFR borrowings prepaid on a date other than the last day of the applicable interest period).

In connection with the proposed IPO, the Company intends to use approximately $200,000,000 of the net proceeds from this offering to prepay a portion of the outstanding principal balance of the Term Loan B. Because the closing of this offering is expected to occur prior to January 15, 2023, such prepayment will be subject to the 1.00% prepayment premium, resulting in a prepayment premium of approximately $2,000,000 payable to the Term Loan B lenders. The prepayment premium will be paid from the net proceeds of this offering and is reflected in the estimated use of proceeds described under "Use of Proceeds."

Mandatory Prepayments. In addition to the excess cash flow prepayments described above, the First Lien Credit Agreement requires CB Operating to make mandatory prepayments of the Term Loan B (without premium) with the net cash proceeds of (a) certain asset sales (to the extent such proceeds are not reinvested within a specified period), (b) certain debt issuances (other than permitted indebtedness), and (c) certain insurance or condemnation proceeds (to the extent such proceeds are not applied to restoration). Mandatory prepayments are applied first to the Term Loan B and then, if no Term Loan B obligations remain outstanding, to the Revolving Credit Facility, in each case subject to customary exceptions and reinvestment rights.

2.7 Use of IPO Proceeds for Repayment

As described more fully under "Use of Proceeds," the Company intends to use approximately $200,000,000 of the net proceeds from the primary offering to prepay a portion of the Term Loan B. After giving effect to such prepayment, the outstanding principal balance of the Term Loan B would be reduced from approximately $612,500,000 to approximately $412,500,000. The Company believes that the prepayment of a substantial portion of the Term Loan B will reduce annual cash interest expense, improve the Company's consolidated leverage metrics, and provide additional financial flexibility for future growth initiatives. The remaining balance of the Term Loan B will continue to be subject to quarterly amortization and the other terms and conditions of the First Lien Credit Agreement.

2.8 Security and Collateral

The Term Loan B is secured on a pari passu basis with the Revolving Credit Facility by first-priority liens on substantially all of the assets of CBR Holdings LLC and CB Operating (excluding ring-fenced project-level SPV assets pledged under separate non-recourse project-finance facilities). The collateral securing the Term Loan B is the same collateral described above in Section 1.5 with respect to the Revolving Credit Facility. The intercreditor arrangements among the Revolving Credit Facility lenders and the Term Loan B lenders are governed by the First Lien Credit Agreement and provide that the lenders under both tranches share ratably in the collateral and proceeds thereof.

2.9 Key Covenants

Because the Term Loan B is governed by the same First Lien Credit Agreement as the Revolving Credit Facility, CB Operating and its restricted subsidiaries are subject to the same financial maintenance covenants, negative covenants, and affirmative covenants described in Section 1.6 above. In addition, the Term Loan B tranche is subject to certain incurrence-based covenants that apply only to the term loan tranche, including limitations on the ability of CB Operating to amend, extend, or refinance the Term Loan B without the consent of the requisite lenders, and requirements that any refinancing indebtedness satisfy specified conditions (including tenor, pricing, and covenant protections not more favorable to the new lenders than those under the existing Term Loan B).

2.10 Change-of-Control and IPO-Related Provisions

The Term Loan B is subject to the same change-of-control provisions described in Section 1.7 above with respect to the Revolving Credit Facility, as both tranches are governed by the First Lien Credit Agreement. As noted above, the Company has requested the consent of Veltrano National Bank, as Administrative Agent, and the requisite lenders under the First Lien Credit Agreement to the consummation of the IPO and related transactions. Such consent has been requested but has not yet been obtained as of the date of this prospectus. The closing of this offering is conditioned upon the receipt of such consent.

2.11 Events of Default

The events of default applicable to the Term Loan B are the same as those described in Section 1.8 above with respect to the Revolving Credit Facility, as both tranches are governed by the First Lien Credit Agreement. The occurrence of an event of default under the First Lien Credit Agreement would permit the Administrative Agent to accelerate both the Revolving Credit Facility and the Term Loan B simultaneously.

3. Mesquite Wind Construction-to-Term Facility

3.1 Overview and Parties

On April 20, 2021, Mesquite Wind Holdings LLC ("Mesquite Wind"), a wholly-owned subsidiary of CB Operating formed as a special purpose vehicle for the development, construction, ownership, and operation of the Mesquite Wind project, entered into a construction-to-term loan facility (the "Mesquite Wind Facility") pursuant to that certain Credit Agreement, dated as of April 20, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "Mesquite Wind Credit Agreement"), among Mesquite Wind, as borrower, and Prairie Commercial Bank, N.A., as lender, administrative agent, and collateral agent. Prairie Commercial Bank, N.A. maintains its principal offices at 2200 Ross Avenue, Suite 3600, Dallas, Texas 75201. The primary contact for matters relating to the Mesquite Wind Facility is Brent Hollowell, Senior Vice President, Project Finance.

The Mesquite Wind Facility is a non-recourse project-finance construction-to-term loan facility. The obligations of Mesquite Wind under the Mesquite Wind Facility are not guaranteed by, and are not obligations of, CBR, CBR Holdings LLC, CB Operating, or any of their respective subsidiaries other than Mesquite Wind. Recourse to the equity sponsors is limited to the pledge by CB Operating of its equity interests in Mesquite Wind and customary limited-recourse completion guarantees during the construction phase.

3.2 Commitment. The Mesquite Wind Facility provides for total commitments of $165,000,000, which are available to fund the construction of the Mesquite Wind project, a 420 megawatt ("MW") onshore wind energy generation project located in Oldham County, Texas. The Mesquite Wind project, upon completion, is expected to consist of approximately 140 wind turbine generators and related balance-of-plant equipment, interconnection facilities, and other infrastructure. As of December 31, 2021, Mesquite Wind had drawn approximately $127,500,000 under the Mesquite Wind Facility, leaving approximately $37,500,000 of remaining commitments available for future construction draws.

3.3 Conversion and Maturity

During the construction phase, borrowings under the Mesquite Wind Facility are available on a revolving basis to fund construction costs, subject to compliance with a construction budget and construction schedule approved by Prairie Commercial Bank and verified by the project's independent engineer. The construction phase maturity date and the deadline for conversion of the facility to a term loan is December 15, 2024 (the "Mesquite Wind Conversion Date").

Upon satisfaction of specified conversion conditions, the Mesquite Wind Facility is required to convert from a construction loan to a fully-amortizing term loan. The conversion conditions include, without limitation: (a) achievement of commercial operation of the Mesquite Wind project, as certified by the independent engineer (expected to occur in the third quarter of 2022); (b) execution and effectiveness of all material project contracts, including the power purchase agreement, interconnection agreement, operations and maintenance agreement, and balance-of-plant warranty; (c) delivery of an updated financial model demonstrating compliance with minimum debt service coverage ratios; (d) funding of all required reserve accounts; and (e) absence of any default or event of default under the Mesquite Wind Credit Agreement. The Company currently expects that the Mesquite Wind project will achieve commercial operation in the third quarter of 2022, and that the conversion conditions will be satisfied shortly thereafter.

Following conversion, the term loan will amortize over a period designed to achieve full repayment prior to the expiration of the power purchase agreement for the Mesquite Wind project, with a final maturity date expected to be approximately 18 years following the conversion date.

3.4 Interest Rate

During the construction phase, borrowings under the Mesquite Wind Facility bear interest at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.50% per annum. Upon conversion to a term loan, Mesquite Wind will have the option to fix the interest rate through an interest rate swap arrangement or to continue at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.25% per annum. The reduction in the applicable margin upon conversion reflects the lower risk profile of the project following achievement of commercial operation.

3.5 Security. The obligations of Mesquite Wind under the Mesquite Wind Facility are secured by first-priority liens on substantially all assets of the Mesquite Wind project, including, without limitation:

(a) all real property interests, including fee interests, leasehold interests, and easements comprising the project site in Oldham County, Texas;

(b) all personal property of Mesquite Wind, including equipment (including all wind turbine generators, transformers, substations, collection systems, and other balance-of-plant equipment), accounts, deposit accounts, securities accounts, general intangibles, and intellectual property;

(c) all of Mesquite Wind's rights under material project contracts, including the power purchase agreement with an investment-grade utility counterparty, the engineering, procurement, and construction ("EPC") contract, the operations and maintenance ("O&M") agreement, and the interconnection agreement with the applicable transmission operator;

(d) all permits, licenses, and governmental approvals relating to the Mesquite Wind project; and

(e) the equity interests in Mesquite Wind Holdings LLC, pledged by CB Operating to secure the obligations under the Mesquite Wind Facility.

As noted above, the Mesquite Wind Facility is non-recourse to CBR and its other subsidiaries (other than Mesquite Wind). The assets of the Mesquite Wind project, including the project contracts and revenue streams, are ring-fenced at the Mesquite Wind level and are not available to satisfy the claims of CBR's corporate-level creditors. Conversely, the corporate-level assets of CBR, CBR Holdings LLC, and CB Operating (other than the equity interests in Mesquite Wind) are not available to satisfy the claims of Prairie Commercial Bank under the Mesquite Wind Facility.

3.6 Key Covenants

The Mesquite Wind Credit Agreement contains customary project-finance covenants applicable to Mesquite Wind and the Mesquite Wind project, including the following:

Financial Covenants. Following conversion to a term loan, Mesquite Wind is required to maintain a minimum debt service coverage ratio ("DSCR") of 1.20:1.00, tested semi-annually. The DSCR is calculated as the ratio of net cash flow from the project (after operating expenses and required reserve contributions) to scheduled debt service payments on the term loan for the applicable measurement period. Failure to maintain the minimum DSCR constitutes an event of default under the Mesquite Wind Credit Agreement.

Reserve Account Requirements. Mesquite Wind is required to establish and maintain certain reserve accounts, including (a) a debt service reserve account in an amount equal to six months of projected debt service, (b) a major maintenance reserve account funded in accordance with a budget approved by the independent engineer, and (c) a working capital reserve account in an amount determined by the lender. Each reserve account is subject to replenishment requirements if balances fall below the specified minimum levels.

