MEMORANDUM
PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
April 28, 2025
TO: Dunmore Energy Holdings Ltd.
Attention: Deepa Rajaram, Chief Financial Officer
Alistair Forde, General Counsel
FROM: Leonard Cross, Specialist Partner, Tax Calderwood & Harkness LLP 425 Lexington Avenue New York, NY 10017
WITH INPUT FROM: Nigel Ashworth, Lead Partner Kincaid & Moreau LLP 68 Fort Street, George Town Grand Cayman KY1-1107 (Cayman Islands Counsel to DEH)
CC: Jennifer Kwon, Responsible Partner, Capital Markets — Calderwood & Harkness LLP Nigel Ashworth — Kincaid & Moreau LLP
MATTER NO.: 1016-00003
RE: Memorandum Regarding Tax-Exempt Status of Dunmore Energy Holdings Ltd. under Cayman Islands Law and Request for Tax Undertaking
This memorandum is a privileged and confidential communication prepared by Calderwood & Harkness LLP for the sole benefit of Dunmore Energy Holdings Ltd. and its officers and directors named herein. It is protected by the attorney-client privilege, the work-product doctrine, and all other applicable privileges. It may not be disclosed to, or relied upon by, any third party without the prior written consent of Calderwood & Harkness LLP.
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I. PURPOSE AND EXECUTIVE SUMMARY
This memorandum has been prepared by Leonard Cross of Calderwood & Harkness LLP, in consultation with Nigel Ashworth of Kincaid & Moreau LLP (Cayman Islands counsel to Dunmore Energy Holdings Ltd.), for the purpose of confirming the current tax-exempt status of Dunmore Energy Holdings Ltd. ("DEH" or the "Company") under the laws of the Cayman Islands. This confirmation is rendered in connection with the proposed issuance of $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032 (the "Notes") by DEH and Dunmore upstream Finance Corp. ("DUFC"), a Delaware corporation and wholly-owned subsidiary of DEH, as co-issuer.
Specifically, this memorandum:
(a) summarizes the applicable Cayman Islands tax framework as it relates to DEH and the proposed issuance of the Notes;
(b) confirms DEH's qualification as a tax-exempt entity under current Cayman Islands law, including its status as an exempted company under the Companies Act (as revised) of the Cayman Islands;
(c) describes the Tax Undertaking mechanism available under the Tax Concessions Act (as revised) of the Cayman Islands, including the statutory basis, duration, scope, and application process for obtaining such an undertaking;
(d) sets forth a recommendation that DEH promptly apply for a Tax Undertaking from the Cayman Islands government for the maximum permissible period of thirty (30) years; and
(e) analyzes the relevance of DEH's tax-exempt status to the Indenture's tax gross-up, additional-amounts, and tax-redemption provisions, as well as to the tax disclosure contained in the Offering Memorandum.
DEH is an exempted company incorporated under the laws of the Cayman Islands, bearing Cayman Registry No. MC-384726, with its registered office at c/o Maples Corporate Services Ltd., PO Box 309, Ugland House, George Town, Grand Cayman KY1-1104. The Company's principal executive offices are located at 14th Floor, Harbour Place Tower, 103 South Church Street, George Town, Grand Cayman KY1-1002.
This memorandum has been prepared by Leonard Cross, Specialist Partner, Tax, of Calderwood & Harkness LLP (425 Lexington Avenue, New York, NY 10017), in consultation with Nigel Ashworth, Lead Partner, of Kincaid & Moreau LLP (68 Fort Street, George Town, Grand Cayman KY1-1107), Cayman Islands counsel to DEH. Calderwood & Harkness LLP serves as U.S. counsel to the Company in connection with the offering of the Notes and related transactions.
This memorandum is intended to support the tax disclosure set forth in the Final Offering Memorandum relating to the Notes and the Indenture covenants relating to additional amounts, tax redemption, and related matters. It should be read in conjunction with the companion U.S. Federal Income Tax Memorandum, the Cayman Law Opinion to be delivered by Kincaid & Moreau LLP at closing, and the Tax Covenant Commentary separately prepared by Leonard Cross of this firm.
II. BACKGROUND ON THE OFFERING AND RELEVANCE OF CAYMAN TAX STATUS
A. The Offering
DEH and DUFC (a Delaware corporation, EIN 93-4728106), as co-issuers, are proposing to issue $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due May 1, 2032. DUFC is a wholly-owned subsidiary of DEH that was formed solely for the purpose of serving as co-issuer of the Notes and has no independent operations, assets, or revenues. The Notes are being placed (i) under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers ("QIBs") within the meaning of Rule 144A, and (ii) under Regulation S of the Securities Act to persons other than U.S. persons in offshore transactions.
The Notes will be issued at an issue price of 98.50% of par, yielding gross proceeds of $837,250,000 and original issue discount ("OID") of $12,750,000 (1.50% of the aggregate principal amount). Interest on the Notes will accrue at a rate of 9.375% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing November 1, 2025. Each semi-annual interest payment will be in the amount of $39,843,750 (calculated on the full $850,000,000 aggregate principal amount).