Distribution Conditions. Mesquite Wind is not permitted to make any distributions to CB Operating or any other parent entity unless and until the following distribution conditions have been satisfied: (i) the DSCR for the most recently completed measurement period is not less than 1.20:1.00; (ii) no default or event of default under the Mesquite Wind Credit Agreement exists or would result from such distribution; (iii) all reserve accounts are funded to their required levels; and (iv) Mesquite Wind has delivered a distribution compliance certificate to Prairie Commercial Bank certifying compliance with all distribution conditions. These distribution restrictions may limit the ability of the Mesquite Wind project to generate cash flow available for distribution to CB Operating and, ultimately, to the Company. See "Dividend Policy" and "Risk Factors — Risks Related to Our Indebtedness."

Construction-Phase Covenants. During the construction phase, Mesquite Wind is subject to additional covenants, including requirements to (a) cause construction of the Mesquite Wind project to proceed in accordance with the approved construction budget and construction schedule, (b) provide periodic reports from the independent engineer regarding construction progress, and (c) promptly notify Prairie Commercial Bank of any material deviation from the construction budget or schedule or any material construction delay or dispute.

3.7 IPO-Related Provisions

The Mesquite Wind Credit Agreement requires Mesquite Wind and CB Operating to provide notice to Prairie Commercial Bank in connection with certain corporate events affecting the ownership or control of Mesquite Wind, including the proposed initial public offering of the Company's common stock. Unlike the First Lien Credit Agreement governing the Corporate Revolving Credit Facility and Term Loan B, the Mesquite Wind Credit Agreement does not require the consent of Prairie Commercial Bank for the IPO; the obligation is limited to the delivery of a written notice to Prairie Commercial Bank describing the proposed transaction and confirming that no event of default or material adverse effect will result therefrom. Such notice has been prepared but has not yet been delivered to Prairie Commercial Bank, as the offering is currently dormant. The Company intends to deliver such notice in advance of the closing of this offering.

3.8 Events of Default

The Mesquite Wind Credit Agreement contains customary project-finance events of default, including, without limitation:

(a) failure to achieve commercial operation of the Mesquite Wind project by the longstop date specified in the Mesquite Wind Credit Agreement (currently December 15, 2023, which is one year prior to the conversion date);

(b) failure to make any payment of principal, interest, or other amounts when due (subject to a grace period of five business days for interest and fee payments);

(c) failure to comply with any covenant or agreement in the Mesquite Wind Credit Agreement (subject to cure periods for certain non-financial covenants);

(d) termination or material modification of any material project document (including the power purchase agreement, the EPC contract, the O&M agreement, or the interconnection agreement) without the prior consent of Prairie Commercial Bank;

(e) the occurrence of a material adverse effect on the Mesquite Wind project, as defined in the Mesquite Wind Credit Agreement;

(f) certain bankruptcy or insolvency events affecting Mesquite Wind;

(g) the rendering of one or more judgments against Mesquite Wind in excess of specified thresholds; and

(h) the occurrence of certain environmental events or loss events affecting the Mesquite Wind project that are not remedied within specified cure periods.

Upon the occurrence and continuance of an event of default, Prairie Commercial Bank may declare all outstanding obligations under the Mesquite Wind Facility to be immediately due and payable, terminate any remaining commitments, and exercise remedies with respect to the project collateral, including foreclosure on the project assets and the equity interests in Mesquite Wind. Because the Mesquite Wind Facility is non-recourse, a default under the Mesquite Wind Facility would not, by itself, constitute an event of default under the Company's corporate-level credit facilities. However, a default could result in the loss of the Mesquite Wind project, which would have a material adverse effect on the Company's business, results of operations, and financial condition.

4. Cimarron Solar Construction-to-Term Facility

4.1 Overview and Parties

On September 10, 2021, Cimarron Solar Development LLC ("Cimarron Solar"), a wholly-owned subsidiary of CB Operating formed as a special purpose vehicle for the development, construction, ownership, and operation of the Cimarron Solar project, entered into a construction-to-term loan facility (the "Cimarron Solar Facility") pursuant to that certain Credit Agreement, dated as of September 10, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "Cimarron Solar Credit Agreement"), among Cimarron Solar, as borrower, and Prairie Commercial Bank, N.A., as lender, administrative agent, and collateral agent. The primary contact at Prairie Commercial Bank for matters relating to the Cimarron Solar Facility is Brent Hollowell, Senior Vice President, Project Finance.

The Cimarron Solar Facility is a non-recourse project-finance construction-to-term loan facility, structured on substantially similar terms to the Mesquite Wind Facility described in Section 3 above. The obligations of Cimarron Solar under the Cimarron Solar Facility are not guaranteed by, and are not obligations of, CBR, CBR Holdings LLC, CB Operating, or any of their respective subsidiaries other than Cimarron Solar. Recourse to the equity sponsors is limited to the pledge by CB Operating of its equity interests in Cimarron Solar and customary limited-recourse completion guarantees during the construction phase.

4.2 Commitment. The Cimarron Solar Facility provides for total commitments of $143,000,000, which are available to fund the construction of the Cimarron Solar project, a 350 MW solar photovoltaic ("PV") energy generation project located in Doña Ana County, New Mexico. The Cimarron Solar project, upon completion, is expected to consist of single-axis tracking solar PV modules and related inverters, transformers, substations, collection systems, interconnection facilities, and other balance-of-plant infrastructure. As of December 31, 2021, construction of the Cimarron Solar project was in its early stages, and Cimarron Solar had drawn approximately $37,500,000 under the Cimarron Solar Facility, leaving approximately $105,500,000 of remaining commitments available for future construction draws.

As described more fully under "Use of Proceeds," the Company intends to use approximately $100,000,000 of the net proceeds from this offering to fund a portion of the construction costs of the Cimarron Solar project. To the extent that such proceeds are contributed as equity to Cimarron Solar, they will reduce the amount that would otherwise be drawn under the Cimarron Solar Facility, thereby lowering the overall project-level debt and improving the debt-to-equity ratio for the Cimarron Solar project.

4.3 Conversion and Maturity

During the construction phase, borrowings under the Cimarron Solar Facility are available on a revolving basis to fund construction costs, subject to compliance with an approved construction budget and construction schedule. The construction phase maturity date and the deadline for conversion of the facility to a term loan is March 15, 2025 (the "Cimarron Solar Conversion Date").

Upon satisfaction of specified conversion conditions, which are substantially similar to those described in Section 3.3 above with respect to the Mesquite Wind Facility (including achievement of commercial operation, execution of all material project contracts, delivery of an updated financial model, funding of reserve accounts, and absence of any default), the Cimarron Solar Facility will convert from a construction loan to a fully-amortizing term loan. The Company currently expects that the Cimarron Solar project will achieve commercial operation in the first quarter of 2023, and that the conversion conditions will be satisfied shortly thereafter.

Following conversion, the term loan will amortize over a period designed to achieve full repayment prior to the expiration of the power purchase agreement for the Cimarron Solar project, with a final maturity date expected to be approximately 20 years following the conversion date.

4.4 Interest Rate

During the construction phase, borrowings under the Cimarron Solar Facility bear interest at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.50% per annum. Upon conversion to a term loan, Cimarron Solar will have the option to fix the interest rate through an interest rate swap arrangement or to continue at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.25% per annum. These interest rate terms are substantially similar to those of the Mesquite Wind Facility.

4.5 Security. The obligations of Cimarron Solar under the Cimarron Solar Facility are secured by first-priority liens on substantially all assets of the Cimarron Solar project, including, without limitation:

(a) all real property interests comprising the project site in Doña Ana County, New Mexico, including fee interests, leasehold interests, and easements;

(b) all personal property of Cimarron Solar, including solar PV modules, inverters, transformers, racking and tracking systems, substations, collection systems, and all other balance-of-plant equipment, as well as accounts, deposit accounts, securities accounts, general intangibles, and intellectual property;

(c) all of Cimarron Solar's rights under material project contracts, including the power purchase agreement, the EPC contract, the O&M agreement, and the interconnection agreement;

(d) all permits, licenses, and governmental approvals relating to the Cimarron Solar project; and

(e) the equity interests in Cimarron Solar Development LLC, pledged by CB Operating to secure the obligations under the Cimarron Solar Facility.

The Cimarron Solar Facility is non-recourse to CBR and its other subsidiaries (other than Cimarron Solar). The ring-fencing of project assets operates in the same manner as described in Section 3.5 with respect to the Mesquite Wind Facility.

4.6 Key Covenants

The Cimarron Solar Credit Agreement contains project-level financial covenants, distribution conditions, reserve account requirements, and construction-phase covenants that are substantially similar to those described in Section 3.6 above with respect to the Mesquite Wind Facility. In particular:

(a) Following conversion to a term loan, Cimarron Solar is required to maintain a minimum DSCR of 1.20:1.00, tested semi-annually.

(b) Cimarron Solar must establish and maintain debt service reserve, major maintenance reserve, and working capital reserve accounts at specified minimum levels.

(c) Distributions from Cimarron Solar to CB Operating are subject to the satisfaction of distribution conditions, including DSCR compliance, absence of defaults, and full funding of reserve accounts.

(d) During the construction phase, Cimarron Solar is required to construct the project in accordance with the approved construction budget and schedule and to provide periodic independent engineer reports to Prairie Commercial Bank.

4.7 IPO-Related Provisions

The Cimarron Solar Credit Agreement contains IPO-related provisions that are substantially similar to those described in Section 3.7 above with respect to the Mesquite Wind Facility. Cimarron Solar and CB Operating are required to provide notice to Prairie Commercial Bank in connection with the IPO, but no consent is required. Such notice has been prepared but has not yet been delivered to Prairie Commercial Bank, as the offering is currently dormant. The Company intends to deliver such notice in advance of the closing of this offering.