B. The Guarantors
The Notes will be guaranteed on a senior secured basis by six subsidiaries of DEH (collectively, the "Guarantors"):
(i) Dunmore Nigeria E&P Ltd., a company organized under the laws of the Federal Republic of Nigeria;
(ii) Dunmore Gulf Operations LLC, a limited liability company organized under the laws of the State of Delaware;
(iii) Dunmore Renewables LLC, a limited liability company organized under the laws of the State of Delaware;
(iv) Dunmore Senegal S.A., a société anonyme organized under the laws of the Republic of Senegal;
(v) Dunmore Midstream Holdings Inc., a corporation organized under the laws of the State of Delaware; and
(vi) Dunmore Trading Ltd., a company incorporated under the laws of England and Wales.
C. Trustee, Collateral Agent, and Paying Agent
Northgate Trust Company, N.A. will serve as Trustee and Collateral Agent under the Indenture. Beacon Fiduciary Services LLC, located in New York, New York, will serve as Paying Agent under the Paying Agency Agreement.
D. Use of Proceeds
The net proceeds from the offering of the Notes are expected to be applied as follows:
E. Preliminary Credit Ratings
The Notes have received the following preliminary credit ratings:
• Lodestar Ratings International: B2 / Stable outlook
• Veridian Credit Assessments Inc.: B+ / Stable outlook
The preliminary ratings are subject to confirmation at or prior to pricing and are not a recommendation to buy, sell, or hold the Notes.
F. Closing and Settlement
The closing and settlement date for the Notes is scheduled for May 15, 2025.
G. Relevance of DEH's Cayman Tax Status
DEH's status as a tax-exempt entity under the laws of the Cayman Islands is directly relevant to the offering of the Notes in the following respects:
(i) Withholding and Gross-Up Obligations. The Indenture contains provisions requiring the Issuers to pay "Additional Amounts" to holders of the Notes in the event that any payment of principal, premium (if any), or interest on the Notes is subject to deduction or withholding for or on account of any taxes imposed by the Cayman Islands (or any political subdivision or taxing authority thereof) or any other jurisdiction from or through which payments on the Notes are made. DEH's tax-exempt status under Cayman Islands law, and the proposed Tax Undertaking, are central to the expectation that no such withholding or deduction will be required, and accordingly that the Additional Amounts provisions will not be triggered in respect of Cayman Islands taxes.
(ii) Offering Memorandum Tax Disclosure. The Final Offering Memorandum will include a section on Cayman Islands tax considerations, describing DEH's tax-exempt status, the absence of income, corporate, capital gains, and withholding taxes in the Cayman Islands, and the Tax Undertaking. Accuracy and completeness of this disclosure is essential under applicable securities law standards.
(iii) Tax Redemption. The Indenture permits DEH to redeem the Notes in whole (but not in part) at 100% of principal amount plus accrued and unpaid interest if, as a result of a change in or amendment to the laws of the Cayman Islands (or a change in the official interpretation or application thereof), DEH would become obligated to pay Additional Amounts. The Tax Undertaking materially reduces the likelihood that such a redemption event would occur during the life of the Notes.
For these reasons, confirmation of DEH's Cayman Islands tax-exempt status and the recommendation to obtain a Tax Undertaking are critical components of the overall transaction analysis.
III. CAYMAN ISLANDS TAX FRAMEWORK — OVERVIEW
A. No Income, Corporate, Capital Gains, or Withholding Tax
The Cayman Islands does not currently impose any form of income tax, corporate tax, capital gains tax, or withholding tax on companies incorporated or registered in the jurisdiction. This has been a longstanding and fundamental feature of the Cayman Islands fiscal regime, and it applies equally to exempted companies such as DEH and to ordinary resident companies.
In addition to the foregoing, there is no estate duty, inheritance tax, or gift tax imposed under the laws of the Cayman Islands. No profits tax, value-added tax, sales tax, or use tax is levied in the Cayman Islands. We note that the Cayman Islands government has from time to time introduced certain fees, duties, and levies — including import duties on goods, stamp duty on certain instruments executed in or brought into the Cayman Islands, and various regulatory and licensing fees — but we confirm that none of these constitute an income tax, withholding tax, corporate tax, capital gains tax, or other direct tax on income, profits, or gains. There is no general consumption tax or value-added tax regime in effect in the Cayman Islands as of the date of this memorandum.
As a result of the foregoing, payments of interest, principal, and premium (if any) by DEH on the Notes will not be subject to taxation in the Cayman Islands, and no withholding or deduction for or on account of Cayman Islands taxes will be required on such payments. This conclusion applies regardless of the nationality, residence, or domicile of the holder of the Notes, and regardless of whether the holder is a natural person, corporation, partnership, trust, or other entity.