4.8 Events of Default

The Cimarron Solar Credit Agreement contains events of default that are substantially similar to those described in Section 3.8 above with respect to the Mesquite Wind Facility, including, without limitation, failure to achieve commercial operation by the applicable longstop date, payment defaults, covenant breaches, termination or material modification of material project documents, material adverse effects on the project, bankruptcy events, and environmental events. The remedies available to Prairie Commercial Bank upon an event of default under the Cimarron Solar Facility, and the consequences of a default at the project level, are also substantially similar to those described in Section 3.8.

5. Tax-Equity Partnership — Solaris West Portfolio

5.1 Overview and Parties

In June 2020, Solaris West Solar LLC ("Solaris West"), a wholly-owned subsidiary of CB Operating, entered into a tax-equity partnership arrangement (the "Solaris West Tax-Equity Partnership") with Veltara Basin Financial LLC ("Veltara Basin") pursuant to that certain Amended and Restated Limited Liability Company Agreement of Solaris West Solar LLC, dated as of June 30, 2020 (as amended, restated, supplemented, or otherwise modified from time to time, the "Solaris West Partnership Agreement"). Veltara Basin Financial LLC maintains its principal offices at 2029 Century Park East, Suite 1500, Los Angeles, California 90067. The primary contact for matters relating to the Solaris West Tax-Equity Partnership is Karen Fujimoto, Partner, Tax Equity Investments.

Solaris West is the project-level SPV formed for the ownership and operation of the Solaris West project, a 450 MW solar PV energy generation project located in Pecos County, Texas. The Solaris West project achieved commercial operation in the third quarter of 2020 and is currently operating and generating revenue under long-term power purchase agreements.

The Solaris West Tax-Equity Partnership is structured as a partnership-flip arrangement, a structure commonly used in the renewable energy industry to monetize federal income tax benefits, including the Investment Tax Credit ("ITC") under Section 48 of the Internal Revenue Code and accelerated depreciation under the Modified Accelerated Cost Recovery System ("MACRS"). The Solaris West Tax-Equity Partnership is not traditional debt; rather, it is an equity investment by Veltara Basin in Solaris West. However, the Solaris West Tax-Equity Partnership is described in this section because it represents a significant financing obligation and a material component of the Company's total capitalization. The partnership-flip structure creates obligations and restrictions that are economically similar to certain features of debt financing, including preferred return obligations and distribution restrictions.

5.2 Investment Amount

In connection with the formation of the Solaris West Tax-Equity Partnership, Veltara Basin invested a total of $280,000,000 in Solaris West in exchange for its membership interest in Solaris West. The investment was funded in multiple tranches, including an initial funding at the closing of the Solaris West Partnership Agreement and subsequent fundings upon the achievement of specified milestones, including the commercial operation of the Solaris West project. As of December 31, 2021, all tranches of the tax-equity investment had been funded.

5.3 Partnership-Flip Mechanics

The Solaris West Tax-Equity Partnership utilizes a partnership-flip structure in which allocations of tax benefits, income, loss, and cash distributions between CB Operating (through its membership interest in Solaris West) and Veltara Basin change upon the occurrence of a "flip" event. The mechanics of the partnership-flip are summarized below:

Pre-Flip Period. During the pre-flip period, Veltara Basin receives a disproportionate allocation of the tax benefits generated by the Solaris West project, including 99% of the Investment Tax Credits and 99% of the taxable income, losses, and depreciation deductions. Veltara Basin also receives a preferred return on its investment, which is economically equivalent to a fixed annual return on the outstanding invested capital. Cash distributions during the pre-flip period are allocated disproportionately to Veltara Basin to the extent necessary to provide the preferred return. CB Operating receives a relatively small share of the tax benefits and cash distributions during the pre-flip period.

Flip Event. The partnership "flips" upon the earlier of (a) the date on which Veltara Basin has achieved a specified target internal rate of return on its investment (the "Target Return Date"), which the Company currently expects to occur in approximately 2028, or (b) a specified outside date (the "Outside Date") set forth in the Solaris West Partnership Agreement. The flip event is a pre-determined contractual mechanism and does not require any action or consent by either party.

Post-Flip Period. Following the flip event, Veltara Basin's allocation of income, loss, and cash distributions is substantially reduced. In the post-flip period, Veltara Basin receives only 5% of allocations of income, loss, and cash distributions, and CB Operating receives 95%. Additionally, following the flip event, CB Operating has the option (but not the obligation) to purchase Veltara Basin's remaining membership interest in Solaris West at fair market value, thereby acquiring 100% ownership of the Solaris West project. The Company currently expects that it will exercise this purchase option following the flip event.

5.4 Accounting Treatment

The Solaris West Tax-Equity Partnership is accounted for in the Company's consolidated financial statements using the Hypothetical-Liquidation-at-Book-Value ("HLBV") methodology. Under the HLBV methodology, the Company allocates equity in earnings or losses of Solaris West between CB Operating and Veltara Basin based on the amount each member would receive if the partnership were to liquidate all of its assets at their book values and distribute the net proceeds in accordance with the distribution provisions of the Solaris West Partnership Agreement. The use of the HLBV methodology can result in significant period-to-period fluctuations in the Company's reported earnings, as the allocations depend on the book values of the underlying project assets and the specific terms of the distribution waterfall.

For a more detailed discussion of the Company's use of the HLBV methodology and its impact on the Company's consolidated financial statements, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Hypothetical-Liquidation-at-Book-Value Methodology." The HLBV methodology and related disclosures have been the subject of comments from the Staff of the Securities and Exchange Commission in connection with the review of this registration statement.

5.5 ITC Recapture Risk

The Investment Tax Credits claimed in connection with the Solaris West project are subject to recapture under Section 50 of the Internal Revenue Code if certain conditions are not maintained during the applicable five-year recapture period following the date on which the relevant property was placed in service. The recapture period for the Solaris West project is expected to expire in the third quarter of 2025, approximately five years after the project's commercial operation date.

During the recapture period, the Company must ensure that (a) the Solaris West project remains in service and continues to generate electricity, (b) the ownership structure of Solaris West and its assets is not altered in a manner that would constitute a "disposition" or "cessation" under the applicable Treasury Regulations, and (c) the project continues to qualify as "energy property" within the meaning of Section 48 of the Internal Revenue Code. If an ITC recapture event were to occur, the Company would be required to repay a portion of the Investment Tax Credits previously claimed, which could result in a material tax liability and could trigger indemnification obligations under the Solaris West Partnership Agreement.

The Company does not believe that the proposed initial public offering of the Company's common stock constitutes a recapture event with respect to the Investment Tax Credits claimed for the Solaris West project, as the IPO involves the issuance of common stock of Calloway-Briggs Renewables Inc. (the ultimate parent company) and does not directly alter the ownership of Solaris West or its assets. However, out of an abundance of caution, the Company has requested written confirmation from Veltara Basin Financial LLC that the IPO does not constitute or give rise to a recapture event under the Solaris West Partnership Agreement or the Internal Revenue Code. As of the date of this prospectus, such confirmation has been requested but has not yet been obtained, as the offering is currently dormant. See "Risk Factors — Risks Related to Our Business — We may be subject to ITC recapture risk in connection with the Solaris West project."

5.6 IPO-Related Provisions

The Solaris West Partnership Agreement contains provisions requiring the consent of, or notice to, Veltara Basin Financial LLC in connection with certain change-of-control transactions affecting the project entity or its direct or indirect parent entities. The Company has determined that the proposed IPO may trigger one or more of the consent or notice provisions under the Solaris West Partnership Agreement, and accordingly, the Company has drafted a consent request to Veltara Basin seeking (a) consent to the IPO and related transactions, if required, and (b) confirmation that the IPO does not constitute or give rise to an ITC recapture event. As of the date of this prospectus, the consent request has been drafted but has not yet been delivered, as the offering is currently dormant.

5.7 Distribution Restrictions

Distributions from Solaris West to CB Operating are subject to compliance with the Solaris West Partnership Agreement, including the following conditions:

(a) Veltara Basin's preferred return must be current and fully paid before any distributions may be made to CB Operating in excess of CB Operating's minimum distribution allocation;

(b) the Solaris West project must have achieved and maintained minimum performance thresholds, as specified in the Solaris West Partnership Agreement;

(c) certain reserve accounts established under the Solaris West Partnership Agreement must be funded to their required levels; and

(d) no event constituting a "Tax Event" (including an ITC recapture event) or a default under the Solaris West Partnership Agreement may exist or would result from such distribution.

These distribution restrictions may limit the amount of cash flow that the Solaris West project is able to distribute to CB Operating and, ultimately, to the Company. The Company expects that, following the flip event (currently expected in 2028), the distribution restrictions will be substantially relaxed, and CB Operating will be entitled to receive 95% of cash distributions from the Solaris West project. See "Dividend Policy" and "Risk Factors — Risks Related to Our Indebtedness."

6. Summary of Total Indebtedness

The following table summarizes our outstanding indebtedness and financing arrangements as of December 31, 2021:

As of December 31, 2021, the Company's total consolidated indebtedness was approximately $1,710,000,000, inclusive of outstanding borrowings under the corporate-level credit facilities (the Revolving Credit Facility and Term Loan B) and the project-finance construction-to-term facilities (the Mesquite Wind Facility and the Cimarron Solar Facility), as well as accrued interest and fees associated therewith. The tax-equity investment of $280,000,000 by Veltara Basin Financial LLC in the Solaris West Tax-Equity Partnership is included in the Company's total capitalization figure but is not classified as traditional debt; it is accounted for as a non-controlling interest in the Company's consolidated financial statements using the HLBV methodology, as described in Section 5.4 above. The approximately $1.71 billion figure referenced in the introductory paragraph of this section reflects the aggregate of all of the foregoing financing arrangements, including both debt and tax-equity obligations, as presented in the Company's consolidated balance sheet.