No Cayman Islands stamp duty is payable on the issuance, transfer, or redemption of the Notes, provided the Notes (and any instruments of transfer relating thereto) are not executed in, brought into, or registered in the Cayman Islands. We have confirmed that this condition will be satisfied in the present transaction: the Indenture is governed by the laws of the State of New York, the Notes will be issued in global form through The Depository Trust Company in New York, and the Paying Agent (Beacon Fiduciary Services LLC) is located in New York, New York. Accordingly, no circumstances exist under which the Notes or related instruments would need to be brought into or registered in the Cayman Islands.
B. Exempted Company Status
DEH is organized as an "exempted company" under the Companies Act (as revised) of the Cayman Islands (the "Companies Act"). The exempted company is a well-established corporate form under Cayman Islands law, specifically designed for entities that conduct their principal business activities outside the Cayman Islands.
Under the Companies Act, an exempted company is not permitted to trade in the Cayman Islands, except in furtherance of its business carried on outside the Cayman Islands. Exempted companies are not subject to the same regulatory, disclosure, and reporting requirements as ordinary resident companies incorporated in the Cayman Islands. Among other benefits, an exempted company is not required to file an annual return of shareholders with the Cayman Islands Registrar of Companies, is permitted to issue bearer shares (subject to applicable anti-money laundering regulations), and may hold directors' meetings outside the Cayman Islands.
The exempted company status provides the statutory foundation for applying for a Tax Undertaking under the Tax Concessions Act (as revised) of the Cayman Islands, which is discussed in detail in Section IV below. Only exempted companies (and certain other categories of entities, such as exempted limited partnerships and exempted trusts) are eligible to apply for and receive a Tax Undertaking.
We have confirmed, in consultation with Nigel Ashworth of Kincaid & Moreau LLP, that DEH has been and continues to be in good standing as an exempted company under the Companies Act. A certificate of good standing was obtained from the Cayman Islands Registrar of Companies as recently as April 22, 2025, and Kincaid & Moreau LLP has verified that all annual fees payable to the Registrar of Companies have been paid in full and that no proceedings are pending or threatened for the striking off or winding up of DEH.
C. No Tax Treaties
The Cayman Islands is not party to any double taxation treaties or tax information exchange agreements that would impose a taxing obligation on DEH or alter the tax treatment of the Notes or payments thereunder. The absence of any such treaties means that there is no treaty-based mechanism by which a foreign government could claim a right to tax payments made by DEH on the Notes at source or require DEH to withhold on such payments on behalf of a foreign taxing jurisdiction.
We note that the Cayman Islands has entered into Tax Information Exchange Agreements ("TIEAs") with a number of jurisdictions, and participates in certain international transparency and information-sharing initiatives, including the following:
• OECD Common Reporting Standard (CRS). The Cayman Islands has adopted the Common Reporting Standard as implemented through the Tax Information Authority Act (as revised) and the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations. Under CRS, certain Cayman Islands financial institutions — including certain investment entities — are required to identify and report information regarding financial accounts held by tax residents of reportable jurisdictions.
• FATCA Intergovernmental Agreement. The Cayman Islands has entered into a Model 1 intergovernmental agreement ("IGA") with the United States for the implementation of the Foreign Account Tax Compliance Act ("FATCA"). Under the IGA, Cayman Islands financial institutions are required to report certain information regarding U.S. account holders to the Cayman Islands Tax Information Authority, which in turn exchanges such information with the U.S. Internal Revenue Service.
It is important to emphasize that neither the CRS reporting obligations nor the FATCA IGA imposes any tax on DEH, creates any withholding obligation with respect to payments on the Notes under Cayman Islands law, or alters DEH's tax-exempt status under Cayman Islands law. The information-reporting obligations arising under CRS and FATCA are addressed separately in the companion Withholding and Reporting Obligations Memorandum and do not affect the conclusions set forth in this memorandum.
IV. TAX UNDERTAKING UNDER CAYMAN ISLANDS LAW
A. Statutory Basis — The Tax Concessions Act (as revised)
The Tax Concessions Act (as revised) of the Cayman Islands (the "Tax Concessions Act") provides the statutory basis for the issuance of a tax undertaking (commonly referred to as a "Tax Undertaking" or "Tax Exemption Undertaking") by the Cayman Islands government to an exempted company.
Under Section 6 of the Tax Concessions Act, the Governor in Cabinet may grant an undertaking to an exempted company (or an exempted limited partnership, trust, or other qualifying entity) providing that, in the event any legislation is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains, or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax shall not be applicable to the exempted company or to any of its operations. The Tax Undertaking also extends to the shares, debentures, notes, and other obligations (including the Notes) of the exempted company, ensuring that such instruments and the payments thereon are likewise exempt from any future taxation.
The Tax Concessions Act has been in force in the Cayman Islands since its original enactment and has been relied upon by a substantial number of exempted companies, including numerous issuers of international debt securities, as a mechanism for obtaining binding assurance regarding the continuation of their tax-exempt status. The Tax Undertaking creates a contractual obligation on the part of the Cayman Islands government and provides a high degree of certainty to issuers and investors.
B. Duration and Scope of the Tax Undertaking
A Tax Undertaking may be granted for a period of up to thirty (30) years from the date of issuance of the undertaking. This is the maximum period permitted under the Tax Concessions Act and represents the standard practice for exempted company issuers of international debt securities.
We recommend that DEH request a Tax Undertaking for the maximum 30-year period. A 30-year Tax Undertaking, if granted, would extend to approximately mid-2055 — well beyond the May 1, 2032 maturity date of the Notes. This would provide full and uninterrupted coverage throughout the entire life of the Notes, including any period during which the Notes may remain outstanding following a failure to redeem or repay at maturity.
The scope of the Tax Undertaking covers the following:
(i) any tax to be levied on profits, income, gains, or appreciations of DEH, howsoever arising;
(ii) any tax in the nature of estate duty or inheritance tax applicable to the shares, debentures, or other obligations (including the Notes) of DEH, whether on their issuance, transfer, or redemption; and
(iii) any withholding or deduction for or on account of tax imposed on payments made by DEH, including payments of interest, principal, and premium (if any) on the Notes.
The Tax Undertaking thus provides comprehensive protection against the imposition of any future direct tax by the Cayman Islands on DEH or on the Notes throughout the term of the undertaking.
C. Application Process
The application for a Tax Undertaking is made to the Cayman Islands Tax Concessions Secretariat (or, more formally, to the Governor in Cabinet through the appropriate ministry responsible for financial services). The application process is well-established and straightforward.
Kincaid & Moreau LLP (Nigel Ashworth) will prepare and submit the application on behalf of DEH. The application should reference DEH's Cayman Registry No. MC-384726 and should be accompanied by the following documents:
(i) a certified copy of the Certificate of Incorporation of DEH;
(ii) the Memorandum and Articles of Association of DEH (as currently in effect);
(iii) a certificate of good standing issued by the Cayman Islands Registrar of Companies; and
(iv) a brief description of DEH's business and the proposed Notes offering, including the aggregate principal amount, maturity date, interest rate, and the identities of the co-issuer and guarantors.
A form of the application letter is attached hereto as Appendix A.
The typical processing time for a Tax Undertaking application is two to four weeks from the date of submission. Nigel Ashworth of Kincaid & Moreau LLP has confirmed that the firm has extensive experience with the application process and has established working relationships with the relevant government officials. Kincaid & Moreau LLP has further confirmed that it can expedite the application and will use its best efforts to secure issuance of the Tax Undertaking no later than May 12, 2025, which is in advance of the anticipated closing date of May 15, 2025.
The filing fee for a Tax Undertaking application is modest, currently ranging from CI$600 to CI$1,000 (approximately US$720 to US$1,200 at current exchange rates). This fee is payable at the time of submission and is non-refundable.
D. Recommendation
Calderwood & Harkness LLP recommends that DEH promptly apply for a Tax Undertaking for the maximum 30-year period under the Tax Concessions Act. We make this recommendation for the following reasons:
First, although there is no current indication that the Cayman Islands government intends to introduce any form of direct taxation — and indeed, the absence of direct taxation has been a central pillar of the Cayman Islands' economic model for decades — the geopolitical and regulatory environment for offshore financial centers continues to evolve. International initiatives, including the OECD's Base Erosion and Profit Shifting ("BEPS") framework and the Pillar Two global minimum tax rules, have placed increasing pressure on jurisdictions that do not impose corporate income taxes. While the Cayman Islands has not announced any plans to implement a domestic corporate income tax or withholding tax regime, obtaining the Tax Undertaking provides contractual certainty that protects DEH and its Noteholders against any such change during the life of the Notes.
Second, the Tax Undertaking is standard practice for Cayman Islands exempted company issuers of international debt securities. Purchasers and investors in the Notes — particularly institutional investors such as qualified institutional buyers — expect that a Cayman Islands issuer will have obtained or will obtain a Tax Undertaking. The absence of a Tax Undertaking could raise concerns among potential investors and could adversely affect the pricing or marketability of the Notes.
Third, the Tax Undertaking will support DEH's representations in the Offering Memorandum and the Indenture regarding the absence of Cayman Islands taxation. It will also provide the factual basis for the tax-related opinions to be delivered by Kincaid & Moreau LLP and Calderwood & Harkness LLP at closing.
Fourth, the cost of obtaining a Tax Undertaking (approximately US$720 to US$1,200 in filing fees, plus Kincaid & Moreau LLP's legal fees for preparation and filing of the application) is negligible in the context of an $850,000,000 offering.
For all of these reasons, we strongly recommend that DEH proceed with the application at the earliest practicable date.