Non-Recourse Nature of Project-Finance Facilities. Investors should note that the obligations under the Mesquite Wind Facility and the Cimarron Solar Facility are non-recourse to CBR, CBR Holdings LLC, CB Operating, and their respective subsidiaries other than the applicable project-level SPV. These obligations are ring-fenced at the project SPV level, and the creditors of the project-finance facilities have recourse solely to the assets of the applicable project and the equity interests in the applicable SPV. The project-finance obligations do not constitute obligations of, and are not guaranteed by, the Company or its corporate-level subsidiaries (subject to limited completion guarantees during the construction phase). Accordingly, in the event of a default under either project-finance facility, the lenders may exercise remedies against the assets of the applicable project and the equity interests in the applicable SPV, but they may not seek recourse against the corporate-level assets of CBR, CBR Holdings LLC, or CB Operating.

Conversely, the corporate-level creditors under the Revolving Credit Facility and Term Loan B do not have direct claims against the ring-fenced assets of the project-level SPVs. The corporate-level creditors' recourse with respect to the projects is limited to the equity interests in the project-level SPVs, which are pledged as collateral under the First Lien Credit Agreement but are subject to the prior claims of the project-level creditors with respect to the project assets. This structural arrangement results in the effective structural subordination of the corporate-level creditors to the project-level creditors with respect to the assets of the individual projects.