V. INTERACTION WITH INDENTURE PROVISIONS
A. Tax Gross-Up / Additional Amounts
The Indenture (execution version dated May 15, 2025, among DEH, DUFC, the Guarantors, and Northgate Trust Company, N.A., as Trustee and Collateral Agent) contains provisions in Article 4, Section 4.14, requiring the Issuers to pay "Additional Amounts" to holders and beneficial owners of the Notes in the event that any payment of principal, premium (if any), or interest on the Notes is subject to deduction or withholding for or on account of any taxes, duties, assessments, or governmental charges of whatever nature imposed or levied by or on behalf of the Cayman Islands (or any political subdivision or taxing authority thereof or therein), the United States (or any political subdivision or taxing authority thereof or therein), or any other jurisdiction from or through which payments on the Notes are made (each, a "Relevant Taxing Jurisdiction").
Under the Additional Amounts provisions, the Issuers are required to pay such additional amounts as are necessary so that the net amount received by each holder and beneficial owner after any such deduction or withholding (including any deduction or withholding on such additional amounts) equals the amount that would have been received absent such deduction or withholding.
Because the Cayman Islands does not currently impose any withholding tax or other tax on payments of interest, principal, or premium, and in light of the proposed Tax Undertaking (which will provide binding assurance that no such tax will be imposed for a period of up to 30 years), the Additional Amounts provisions are not expected to be triggered with respect to Cayman Islands taxes at any time during the life of the Notes.
The Additional Amounts provisions are subject to standard carve-outs and exceptions, including (without limitation) the following:
(i) taxes that would not have been imposed but for the existence of a present or former connection between the holder (or a fiduciary, settlor, beneficiary, member, or shareholder of the holder, or a person holding a power over an estate or trust administered by a fiduciary holder) and the Relevant Taxing Jurisdiction, other than the mere acquisition, ownership, holding, or disposition of the Notes or the receipt of payments thereunder;
(ii) taxes that are imposed by reason of the holder's failure to comply with applicable certification, identification, information, documentation, or other reporting requirements, including the timely provision of a properly completed IRS Form W-8BEN, W-8BEN-E, W-8ECI, W-8IMY, or W-9 (or any successor form), to the extent required by applicable law or regulation;
(iii) any withholding or deduction imposed under or in connection with FATCA (Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended, and any regulations, guidance, or agreements thereunder, and any intergovernmental agreements implementing FATCA);
(iv) taxes imposed on a holder that is a fiduciary, partnership, limited liability company, or other fiscally transparent entity, to the extent that a beneficiary or settlor with respect to such fiduciary, or a partner or member of such partnership or limited liability company, would not have been entitled to Additional Amounts had such beneficiary, settlor, partner, or member been the direct holder of the Notes;
(v) any backup withholding under Section 3406 of the Internal Revenue Code; and
(vi) any combination of the foregoing.
B. Tax Redemption
The Indenture, at Article 3, Section 3.09, permits DEH to redeem the Notes in whole (but not in part) at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to (but not including) the redemption date, if, as a result of:
(a) a change in, or amendment to, the laws (or any rules or regulations promulgated thereunder) of a Relevant Taxing Jurisdiction (including the Cayman Islands); or
(b) any change in, or amendment to, the official interpretation, administration, or application of such laws, rules, or regulations (including a holding, judgment, or order by a court of competent jurisdiction),
which change or amendment is announced or becomes effective after the date of the Indenture, DEH has become, or would become, obligated to pay Additional Amounts in respect of Cayman Islands taxes (or taxes of any other Relevant Taxing Jurisdiction), and such obligation cannot be avoided by DEH taking reasonable measures available to it (not including any change in jurisdiction of incorporation or organization).
The exercise of the Tax Redemption right is subject to the delivery by DEH to the Trustee of (i) an Officers' Certificate stating that DEH has become, or would become, obligated to pay Additional Amounts as a result of such change or amendment, and (ii) an opinion of independent tax counsel of recognized standing, experienced in such matters, to the effect that the obligation to pay Additional Amounts has arisen or would arise as a result of such change or amendment.
The Tax Undertaking, once obtained, materially reduces the likelihood that a Tax Redemption event would occur during the life of the Notes. Because the Tax Undertaking provides a binding commitment from the Cayman Islands government that no tax on profits, income, gains, or appreciations will be imposed on DEH or on the Notes for a period of up to 30 years, the risk that a change in Cayman Islands tax law would trigger an obligation to pay Additional Amounts is significantly mitigated. However, it should be noted that the Tax Undertaking does not technically prevent the Cayman Islands legislature from enacting new tax legislation — rather, it provides that any such legislation will not be applicable to DEH or the Notes. Accordingly, the Tax Redemption provision provides an additional layer of protection for DEH in the unlikely event that a dispute arises regarding the scope or enforceability of the Tax Undertaking.
C. Offering Memorandum Disclosure
The Final Offering Memorandum (dated May 14, 2025) includes a section entitled "Cayman Islands Tax Considerations" that contains tax disclosure regarding DEH's status under Cayman Islands law. This disclosure states, among other things, that DEH is not currently subject to any income, corporate, capital gains, or withholding tax under the laws of the Cayman Islands, and that the Tax Undertaking has been (or will be) obtained from the Cayman Islands government for a period of up to 30 years.
The Final Offering Memorandum also contains risk-factor disclosure, in the section entitled "Risk Factors — Risks Related to Taxation," that addresses the theoretical possibility of a change in Cayman Islands tax law, notwithstanding the Tax Undertaking. This risk-factor disclosure cross-references the Additional Amounts and Tax Redemption provisions of the Indenture and notes that, in the event a change in Cayman Islands tax law were to result in an obligation to pay Additional Amounts, DEH's financial condition and results of operations could be adversely affected, and DEH would have the right (but not the obligation) to redeem the Notes in whole under the Tax Redemption provision.
We have reviewed drafts of the Cayman Islands tax disclosure and the related risk-factor disclosure in the Offering Memorandum and believe them to be accurate and consistent with the analysis set forth in this memorandum. Any final revisions to such disclosure should be coordinated with Eric Johannsen and Claire Dempsey, who are responsible for the overall Offering Memorandum drafting process.
VI. COORDINATION WITH U.S. TAX ANALYSIS
The companion U.S. Federal Income Tax Memorandum, also prepared by Leonard Cross of Calderwood & Harkness LLP, separately addresses the following matters:
(i) the U.S. federal income tax treatment of the Notes for U.S. holders and non-U.S. holders, including the treatment of the original issue discount of $12,750,000;
(ii) FATCA implications for a Cayman Islands issuer, including DEH's obligations under the Cayman Islands' Model 1 intergovernmental agreement with the United States;
(iii) withholding and reporting obligations under the Internal Revenue Code of 1986, as amended, including the obligations of the Paying Agent (Beacon Fiduciary Services LLC) and the Issuers; and
(iv) IRS Form W-8 requirements for holders of the Notes, including the specific forms and certifications that must be provided by non-U.S. holders to avoid U.S. withholding tax on interest payments.
DEH's Cayman Islands tax-exempt status is relevant to the U.S. federal income tax analysis in several important respects:
(a) Classification as a Foreign Corporation. DEH is classified as a foreign corporation for U.S. federal income tax purposes. As an entity organized under the laws of the Cayman Islands, DEH is not a domestic corporation within the meaning of Section 7701(a)(4) of the Internal Revenue Code. This classification has implications for the application of FATCA, the withholding tax rules under Sections 871 and 881 of the Internal Revenue Code, and the information-reporting rules under Sections 6041 through 6049 of the Internal Revenue Code, all of which are addressed in the companion U.S. Federal Income Tax Memorandum.
(b) No Foreign Tax Credit. The absence of Cayman Islands taxation means that there is no foreign tax credit available to U.S. holders of the Notes under Section 901 of the Internal Revenue Code with respect to Cayman Islands taxes. U.S. holders will not be able to claim a credit or deduction for Cayman Islands taxes because no such taxes are imposed. This simplifies the U.S. tax analysis for U.S. holders but should be disclosed in the Offering Memorandum.
(c) Simplified Withholding Mechanics. Because payments by DEH on the Notes will not be subject to Cayman Islands withholding tax, the withholding mechanics under the Paying Agency Agreement with Beacon Fiduciary Services LLC are simplified. The Paying Agent will need to address only U.S. withholding tax obligations (including FATCA withholding and backup withholding, as applicable) and will not need to account for or remit any Cayman Islands taxes.
With respect to FATCA, DEH has confirmed that it will comply with its FATCA reporting obligations through the Cayman Islands' Model 1 intergovernmental agreement with the United States. Under the Model 1 IGA, DEH (or, more precisely, the Cayman Islands financial institution through which DEH's obligations are reported) is required to identify U.S. account holders and report relevant information to the Cayman Islands Tax Information Authority, which in turn provides such information to the U.S. Internal Revenue Service. DEH's compliance with the Model 1 IGA does not alter its tax-exempt status under Cayman Islands domestic law, and the FATCA reporting obligations do not give rise to any Cayman Islands tax liability.
Similarly, DEH will comply with the Common Reporting Standard ("CRS") as implemented by the Cayman Islands through the Tax Information Authority Act (as revised) and the associated regulations. CRS requires certain Cayman Islands reporting financial institutions to report financial account information relating to account holders who are tax residents of CRS-reportable jurisdictions. As with FATCA, CRS compliance does not impose any Cayman Islands tax on DEH and does not create any Cayman Islands tax liability. The CRS reporting obligations are purely informational in nature and do not alter the conclusions set forth in this memorandum regarding DEH's tax-exempt status.
VII. CONFIRMATION FROM KINCAID & MOREAU LLP
Nigel Ashworth of Kincaid & Moreau LLP, Cayman Islands counsel to DEH, has confirmed orally to the undersigned and will confirm in writing (as part of the Cayman Law Opinion to be delivered at closing) the following:
(a) DEH is duly incorporated and existing in good standing as an exempted company under the Companies Act (as revised) of the Cayman Islands, has full corporate power and authority to carry on its business as presently conducted, and is in compliance with all applicable Cayman Islands legal requirements relating to its organization and continued existence.