7. Pro Forma Impact of the O

DESCRIPTION OF INDEBTEDNESS
The following is a summary description of the material terms of our outstanding indebtedness as of December 31, 2021. As of that date, Calloway-Briggs Renewables Inc. (the "Company," "CBR," "we," "us," or "our") had total consolidated indebtedness of approximately $1.71 billion, comprising corporate-level credit facilities and project-level financing arrangements. This indebtedness is held at various levels of our corporate structure, including at Calloway-Briggs Renewables Inc., CBR Holdings LLC ("CBR Holdings"), Calloway-Briggs Operating Company LLC ("CB Operating"), and individual project-level special purpose vehicles ("SPVs") established in connection with specific renewable energy projects. Our indebtedness reflects the capital-intensive nature of our business and the customary use of non-recourse project-finance structures in the renewable energy industry.
As described more fully in "Use of Proceeds," we intend to use approximately $200,000,000 of the net proceeds from this offering to repay a portion of the outstanding principal balance under our Corporate Term Loan B (as defined below). In addition, we intend to use approximately $100,000,000 of the net proceeds from this offering to fund a portion of the construction costs of the Cimarron Solar project. The remaining net proceeds of this offering will be used for general corporate purposes, including working capital and potential acquisitions.
The five principal financing arrangements described below are: (1) our Corporate Revolving Credit Facility; (2) our Corporate Term Loan B; (3) the Mesquite Wind Construction-to-Term Facility; (4) the Cimarron Solar Construction-to-Term Facility; and (5) the Tax-Equity Partnership relating to the Solaris West Portfolio. The following descriptions are summaries only and are qualified in their entirety by reference to the definitive agreements governing each facility, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part. Investors should read the complete text of such agreements for a full understanding of our financing arrangements.
1. Corporate Revolving Credit Facility
1.1 Overview and Parties
On January 15, 2021, CB Operating, as borrower, entered into a senior secured revolving credit facility (the "Corporate Revolving Credit Facility" or the "Revolving Credit Facility") pursuant to that certain First Lien Credit Agreement, dated as of January 15, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), among CB Operating, the guarantors party thereto, the lenders from time to time party thereto, and Veltrano National Bank, as administrative agent and collateral agent (in such capacity, the "Administrative Agent"). Veltrano National Bank maintains its principal offices at 1401 McKinney Street, Houston, Texas 77010. The primary contact for matters relating to the Revolving Credit Facility is Thomas Raines, Managing Director, Energy Lending.
The obligations of CB Operating under the Revolving Credit Facility are unconditionally guaranteed by Calloway-Briggs Renewables Inc. and CBR Holdings LLC on a senior secured basis. Each guarantor has guaranteed the full and punctual payment when due of all obligations of CB Operating arising under the First Lien Credit Agreement, whether at stated maturity, by acceleration, or otherwise.
1.2 Commitment and Availability
The Revolving Credit Facility provides for aggregate revolving commitments of $400,000,000. CB Operating may borrow, repay, and reborrow amounts under the Revolving Credit Facility from time to time until the maturity date, subject to compliance with borrowing base requirements and the satisfaction of customary conditions precedent to each borrowing, including the absence of any default or event of default and the accuracy in all material respects of specified representations and warranties. The borrowing base is calculated based on the aggregate value of eligible assets and equity interests pledged as collateral, subject to applicable advance rates and reserves as determined by the Administrative Agent.
The Revolving Credit Facility includes a letter of credit sub-facility in an aggregate face amount of up to $75,000,000. Letters of credit issued under the sub-facility reduce the available revolving commitments on a dollar-for-dollar basis. As of December 31, 2021, CB Operating had drawn approximately $90,000,000 under the Revolving Credit Facility and had approximately $15,000,000 of outstanding letters of credit, leaving approximately $295,000,000 of unused revolving commitments available for future borrowings.
1.3 Maturity.  All outstanding borrowings and other obligations under the Revolving Credit Facility, including any accrued and unpaid interest and fees, are due and payable in full on January 15, 2027 (the "Revolving Maturity Date"), unless earlier accelerated pursuant to the terms of the First Lien Credit Agreement following the occurrence and continuance of an event of default.
1.4 Interest Rate and Fees
Borrowings under the Revolving Credit Facility bear interest, at CB Operating's election, at a rate per annum equal to either (a) the Adjusted Term SOFR Rate (as defined in the First Lien Credit Agreement), which is based on the secured overnight financing rate published by the Federal Reserve Bank of New York, plus a credit spread adjustment of 0.10% per annum for one-month interest periods, 0.15% per annum for three-month interest periods, and 0.25% per annum for six-month interest periods, plus an applicable margin, or (b) the Alternate Base Rate (as defined in the First Lien Credit Agreement), which is the greatest of (i) the prime rate of Veltrano National Bank, (ii) the federal funds effective rate plus 0.50%, and (iii) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%, in each case plus an applicable margin.
The applicable margin for borrowings under the Revolving Credit Facility ranges from 2.00% to 2.75% per annum for Adjusted Term SOFR Rate borrowings and from 1.00% to 1.75% per annum for Alternate Base Rate borrowings, in each case depending on CB Operating's consolidated total leverage ratio (as defined in the First Lien Credit Agreement) as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered.
CB Operating is required to pay a commitment fee on the average daily unused portion of the revolving commitments at a rate ranging from 0.25% to 0.50% per annum, depending on CB Operating's consolidated total leverage ratio. In addition, CB Operating is required to pay customary letter of credit fees, fronting fees, and administrative fees in connection with the letter of credit sub-facility and the ongoing administration of the Revolving Credit Facility.
1.5 Security and Collateral
The obligations of CB Operating under the Revolving Credit Facility, and the guarantee obligations of Calloway-Briggs Renewables Inc. and CBR Holdings LLC, are secured by a first-priority lien on substantially all of the assets of CBR Holdings LLC and CB Operating, subject to customary exceptions. The collateral includes, without limitation, all accounts receivable, equipment, inventory, intellectual property, deposit accounts, securities accounts, general intangibles, and other personal property of CBR Holdings LLC and CB Operating. In addition, CBR Holdings LLC and CB Operating have pledged the equity interests in CB Operating and certain direct and indirect subsidiary entities (other than project-level SPVs whose assets are ring-fenced under separate project-finance facilities) to secure their obligations under the First Lien Credit Agreement.
The collateral securing the Revolving Credit Facility expressly excludes the assets of project-level SPVs that are pledged as collateral under the separate non-recourse project-finance facilities described below, including the assets of Mesquite Wind Holdings LLC, Cimarron Solar Development LLC, and Solaris West Solar LLC. However, CB Operating's equity interests in each such project-level SPV are pledged as collateral under the First Lien Credit Agreement, meaning that upon a foreclosure by the Administrative Agent, the lenders could potentially acquire ownership of the equity interests in the project-level SPVs, subject to the rights of the project-level lenders and tax-equity investors.
1.6 Key Covenants
The First Lien Credit Agreement contains a number of financial maintenance covenants, negative covenants, and affirmative covenants applicable to CBR, CBR Holdings LLC, CB Operating, and their respective subsidiaries (subject to customary exceptions for non-recourse project-finance subsidiaries).
Financial Maintenance Covenants. CB Operating is required to comply with the following financial maintenance covenants, tested as of the last day of each fiscal quarter:
(a) Consolidated Total Leverage Ratio. CB Operating's consolidated total leverage ratio (the ratio of consolidated total net debt to consolidated adjusted EBITDA, in each case as defined in the First Lien Credit Agreement, for the trailing four fiscal quarter period) may not exceed 5.50:1.00 at any time, stepping down to 5.00:1.00 commencing with the first full fiscal quarter ending after the closing of this offering.
(b) Interest Coverage Ratio. CB Operating's consolidated interest coverage ratio (the ratio of consolidated adjusted EBITDA to consolidated cash interest expense, in each case as defined in the First Lien Credit Agreement, for the trailing four fiscal quarter period) may not be less than 2.00:1.00 at any time.
(c) Minimum Liquidity. CB Operating must maintain minimum liquidity (defined as the sum of unrestricted cash and cash equivalents plus available commitments under the Revolving Credit Facility) of not less than $50,000,000 at all times.
Negative Covenants. The First Lien Credit Agreement contains customary negative covenants that, subject to specified exceptions and qualifications, limit the ability of CB Operating and its restricted subsidiaries to, among other things:
•  incur or guarantee additional indebtedness;
•  create or permit to exist additional liens on their assets;
•  pay dividends on, or make other distributions in respect of, or redeem or repurchase, equity interests (see "Dividend Policy" for a discussion of the impact of these restrictions on the Company's ability to pay dividends following this offering);
•  make investments, loans, and advances;
•  sell, lease, or otherwise transfer or dispose of assets;
•  enter into mergers, consolidations, or similar transactions;
•  enter into transactions with affiliates on other than arm's-length terms;
•  enter into agreements that restrict the ability of subsidiaries to pay dividends or make other distributions;
•  amend or modify the organizational documents of CBR Holdings LLC or CB Operating in a manner materially adverse to the lenders; and
•  change the fiscal year of CB Operating.
Affirmative Covenants. The First Lien Credit Agreement also contains customary affirmative covenants requiring CB Operating and its restricted subsidiaries to, among other things:
•  deliver annual audited and quarterly unaudited financial statements, together with related officers' compliance certificates;
•  maintain insurance on their properties and assets in amounts and of the types customary for companies in the renewable energy industry;
•  comply in all material respects with applicable laws, rules, and regulations;
•  maintain their corporate existence and material properties;
•  provide the Administrative Agent with notice of any defaults, material litigation, and other material events;
•  maintain books and records in accordance with GAAP; and
•  permit the Administrative Agent and the lenders to inspect properties and books and records, subject to customary limitations.
1.7 Change-of-Control and IPO-Related Provisions
The First Lien Credit Agreement contains a change-of-control provision that requires CB Operating to offer to prepay all outstanding obligations under the Revolving Credit Facility (and the Term Loan B described below) upon the occurrence of a "Change of Control" (as defined therein). A Change of Control is generally defined to include, among other events, (a) any transaction or series of transactions resulting in any person or group acquiring beneficial ownership of more than 50% of the voting equity interests in the Company, (b) the Company ceasing to own, directly or indirectly, 100% of the equity interests in CBR Holdings LLC, or (c) CBR Holdings LLC ceasing to own, directly or indirectly, 100% of the equity interests in CB Operating, in each case subject to certain exceptions.
The proposed initial public offering of common stock of the Company, as described in this prospectus, may constitute, or be deemed to give rise to, a Change of Control or a condition or event requiring consent under the First Lien Credit Agreement. Accordingly, the Company has requested the consent of Veltrano National Bank, as Administrative Agent, and the requisite lenders under the First Lien Credit Agreement to the consummation of the IPO and related transactions. As of the date of this prospectus, such consent has been requested but has not yet been obtained. The Company expects to obtain such consent prior to the closing of this offering, and the closing of this offering is conditioned upon the receipt of such consent. There can be no assurance that such consent will be obtained on terms favorable to the Company or at all. See "Risk Factors — Risks Related to This Offering and Our Indebtedness — We require the consent of our corporate lenders to consummate this offering, and there can be no assurance that such consent will be obtained."
1.8 Events of Default
The First Lien Credit Agreement contains customary events of default, including, without limitation:
(a) failure to make any payment of principal, interest, fees, or other amounts when due under the Revolving Credit Facility (subject, in the case of interest and fees, to a grace period of five business days);
(b) material inaccuracy of any representation or warranty when made or deemed made;
(c) failure to comply with any covenant or agreement in the First Lien Credit Agreement (subject, in the case of certain affirmative covenants, to a cure period of 30 days after notice);
(d) cross-default to other indebtedness of CBR, CBR Holdings LLC, CB Operating, or any of their respective restricted subsidiaries in an aggregate principal amount exceeding $25,000,000, arising from a payment default or acceleration of such indebtedness;
(e) one or more judgments in an aggregate amount exceeding $25,000,000 rendered against CBR, CBR Holdings LLC, CB Operating, or any of their restricted subsidiaries that remain undischarged or unstayed for a period of 60 consecutive days;
(f) certain bankruptcy or insolvency events affecting CBR, CBR Holdings LLC, CB Operating, or any of their material subsidiaries;