(b) Under the current laws of the Cayman Islands, there is no income tax, corporation tax, capital gains tax, withholding tax, or other tax on profits or gains payable by DEH, and no income tax, withholding tax, or other tax is payable in respect of payments of principal, premium (if any), or interest on the Notes. There is no tax in the Cayman Islands in the nature of estate duty, inheritance tax, or gift tax that would apply to the Notes.
(c) The Tax Undertaking, once obtained from the Governor in Cabinet pursuant to the Tax Concessions Act (as revised), will provide binding assurance from the Cayman Islands government that no tax on profits, income, gains, or appreciations, and no tax in the nature of estate duty or inheritance tax, will be applied to DEH or to any shares, debentures, or other obligations (including the Notes) of DEH for the duration of the undertaking. The maximum permissible duration is thirty (30) years from the date of the undertaking.
(d) No Cayman Islands stamp duty will be payable in connection with the issuance, transfer, or redemption of the Notes, or in connection with the enforcement of any rights under the Notes or the Indenture, provided that the Notes and any instruments of transfer relating thereto are not executed in, brought into, or registered in the Cayman Islands. We note that none of the offering documents, including the Indenture, the Notes, and the Paying Agency Agreement, will be executed in the Cayman Islands, and no instruments relating to the Notes will be brought into or registered in the Cayman Islands in the ordinary course of the transaction.
The formal Cayman Law Opinion, to be delivered by Kincaid & Moreau LLP on or before May 15, 2025 (the closing date), will address each of the foregoing matters as part of the closing opinion package. The Cayman Law Opinion will be addressed to DEH, DUFC, the Guarantors, Northgate Trust Company, N.A. (as Trustee and Collateral Agent), the initial purchasers, and such other parties as may be specified in the Opinion Addressee Letter. Calderwood & Harkness LLP will coordinate with Kincaid & Moreau LLP to ensure that the Cayman Law Opinion is consistent with this memorandum and with the tax disclosure in the Final Offering Memorandum.
VIII. ACTION ITEMS AND NEXT STEPS
The following action items should be completed promptly to ensure that the Tax Undertaking and related deliverables are in place on or before the closing date:
1. Tax Undertaking Application — Immediate Action Required
Kincaid & Moreau LLP (Nigel Ashworth) shall prepare and file the Tax Undertaking application with the Cayman Islands government (Tax Concessions Secretariat) at the earliest practicable date, targeting issuance of the Tax Undertaking no later than May 12, 2025 (the anticipated pricing date). Kincaid & Moreau LLP should utilize all available channels to expedite the application and should notify Leonard Cross and Jennifer Kwon immediately if any delays are anticipated.
2. Documentation — Closing Binder
Upon receipt, the Tax Undertaking certificate shall be included in the closing binder as a required transaction document. The Tax Undertaking shall be referenced in the Officers' Certificate and the Secretary's/Director's Certificate to be delivered by DEH at closing. Copies of the Tax Undertaking shall be provided to Northgate Trust Company, N.A. (William Kerrigan), as Trustee, and to Whitfield Baxter & Cohn LLP (Harrison Cates), counsel to the initial purchasers.
3. Offering Memorandum — Final Tax Disclosure
The tax disclosure section of the Final Offering Memorandum (the "Cayman Islands Tax Considerations" section and related risk-factor disclosure) should be reviewed one final time to confirm that it accurately reflects the Cayman Islands tax position described in this memorandum and the expected receipt of the Tax Undertaking. Any necessary revisions or updates should be coordinated with Eric Johannsen and Claire Dempsey, who are responsible for the overall Offering Memorandum drafting process. Leonard Cross will provide final sign-off on the Cayman Islands tax disclosure, and Nigel Ashworth will confirm its accuracy from the perspective of Cayman Islands law.
4. Indenture — Confirmation of Tax Provisions
The Additional Amounts (Section 4.14) and Tax Redemption (Section 3.09) provisions in the execution version of the Indenture should be reviewed against this memorandum's analysis to confirm consistency. The Tax Covenant Commentary prepared by Leonard Cross (circulated separately to the working group on April 22, 2025) provides a detailed section-by-section analysis of these provisions and should be consulted in connection with any final revisions.
5. Closing — Master Closing Checklist
The Tax Undertaking shall be listed on the Master Closing Checklist as a required closing deliverable. The responsible parties are:
• Preparation and Filing: Kincaid & Moreau LLP (Nigel Ashworth)
• Receipt and Verification: Leonard Cross (Calderwood & Harkness LLP)
• Inclusion in Closing Binder: Calderwood & Harkness LLP closing team
• Notification to Trustee: William Kerrigan (Northgate Trust Company, N.A.)
• Notification to Initial Purchasers' Counsel: Harrison Cates (Whitfield Baxter & Cohn LLP)
All parties should be promptly notified of the status of the Tax Undertaking application and the expected date of issuance.
IX. CONCLUSION
Based on our review of applicable Cayman Islands law, in consultation with Kincaid & Moreau LLP, we confirm the following:
1. Tax-Exempt Status. DEH is currently exempt from all forms of taxation in the Cayman Islands, including income tax, corporate tax, capital gains tax, withholding tax, estate duty, inheritance tax, and gift tax. Payments of interest, principal, and premium (if any) on the Notes will not be subject to any Cayman Islands tax, and no withholding or deduction for or on account of Cayman Islands taxes will be required on such payments.
2. Tax Undertaking. The Tax Undertaking, once obtained from the Governor in Cabinet under the Tax Concessions Act (as revised), will provide additional contractual certainty for the benefit of DEH and the holders of the Notes for a period of up to thirty (30) years from the date of issuance. The Tax Undertaking will constitute a binding commitment by the Cayman Islands government that no future legislation imposing tax on profits, income, gains, or appreciations shall apply to DEH or to the Notes.
3. No Pending Changes. There is no current legislative, regulatory, or policy initiative in the Cayman Islands that would alter DEH's tax-exempt status or impose any form of direct taxation on DEH or on payments under the Notes. We will continue to monitor developments in Cayman Islands tax law and policy and will promptly notify DEH if any relevant changes are proposed or announced.
4. Adequacy of Support. This memorandum, together with the Cayman Law Opinion to be delivered by Kincaid & Moreau LLP at closing, provides adequate support for the tax-related representations and covenants in the Indenture (including the Additional Amounts and Tax Redemption provisions) and the tax disclosure in the Final Offering Memorandum.
We are available to discuss this memorandum and the recommended action items with Deepa Rajaram, Alistair Forde, and other members of the DEH team at your convenience. Please do not hesitate to contact the undersigned or Jennifer Kwon with any questions.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Specialist Partner, Tax 425 Lexington Avenue New York, NY 10017 Telephone: (212) 555-4800
Email: leonard.cross@calderwoodharkness.com
Matter No. 1016-00003
APPENDIX A
FORM OF TAX UNDERTAKING APPLICATION
[Date]
The Honourable Governor in Cabinet c/o Tax Concessions Secretariat Government Administration Building George Town, Grand Cayman Cayman Islands
Dear Governor in Cabinet:
Re: Application for Tax Undertaking Pursuant to the Tax Concessions Act (as revised) — Dunmore Energy Holdings Ltd. (Cayman Registry No. MC-384726)
We, Kincaid & Moreau LLP, Cayman Islands attorneys-at-law, write on behalf of our client, Dunmore Energy Holdings Ltd. ("DEH" or the "Company"), an exempted company duly incorporated and existing under the laws of the Cayman Islands, Cayman Registry No. MC-384726, with its registered office at:
c/o Maples Corporate Services Ltd. PO Box 309, Ugland House George Town, Grand Cayman KY1-1104 Cayman Islands
We hereby apply, on behalf of the Company, for an undertaking pursuant to Section 6 of the Tax Concessions Act (as revised) of the Cayman Islands (the "Act"), in the following terms:
That, in the event of any legislation being enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains, or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax shall not be applicable to the Company or to any shares, debentures, or other obligations (including the Notes described below) of the Company, for a period of thirty (30) years from the date of the undertaking.
Description of the Company and its Business
DEH is a Cayman Islands exempted company engaged in the business of oil and gas exploration and production, midstream operations, renewable energy development, and energy trading, conducted through its subsidiaries in multiple jurisdictions including Nigeria, Senegal, the United States, and the United Kingdom. The Company's principal executive offices are located at 14th Floor, Harbour Place Tower, 103 South Church Street, George Town, Grand Cayman KY1-1002. The Company does not trade in the Cayman Islands, except in furtherance of its business carried on outside the Cayman Islands.
Description of the Notes
DEH, together with Dunmore upstream Finance Corp. (a Delaware corporation), as co-issuer, is proposing to issue $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due May 1, 2032 (the "Notes"). The Notes will be offered and sold to qualified institutional buyers under Rule 144A of the U.S. Securities Act of 1933, as amended, and to non-U.S. persons under Regulation S thereunder. The Notes will be governed by an indenture governed by the laws of the State of New York, and the paying agent for the Notes will be located in New York, New York.
Enclosed Documents
In support of this application, we enclose the following:
1. Certified copy of the Certificate of Incorporation of Dunmore Energy Holdings Ltd.;
2. Memorandum and Articles of Association of Dunmore Energy Holdings Ltd. (as currently in effect); and
3. Certificate of Good Standing issued by the Cayman Islands Registrar of Companies, dated [date].
Filing Fee
The applicable filing fee in the amount of CI$[amount] is enclosed herewith.
We respectfully request that the Tax Undertaking be issued at the earliest practicable date, and in any event no later than May 12, 2025, in order to accommodate the anticipated closing date for the Notes offering of May 15, 2025.
We are available to provide any additional information or documentation that may be required in connection with this application.
Yours faithfully,
KINCAID & MOREAU LLP
By: ________
Nigel Ashworth Lead Partner 68 Fort Street George Town, Grand Cayman KY1-1107 Cayman Islands Telephone: +1 (345) 555-2900