(g) the occurrence of a Change of Control;
(h) any guarantee or security interest under the collateral documents ceasing to be in full force and effect (other than in accordance with the terms thereof);
(i) the occurrence of an ERISA event reasonably expected to result in a material adverse effect; and
(j) the occurrence of a material adverse effect (as defined in the First Lien Credit Agreement, which generally means any event, circumstance, or condition that has had, or could reasonably be expected to have, a material adverse effect on (i) the business, operations, assets, or financial condition of CB Operating and its restricted subsidiaries taken as a whole, (ii) the ability of any obligor to perform its payment obligations under the First Lien Credit Agreement, or (iii) the rights or remedies of the Administrative Agent or the lenders under the First Lien Credit Agreement).
If an event of default occurs and is continuing, the Administrative Agent may, and at the request of the requisite lenders shall, declare all outstanding obligations under the Revolving Credit Facility to be immediately due and payable, terminate the revolving commitments, and exercise remedies with respect to the collateral. In the case of certain bankruptcy-related events of default, all outstanding obligations are automatically accelerated and the revolving commitments are automatically terminated without any action by the Administrative Agent or the lenders.
2. Corporate Term Loan B
2.1 Overview and Parties
On January 15, 2021, concurrently with the closing of the Revolving Credit Facility, CB Operating, as borrower, entered into a senior secured term loan facility (the "Corporate Term Loan B" or the "Term Loan B") under the First Lien Credit Agreement. The Term Loan B is governed by the same First Lien Credit Agreement described above in Section 1 with respect to the Revolving Credit Facility. Veltrano National Bank serves as the Administrative Agent and collateral agent for the Term Loan B. The Term Loan B was initially syndicated among a group of institutional lenders, including Veltrano National Bank and other financial institutions. The obligations of CB Operating under the Term Loan B are unconditionally guaranteed by Calloway-Briggs Renewables Inc. and CBR Holdings LLC on a senior secured basis, on the same terms and conditions as the guarantee of the Revolving Credit Facility.
2.2 Principal Amount
The Term Loan B was originally issued in an aggregate principal amount of $650,000,000. After giving effect to scheduled amortization payments through December 31, 2021, the outstanding principal amount of the Term Loan B as of December 31, 2021 was $612,500,000. No voluntary prepayments of the Term Loan B had been made as of that date.
2.3 Maturity.  The outstanding principal balance of the Term Loan B, together with all accrued and unpaid interest and other amounts due thereunder, is due and payable in full on January 15, 2029 (the "Term Loan Maturity Date"), unless earlier prepaid or accelerated pursuant to the terms of the First Lien Credit Agreement. The Term Loan Maturity Date is two years later than the Revolving Maturity Date, reflecting the differing structural characteristics of the two tranches.
2.4 Interest Rate
Borrowings under the Term Loan B bear interest, at CB Operating's election, at a rate per annum equal to either (a) the Adjusted Term SOFR Rate plus an applicable margin of 3.25% per annum, or (b) the Alternate Base Rate plus an applicable margin of 2.25% per annum. Unlike the Revolving Credit Facility, the applicable margin for the Term Loan B is fixed and does not fluctuate based on CB Operating's consolidated total leverage ratio. The Term Loan B also includes a SOFR floor of 0.50% per annum, such that if the Adjusted Term SOFR Rate at any time is less than 0.50% per annum, the Adjusted Term SOFR Rate shall be deemed to be 0.50% per annum for purposes of calculating the interest rate on the Term Loan B.
As of December 31, 2021, the weighted average interest rate on borrowings under the Term Loan B was approximately 3.60% per annum, based on the then-prevailing Adjusted Term SOFR Rate plus the applicable margin.
2.5 Amortization.  The Term Loan B requires quarterly amortization payments in an aggregate annual amount equal to 1.00% of the original principal amount of the Term Loan B (i.e., $6,500,000 per year, payable in quarterly installments of $1,625,000 each), with the remaining outstanding principal balance due and payable in full on the Term Loan Maturity Date. Through December 31, 2021, CB Operating had made aggregate amortization payments of $37,500,000 under the Term Loan B.
In addition, the First Lien Credit Agreement requires CB Operating to make mandatory excess cash flow prepayments on an annual basis, commencing with respect to the fiscal year ending December 31, 2021. The excess cash flow prepayment amount is equal to 50% of excess cash flow (as defined in the First Lien Credit Agreement) for the applicable fiscal year, subject to step-downs to 25% if the consolidated total leverage ratio is less than 4.50:1.00 and to 0% if the consolidated total leverage ratio is less than 3.50:1.00. Excess cash flow prepayments are applied to reduce the remaining scheduled amortization payments of the Term Loan B in direct order of maturity. As of the date of this prospectus, the Company has not determined whether any excess cash flow prepayment will be required with respect to the fiscal year ended December 31, 2021.
2.6 Prepayment.  Voluntary Prepayment. CB Operating may voluntarily prepay the Term Loan B in whole or in part at any time, subject to the payment of a prepayment premium. Voluntary prepayments of the Term Loan B made on or prior to January 15, 2023 are subject to a prepayment premium equal to 1.00% of the principal amount of the Term Loan B being prepaid. After January 15, 2023, voluntary prepayments may be made without premium or penalty (other than customary breakage costs in connection with SOFR borrowings prepaid on a date other than the last day of the applicable interest period).
In connection with the proposed IPO, the Company intends to use approximately $200,000,000 of the net proceeds from this offering to prepay a portion of the outstanding principal balance of the Term Loan B. Because the closing of this offering is expected to occur prior to January 15, 2023, such prepayment will be subject to the 1.00% prepayment premium, resulting in a prepayment premium of approximately $2,000,000 payable to the Term Loan B lenders. The prepayment premium will be paid from the net proceeds of this offering and is reflected in the estimated use of proceeds described under "Use of Proceeds."
Mandatory Prepayments. In addition to the excess cash flow prepayments described above, the First Lien Credit Agreement requires CB Operating to make mandatory prepayments of the Term Loan B (without premium) with the net cash proceeds of (a) certain asset sales (to the extent such proceeds are not reinvested within a specified period), (b) certain debt issuances (other than permitted indebtedness), and (c) certain insurance or condemnation proceeds (to the extent such proceeds are not applied to restoration). Mandatory prepayments are applied first to the Term Loan B and then, if no Term Loan B obligations remain outstanding, to the Revolving Credit Facility, in each case subject to customary exceptions and reinvestment rights.
2.7 Use of IPO Proceeds for Repayment
As described more fully under "Use of Proceeds," the Company intends to use approximately $200,000,000 of the net proceeds from the primary offering to prepay a portion of the Term Loan B. After giving effect to such prepayment, the outstanding principal balance of the Term Loan B would be reduced from approximately $612,500,000 to approximately $412,500,000. The Company believes that the prepayment of a substantial portion of the Term Loan B will reduce annual cash interest expense, improve the Company's consolidated leverage metrics, and provide additional financial flexibility for future growth initiatives. The remaining balance of the Term Loan B will continue to be subject to quarterly amortization and the other terms and conditions of the First Lien Credit Agreement.
2.8 Security and Collateral
The Term Loan B is secured on a pari passu basis with the Revolving Credit Facility by first-priority liens on substantially all of the assets of CBR Holdings LLC and CB Operating (excluding ring-fenced project-level SPV assets pledged under separate non-recourse project-finance facilities). The collateral securing the Term Loan B is the same collateral described above in Section 1.5 with respect to the Revolving Credit Facility. The intercreditor arrangements among the Revolving Credit Facility lenders and the Term Loan B lenders are governed by the First Lien Credit Agreement and provide that the lenders under both tranches share ratably in the collateral and proceeds thereof.
2.9 Key Covenants
Because the Term Loan B is governed by the same First Lien Credit Agreement as the Revolving Credit Facility, CB Operating and its restricted subsidiaries are subject to the same financial maintenance covenants, negative covenants, and affirmative covenants described in Section 1.6 above. In addition, the Term Loan B tranche is subject to certain incurrence-based covenants that apply only to the term loan tranche, including limitations on the ability of CB Operating to amend, extend, or refinance the Term Loan B without the consent of the requisite lenders, and requirements that any refinancing indebtedness satisfy specified conditions (including tenor, pricing, and covenant protections not more favorable to the new lenders than those under the existing Term Loan B).
2.10 Change-of-Control and IPO-Related Provisions
The Term Loan B is subject to the same change-of-control provisions described in Section 1.7 above with respect to the Revolving Credit Facility, as both tranches are governed by the First Lien Credit Agreement. As noted above, the Company has requested the consent of Veltrano National Bank, as Administrative Agent, and the requisite lenders under the First Lien Credit Agreement to the consummation of the IPO and related transactions. Such consent has been requested but has not yet been obtained as of the date of this prospectus. The closing of this offering is conditioned upon the receipt of such consent.
2.11 Events of Default
The events of default applicable to the Term Loan B are the same as those described in Section 1.8 above with respect to the Revolving Credit Facility, as both tranches are governed by the First Lien Credit Agreement. The occurrence of an event of default under the First Lien Credit Agreement would permit the Administrative Agent to accelerate both the Revolving Credit Facility and the Term Loan B simultaneously.
3. Mesquite Wind Construction-to-Term Facility
3.1 Overview and Parties
On April 20, 2021, Mesquite Wind Holdings LLC ("Mesquite Wind"), a wholly-owned subsidiary of CB Operating formed as a special purpose vehicle for the development, construction, ownership, and operation of the Mesquite Wind project, entered into a construction-to-term loan facility (the "Mesquite Wind Facility") pursuant to that certain Credit Agreement, dated as of April 20, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "Mesquite Wind Credit Agreement"), among Mesquite Wind, as borrower, and Prairie Commercial Bank, N.A., as lender, administrative agent, and collateral agent. Prairie Commercial Bank, N.A. maintains its principal offices at 2200 Ross Avenue, Suite 3600, Dallas, Texas 75201. The primary contact for matters relating to the Mesquite Wind Facility is Brent Hollowell, Senior Vice President, Project Finance.
The Mesquite Wind Facility is a non-recourse project-finance construction-to-term loan facility. The obligations of Mesquite Wind under the Mesquite Wind Facility are not guaranteed by, and are not obligations of, CBR, CBR Holdings LLC, CB Operating, or any of their respective subsidiaries other than Mesquite Wind. Recourse to the equity sponsors is limited to the pledge by CB Operating of its equity interests in Mesquite Wind and customary limited-recourse completion guarantees during the construction phase.
3.2 Commitment.  The Mesquite Wind Facility provides for total commitments of $165,000,000, which are available to fund the construction of the Mesquite Wind project, a 420 megawatt ("MW") onshore wind energy generation project located in Oldham County, Texas. The Mesquite Wind project, upon completion, is expected to consist of approximately 140 wind turbine generators and related balance-of-plant equipment, interconnection facilities, and other infrastructure. As of December 31, 2021, Mesquite Wind had drawn approximately $127,500,000 under the Mesquite Wind Facility, leaving approximately $37,500,000 of remaining commitments available for future construction draws.
3.3 Conversion and Maturity
During the construction phase, borrowings under the Mesquite Wind Facility are available on a revolving basis to fund construction costs, subject to compliance with a construction budget and construction schedule approved by Prairie Commercial Bank and verified by the project's independent engineer. The construction phase maturity date and the deadline for conversion of the facility to a term loan is December 15, 2024 (the "Mesquite Wind Conversion Date").
Upon satisfaction of specified conversion conditions, the Mesquite Wind Facility is required to convert from a construction loan to a fully-amortizing term loan. The conversion conditions include, without limitation: (a) achievement of commercial operation of the Mesquite Wind project, as certified by the independent engineer (expected to occur in the third quarter of 2022); (b) execution and effectiveness of all material project contracts, including the power purchase agreement, interconnection agreement, operations and maintenance agreement, and balance-of-plant warranty; (c) delivery of an updated financial model demonstrating compliance with minimum debt service coverage ratios; (d) funding of all required reserve accounts; and (e) absence of any default or event of default under the Mesquite Wind Credit Agreement. The Company currently expects that the Mesquite Wind project will achieve commercial operation in the third quarter of 2022, and that the conversion conditions will be satisfied shortly thereafter.
Following conversion, the term loan will amortize over a period designed to achieve full repayment prior to the expiration of the power purchase agreement for the Mesquite Wind project, with a final maturity date expected to be approximately 18 years following the conversion date.
3.4 Interest Rate
During the construction phase, borrowings under the Mesquite Wind Facility bear interest at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.50% per annum. Upon conversion to a term loan, Mesquite Wind will have the option to fix the interest rate through an interest rate swap arrangement or to continue at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.25% per annum. The reduction in the applicable margin upon conversion reflects the lower risk profile of the project following achievement of commercial operation.
3.5 Security.  The obligations of Mesquite Wind under the Mesquite Wind Facility are secured by first-priority liens on substantially all assets of the Mesquite Wind project, including, without limitation:
(a) all real property interests, including fee interests, leasehold interests, and easements comprising the project site in Oldham County, Texas;
(b) all personal property of Mesquite Wind, including equipment (including all wind turbine generators, transformers, substations, collection systems, and other balance-of-plant equipment), accounts, deposit accounts, securities accounts, general intangibles, and intellectual property;
(c) all of Mesquite Wind's rights under material project contracts, including the power purchase agreement with an investment-grade utility counterparty, the engineering, procurement, and construction ("EPC") contract, the operations and maintenance ("O&M") agreement, and the interconnection agreement with the applicable transmission operator;
(d) all permits, licenses, and governmental approvals relating to the Mesquite Wind project; and
(e) the equity interests in Mesquite Wind Holdings LLC, pledged by CB Operating to secure the obligations under the Mesquite Wind Facility.
As noted above, the Mesquite Wind Facility is non-recourse to CBR and its other subsidiaries (other than Mesquite Wind). The assets of the Mesquite Wind project, including the project contracts and revenue streams, are ring-fenced at the Mesquite Wind level and are not available to satisfy the claims of CBR's corporate-level creditors. Conversely, the corporate-level assets of CBR, CBR Holdings LLC, and CB Operating (other than the equity interests in Mesquite Wind) are not available to satisfy the claims of Prairie Commercial Bank under the Mesquite Wind Facility.
3.6 Key Covenants
The Mesquite Wind Credit Agreement contains customary project-finance covenants applicable to Mesquite Wind and the Mesquite Wind project, including the following:
Financial Covenants. Following conversion to a term loan, Mesquite Wind is required to maintain a minimum debt service coverage ratio ("DSCR") of 1.20:1.00, tested semi-annually. The DSCR is calculated as the ratio of net cash flow from the project (after operating expenses and required reserve contributions) to scheduled debt service payments on the term loan for the applicable measurement period. Failure to maintain the minimum DSCR constitutes an event of default under the Mesquite Wind Credit Agreement.
Reserve Account Requirements. Mesquite Wind is required to establish and maintain certain reserve accounts, including (a) a debt service reserve account in an amount equal to six months of projected debt service, (b) a major maintenance reserve account funded in accordance with a budget approved by the independent engineer, and (c) a working capital reserve account in an amount determined by the lender. Each reserve account is subject to replenishment requirements if balances fall below the specified minimum levels.
Distribution Conditions. Mesquite Wind is not permitted to make any distributions to CB Operating or any other parent entity unless and until the following distribution conditions have been satisfied: (i) the DSCR for the most recently completed measurement period is not less than 1.20:1.00; (ii) no default or event of default under the Mesquite Wind Credit Agreement exists or would result from such distribution; (iii) all reserve accounts are funded to their required levels; and (iv) Mesquite Wind has delivered a distribution compliance certificate to Prairie Commercial Bank certifying compliance with all distribution conditions. These distribution restrictions may limit the ability of the Mesquite Wind project to generate cash flow available for distribution to CB Operating and, ultimately, to the Company. See "Dividend Policy" and "Risk Factors — Risks Related to Our Indebtedness."
Construction-Phase Covenants. During the construction phase, Mesquite Wind is subject to additional covenants, including requirements to (a) cause construction of the Mesquite Wind project to proceed in accordance with the approved construction budget and construction schedule, (b) provide periodic reports from the independent engineer regarding construction progress, and (c) promptly notify Prairie Commercial Bank of any material deviation from the construction budget or schedule or any material construction delay or dispute.
3.7 IPO-Related Provisions
The Mesquite Wind Credit Agreement requires Mesquite Wind and CB Operating to provide notice to Prairie Commercial Bank in connection with certain corporate events affecting the ownership or control of Mesquite Wind, including the proposed initial public offering of the Company's common stock. Unlike the First Lien Credit Agreement governing the Corporate Revolving Credit Facility and Term Loan B, the Mesquite Wind Credit Agreement does not require the consent of Prairie Commercial Bank for the IPO; the obligation is limited to the delivery of a written notice to Prairie Commercial Bank describing the proposed transaction and confirming that no event of default or material adverse effect will result therefrom. Such notice has been prepared but has not yet been delivered to Prairie Commercial Bank, as the offering is currently dormant. The Company intends to deliver such notice in advance of the closing of this offering.
3.8 Events of Default
The Mesquite Wind Credit Agreement contains customary project-finance events of default, including, without limitation:
(a) failure to achieve commercial operation of the Mesquite Wind project by the longstop date specified in the Mesquite Wind Credit Agreement (currently December 15, 2023, which is one year prior to the conversion date);
(b) failure to make any payment of principal, interest, or other amounts when due (subject to a grace period of five business days for interest and fee payments);
(c) failure to comply with any covenant or agreement in the Mesquite Wind Credit Agreement (subject to cure periods for certain non-financial covenants);
(d) termination or material modification of any material project document (including the power purchase agreement, the EPC contract, the O&M agreement, or the interconnection agreement) without the prior consent of Prairie Commercial Bank;
(e) the occurrence of a material adverse effect on the Mesquite Wind project, as defined in the Mesquite Wind Credit Agreement;
(f) certain bankruptcy or insolvency events affecting Mesquite Wind;
(g) the rendering of one or more judgments against Mesquite Wind in excess of specified thresholds; and
(h) the occurrence of certain environmental events or loss events affecting the Mesquite Wind project that are not remedied within specified cure periods.
Upon the occurrence and continuance of an event of default, Prairie Commercial Bank may declare all outstanding obligations under the Mesquite Wind Facility to be immediately due and payable, terminate any remaining commitments, and exercise remedies with respect to the project collateral, including foreclosure on the project assets and the equity interests in Mesquite Wind. Because the Mesquite Wind Facility is non-recourse, a default under the Mesquite Wind Facility would not, by itself, constitute an event of default under the Company's corporate-level credit facilities. However, a default could result in the loss of the Mesquite Wind project, which would have a material adverse effect on the Company's business, results of operations, and financial condition.
4. Cimarron Solar Construction-to-Term Facility
4.1 Overview and Parties
On September 10, 2021, Cimarron Solar Development LLC ("Cimarron Solar"), a wholly-owned subsidiary of CB Operating formed as a special purpose vehicle for the development, construction, ownership, and operation of the Cimarron Solar project, entered into a construction-to-term loan facility (the "Cimarron Solar Facility") pursuant to that certain Credit Agreement, dated as of September 10, 2021 (as amended, restated, supplemented, or otherwise modified from time to time, the "Cimarron Solar Credit Agreement"), among Cimarron Solar, as borrower, and Prairie Commercial Bank, N.A., as lender, administrative agent, and collateral agent. The primary contact at Prairie Commercial Bank for matters relating to the Cimarron Solar Facility is Brent Hollowell, Senior Vice President, Project Finance.
The Cimarron Solar Facility is a non-recourse project-finance construction-to-term loan facility, structured on substantially similar terms to the Mesquite Wind Facility described in Section 3 above. The obligations of Cimarron Solar under the Cimarron Solar Facility are not guaranteed by, and are not obligations of, CBR, CBR Holdings LLC, CB Operating, or any of their respective subsidiaries other than Cimarron Solar. Recourse to the equity sponsors is limited to the pledge by CB Operating of its equity interests in Cimarron Solar and customary limited-recourse completion guarantees during the construction phase.
4.2 Commitment.  The Cimarron Solar Facility provides for total commitments of $143,000,000, which are available to fund the construction of the Cimarron Solar project, a 350 MW solar photovoltaic ("PV") energy generation project located in Doña Ana County, New Mexico. The Cimarron Solar project, upon completion, is expected to consist of single-axis tracking solar PV modules and related inverters, transformers, substations, collection systems, interconnection facilities, and other balance-of-plant infrastructure. As of December 31, 2021, construction of the Cimarron Solar project was in its early stages, and Cimarron Solar had drawn approximately $37,500,000 under the Cimarron Solar Facility, leaving approximately $105,500,000 of remaining commitments available for future construction draws.
As described more fully under "Use of Proceeds," the Company intends to use approximately $100,000,000 of the net proceeds from this offering to fund a portion of the construction costs of the Cimarron Solar project. To the extent that such proceeds are contributed as equity to Cimarron Solar, they will reduce the amount that would otherwise be drawn under the Cimarron Solar Facility, thereby lowering the overall project-level debt and improving the debt-to-equity ratio for the Cimarron Solar project.
4.3 Conversion and Maturity
During the construction phase, borrowings under the Cimarron Solar Facility are available on a revolving basis to fund construction costs, subject to compliance with an approved construction budget and construction schedule. The construction phase maturity date and the deadline for conversion of the facility to a term loan is March 15, 2025 (the "Cimarron Solar Conversion Date").
Upon satisfaction of specified conversion conditions, which are substantially similar to those described in Section 3.3 above with respect to the Mesquite Wind Facility (including achievement of commercial operation, execution of all material project contracts, delivery of an updated financial model, funding of reserve accounts, and absence of any default), the Cimarron Solar Facility will convert from a construction loan to a fully-amortizing term loan. The Company currently expects that the Cimarron Solar project will achieve commercial operation in the first quarter of 2023, and that the conversion conditions will be satisfied shortly thereafter.
Following conversion, the term loan will amortize over a period designed to achieve full repayment prior to the expiration of the power purchase agreement for the Cimarron Solar project, with a final maturity date expected to be approximately 20 years following the conversion date.
4.4 Interest Rate
During the construction phase, borrowings under the Cimarron Solar Facility bear interest at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.50% per annum. Upon conversion to a term loan, Cimarron Solar will have the option to fix the interest rate through an interest rate swap arrangement or to continue at a variable rate equal to the Adjusted Term SOFR Rate plus an applicable margin of 2.25% per annum. These interest rate terms are substantially similar to those of the Mesquite Wind Facility.
4.5 Security.  The obligations of Cimarron Solar under the Cimarron Solar Facility are secured by first-priority liens on substantially all assets of the Cimarron Solar project, including, without limitation:
(a) all real property interests comprising the project site in Doña Ana County, New Mexico, including fee interests, leasehold interests, and easements;
(b) all personal property of Cimarron Solar, including solar PV modules, inverters, transformers, racking and tracking systems, substations, collection systems, and all other balance-of-plant equipment, as well as accounts, deposit accounts, securities accounts, general intangibles, and intellectual property;
(c) all of Cimarron Solar's rights under material project contracts, including the power purchase agreement, the EPC contract, the O&M agreement, and the interconnection agreement;
(d) all permits, licenses, and governmental approvals relating to the Cimarron Solar project; and
(e) the equity interests in Cimarron Solar Development LLC, pledged by CB Operating to secure the obligations under the Cimarron Solar Facility.
The Cimarron Solar Facility is non-recourse to CBR and its other subsidiaries (other than Cimarron Solar). The ring-fencing of project assets operates in the same manner as described in Section 3.5 with respect to the Mesquite Wind Facility.
4.6 Key Covenants
The Cimarron Solar Credit Agreement contains project-level financial covenants, distribution conditions, reserve account requirements, and construction-phase covenants that are substantially similar to those described in Section 3.6 above with respect to the Mesquite Wind Facility. In particular:
(a) Following conversion to a term loan, Cimarron Solar is required to maintain a minimum DSCR of 1.20:1.00, tested semi-annually.
(b) Cimarron Solar must establish and maintain debt service reserve, major maintenance reserve, and working capital reserve accounts at specified minimum levels.
(c) Distributions from Cimarron Solar to CB Operating are subject to the satisfaction of distribution conditions, including DSCR compliance, absence of defaults, and full funding of reserve accounts.
(d) During the construction phase, Cimarron Solar is required to construct the project in accordance with the approved construction budget and schedule and to provide periodic independent engineer reports to Prairie Commercial Bank.
4.7 IPO-Related Provisions
The Cimarron Solar Credit Agreement contains IPO-related provisions that are substantially similar to those described in Section 3.7 above with respect to the Mesquite Wind Facility. Cimarron Solar and CB Operating are required to provide notice to Prairie Commercial Bank in connection with the IPO, but no consent is required. Such notice has been prepared but has not yet been delivered to Prairie Commercial Bank, as the offering is currently dormant. The Company intends to deliver such notice in advance of the closing of this offering.
4.8 Events of Default
The Cimarron Solar Credit Agreement contains events of default that are substantially similar to those described in Section 3.8 above with respect to the Mesquite Wind Facility, including, without limitation, failure to achieve commercial operation by the applicable longstop date, payment defaults, covenant breaches, termination or material modification of material project documents, material adverse effects on the project, bankruptcy events, and environmental events. The remedies available to Prairie Commercial Bank upon an event of default under the Cimarron Solar Facility, and the consequences of a default at the project level, are also substantially similar to those described in Section 3.8.
5. Tax-Equity Partnership — Solaris West Portfolio
5.1 Overview and Parties
In June 2020, Solaris West Solar LLC ("Solaris West"), a wholly-owned subsidiary of CB Operating, entered into a tax-equity partnership arrangement (the "Solaris West Tax-Equity Partnership") with Veltara Basin Financial LLC ("Veltara Basin") pursuant to that certain Amended and Restated Limited Liability Company Agreement of Solaris West Solar LLC, dated as of June 30, 2020 (as amended, restated, supplemented, or otherwise modified from time to time, the "Solaris West Partnership Agreement"). Veltara Basin Financial LLC maintains its principal offices at 2029 Century Park East, Suite 1500, Los Angeles, California 90067. The primary contact for matters relating to the Solaris West Tax-Equity Partnership is Karen Fujimoto, Partner, Tax Equity Investments.
Solaris West is the project-level SPV formed for the ownership and operation of the Solaris West project, a 450 MW solar PV energy generation project located in Pecos County, Texas. The Solaris West project achieved commercial operation in the third quarter of 2020 and is currently operating and generating revenue under long-term power purchase agreements.
The Solaris West Tax-Equity Partnership is structured as a partnership-flip arrangement, a structure commonly used in the renewable energy industry to monetize federal income tax benefits, including the Investment Tax Credit ("ITC") under Section 48 of the Internal Revenue Code and accelerated depreciation under the Modified Accelerated Cost Recovery System ("MACRS"). The Solaris West Tax-Equity Partnership is not traditional debt; rather, it is an equity investment by Veltara Basin in Solaris West. However, the Solaris West Tax-Equity Partnership is described in this section because it represents a significant financing obligation and a material component of the Company's total capitalization. The partnership-flip structure creates obligations and restrictions that are economically similar to certain features of debt financing, including preferred return obligations and distribution restrictions.
5.2 Investment Amount
In connection with the formation of the Solaris West Tax-Equity Partnership, Veltara Basin invested a total of $280,000,000 in Solaris West in exchange for its membership interest in Solaris West. The investment was funded in multiple tranches, including an initial funding at the closing of the Solaris West Partnership Agreement and subsequent fundings upon the achievement of specified milestones, including the commercial operation of the Solaris West project. As of December 31, 2021, all tranches of the tax-equity investment had been funded.
5.3 Partnership-Flip Mechanics
The Solaris West Tax-Equity Partnership utilizes a partnership-flip structure in which allocations of tax benefits, income, loss, and cash distributions between CB Operating (through its membership interest in Solaris West) and Veltara Basin change upon the occurrence of a "flip" event. The mechanics of the partnership-flip are summarized below:
Pre-Flip Period. During the pre-flip period, Veltara Basin receives a disproportionate allocation of the tax benefits generated by the Solaris West project, including 99% of the Investment Tax Credits and 99% of the taxable income, losses, and depreciation deductions. Veltara Basin also receives a preferred return on its investment, which is economically equivalent to a fixed annual return on the outstanding invested capital. Cash distributions during the pre-flip period are allocated disproportionately to Veltara Basin to the extent necessary to provide the preferred return. CB Operating receives a relatively small share of the tax benefits and cash distributions during the pre-flip period.
Flip Event. The partnership "flips" upon the earlier of (a) the date on which Veltara Basin has achieved a specified target internal rate of return on its investment (the "Target Return Date"), which the Company currently expects to occur in approximately 2028, or (b) a specified outside date (the "Outside Date") set forth in the Solaris West Partnership Agreement. The flip event is a pre-determined contractual mechanism and does not require any action or consent by either party.
Post-Flip Period. Following the flip event, Veltara Basin's allocation of income, loss, and cash distributions is substantially reduced. In the post-flip period, Veltara Basin receives only 5% of allocations of income, loss, and cash distributions, and CB Operating receives 95%. Additionally, following the flip event, CB Operating has the option (but not the obligation) to purchase Veltara Basin's remaining membership interest in Solaris West at fair market value, thereby acquiring 100% ownership of the Solaris West project. The Company currently expects that it will exercise this purchase option following the flip event.
5.4 Accounting Treatment
The Solaris West Tax-Equity Partnership is accounted for in the Company's consolidated financial statements using the Hypothetical-Liquidation-at-Book-Value ("HLBV") methodology. Under the HLBV methodology, the Company allocates equity in earnings or losses of Solaris West between CB Operating and Veltara Basin based on the amount each member would receive if the partnership were to liquidate all of its assets at their book values and distribute the net proceeds in accordance with the distribution provisions of the Solaris West Partnership Agreement. The use of the HLBV methodology can result in significant period-to-period fluctuations in the Company's reported earnings, as the allocations depend on the book values of the underlying project assets and the specific terms of the distribution waterfall.
For a more detailed discussion of the Company's use of the HLBV methodology and its impact on the Company's consolidated financial statements, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Hypothetical-Liquidation-at-Book-Value Methodology." The HLBV methodology and related disclosures have been the subject of comments from the Staff of the Securities and Exchange Commission in connection with the review of this registration statement.
5.5 ITC Recapture Risk
The Investment Tax Credits claimed in connection with the Solaris West project are subject to recapture under Section 50 of the Internal Revenue Code if certain conditions are not maintained during the applicable five-year recapture period following the date on which the relevant property was placed in service. The recapture period for the Solaris West project is expected to expire in the third quarter of 2025, approximately five years after the project's commercial operation date.
During the recapture period, the Company must ensure that (a) the Solaris West project remains in service and continues to generate electricity, (b) the ownership structure of Solaris West and its assets is not altered in a manner that would constitute a "disposition" or "cessation" under the applicable Treasury Regulations, and (c) the project continues to qualify as "energy property" within the meaning of Section 48 of the Internal Revenue Code. If an ITC recapture event were to occur, the Company would be required to repay a portion of the Investment Tax Credits previously claimed, which could result in a material tax liability and could trigger indemnification obligations under the Solaris West Partnership Agreement.
The Company does not believe that the proposed initial public offering of the Company's common stock constitutes a recapture event with respect to the Investment Tax Credits claimed for the Solaris West project, as the IPO involves the issuance of common stock of Calloway-Briggs Renewables Inc. (the ultimate parent company) and does not directly alter the ownership of Solaris West or its assets. However, out of an abundance of caution, the Company has requested written confirmation from Veltara Basin Financial LLC that the IPO does not constitute or give rise to a recapture event under the Solaris West Partnership Agreement or the Internal Revenue Code. As of the date of this prospectus, such confirmation has been requested but has not yet been obtained, as the offering is currently dormant. See "Risk Factors — Risks Related to Our Business — We may be subject to ITC recapture risk in connection with the Solaris West project."
5.6 IPO-Related Provisions
The Solaris West Partnership Agreement contains provisions requiring the consent of, or notice to, Veltara Basin Financial LLC in connection with certain change-of-control transactions affecting the project entity or its direct or indirect parent entities. The Company has determined that the proposed IPO may trigger one or more of the consent or notice provisions under the Solaris West Partnership Agreement, and accordingly, the Company has drafted a consent request to Veltara Basin seeking (a) consent to the IPO and related transactions, if required, and (b) confirmation that the IPO does not constitute or give rise to an ITC recapture event. As of the date of this prospectus, the consent request has been drafted but has not yet been delivered, as the offering is currently dormant.
5.7 Distribution Restrictions
Distributions from Solaris West to CB Operating are subject to compliance with the Solaris West Partnership Agreement, including the following conditions:
(a) Veltara Basin's preferred return must be current and fully paid before any distributions may be made to CB Operating in excess of CB Operating's minimum distribution allocation;
(b) the Solaris West project must have achieved and maintained minimum performance thresholds, as specified in the Solaris West Partnership Agreement;
(c) certain reserve accounts established under the Solaris West Partnership Agreement must be funded to their required levels; and
(d) no event constituting a "Tax Event" (including an ITC recapture event) or a default under the Solaris West Partnership Agreement may exist or would result from such distribution.
These distribution restrictions may limit the amount of cash flow that the Solaris West project is able to distribute to CB Operating and, ultimately, to the Company. The Company expects that, following the flip event (currently expected in 2028), the distribution restrictions will be substantially relaxed, and CB Operating will be entitled to receive 95% of cash distributions from the Solaris West project. See "Dividend Policy" and "Risk Factors — Risks Related to Our Indebtedness."
6. Summary of Total Indebtedness
The following table summarizes our outstanding indebtedness and financing arrangements as of December 31, 2021:
As of December 31, 2021, the Company's total consolidated indebtedness was approximately $1,710,000,000, inclusive of outstanding borrowings under the corporate-level credit facilities (the Revolving Credit Facility and Term Loan B) and the project-finance construction-to-term facilities (the Mesquite Wind Facility and the Cimarron Solar Facility), as well as accrued interest and fees associated therewith. The tax-equity investment of $280,000,000 by Veltara Basin Financial LLC in the Solaris West Tax-Equity Partnership is included in the Company's total capitalization figure but is not classified as traditional debt; it is accounted for as a non-controlling interest in the Company's consolidated financial statements using the HLBV methodology, as described in Section 5.4 above. The approximately $1.71 billion figure referenced in the introductory paragraph of this section reflects the aggregate of all of the foregoing financing arrangements, including both debt and tax-equity obligations, as presented in the Company's consolidated balance sheet.
Non-Recourse Nature of Project-Finance Facilities. Investors should note that the obligations under the Mesquite Wind Facility and the Cimarron Solar Facility are non-recourse to CBR, CBR Holdings LLC, CB Operating, and their respective subsidiaries other than the applicable project-level SPV. These obligations are ring-fenced at the project SPV level, and the creditors of the project-finance facilities have recourse solely to the assets of the applicable project and the equity interests in the applicable SPV. The project-finance obligations do not constitute obligations of, and are not guaranteed by, the Company or its corporate-level subsidiaries (subject to limited completion guarantees during the construction phase). Accordingly, in the event of a default under either project-finance facility, the lenders may exercise remedies against the assets of the applicable project and the equity interests in the applicable SPV, but they may not seek recourse against the corporate-level assets of CBR, CBR Holdings LLC, or CB Operating.
Conversely, the corporate-level creditors under the Revolving Credit Facility and Term Loan B do not have direct claims against the ring-fenced assets of the project-level SPVs. The corporate-level creditors' recourse with respect to the projects is limited to the equity interests in the project-level SPVs, which are pledged as collateral under the First Lien Credit Agreement but are subject to the prior claims of the project-level creditors with respect to the project assets. This structural arrangement results in the effective structural subordination of the corporate-level creditors to the project-level creditors with respect to the assets of the individual projects.
7. Pro Forma Impact of the O

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