1023-00001 · Ironside Capital Management LP · Dormancy/Quarterly Reviews

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

To: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP

From: Theresa Kim, Lead Associate, Funds & Asset Management, Calderwood & Harkness LLP Reviewed by: Pamela Cross, Responsible Partner, Funds & Asset Management, Calderwood & Harkness LLP

Date: July 15, 2024

Re: Review of Meridian Infrastructure GP IV LLC Quarterly Status Report — Q2 2024 (April 1, 2024 – June 30, 2024) — ICM Cascadia Co-Invest, LP

Matter No.: 1023-00001

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I. Executive Summary

This memorandum presents Calderwood & Harkness LLP's ("C&H") review and analysis of the quarterly status report for the second quarter of 2024 (the "Q2 Report") delivered by Meridian Infrastructure GP IV LLC (the "GP") to Ironside Capital Management LP ("Ironside" or the "LP") in its capacity as the sole limited partner holding a 99.99% limited partnership interest in ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest"), a Delaware limited partnership formed under the Delaware Revised Uniform Limited Partnership Act (EIN: 88-3921457; Delaware Secretary of State File No. 7439218).

The Q2 Report was delivered pursuant to Section 7.04 of the Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP, dated July 29, 2022 (the "LP Agreement"), and Section 3 of the Side Letter Agreement between the GP and Ironside, also dated July 29, 2022 (the "Side Letter"). Collectively, these provisions require the GP to furnish quarterly status reports to the LP during any period of dormancy following the declaration of a Material Impediment Event (as defined in the LP Agreement). The Material Impediment Event was formally declared by the GP on November 10, 2022, and dormancy commenced on January 9, 2023 with the suspension of capital calls and investment activity.

This is the sixth quarterly report delivered since dormancy commenced. C&H has prepared prior review memoranda for each of the preceding five quarters: Q1 2023, Q2 2023, Q3 2023, Q4 2023, and Q1 2024. This memorandum should be read in conjunction with those prior reviews, which are maintained in C&H's files under the above-referenced matter number.

Three developments of critical significance are reported or implicated by the Q2 Report:

1. FERC §203 Approval Lapsed. The Federal Energy Regulatory Commission ("FERC") approval under Section 203 of the Federal Power Act, originally granted December 15, 2022 (Docket No. EC22-143-000) and subsequently extended by FERC staff letter, lapsed as of June 15, 2024 because the transaction did not close and no further extension was sought by the parties. A fresh FERC §203 application will be required for any reactivation of the acquisition.

2. Tentative Concession Framework Reached. On June 30, 2024, the Portland Metropolitan Water District and Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") reached a tentative, non-binding framework on revised terms for the Bull Run Filtration Project water-treatment concession—the dispute that gave rise to the Material Impediment Event. The GP characterizes this as the most significant positive development since dormancy commenced.

3. 18-Month Dormancy Mark Reached. On July 9, 2024, the Vehicle reached the 18-month dormancy threshold under LP Agreement §7.04(c), measured from the January 9, 2023 capital-call suspension date. This milestone ripens Ironside's contractual right to elect a wind-down of ICM Cascadia Co-Invest, LP and to be released from its unfunded capital commitment.

Throughout Q2 2024, the Vehicle remained fully dormant. No capital calls were issued, no distributions were made, and no investment activity of any kind occurred. Capital called to date remains at $22,500,000, representing 7.5% of total committed capital, and the unfunded commitment stands at $277,500,000.

The sections that follow present our detailed compliance review of the Q2 Report's delivery and content, a comprehensive summary of the GP's reported information, and C&H's analysis of the key legal and strategic issues arising from this quarter's developments.

II. Compliance Review: Delivery and Format of Q2 Report

A. Timeliness. Section 7.04(b) of the LP Agreement requires the GP to deliver quarterly status reports to the LP within fifteen (15) business days after the end of each calendar quarter during any period of dormancy. For purposes of this calculation, business days exclude Saturdays, Sundays, and federal holidays recognized under the LP Agreement.

The second calendar quarter of 2024 ended on June 30, 2024. Counting forward from July 1, 2024 (the first business day following the quarter-end) and excluding weekends and the Independence Day holiday observed on July 4, 2024, the fifteenth business day falls on approximately July 22, 2024.

The Q2 Report was received by Ironside via electronic delivery (encrypted PDF transmitted to the secure portal designated in the LP Agreement) on July 10, 2024. This is well within the contractual deadline and represents delivery approximately eight (8) business days ahead of the outer limit permitted under §7.04(b).

Conclusion: The Q2 Report was timely delivered. This is consistent with the GP's practice in prior quarters; all six quarterly reports to date have been delivered within the required timeframe.

B. Content Requirements

Section 3(a) of the Side Letter specifies minimum content requirements for quarterly status reports delivered during dormancy. These requirements supplement and particularize the more general reporting obligations set forth in LP Agreement §7.04(b). The Side Letter was negotiated by C&H on Ironside's behalf and is binding on the GP. The five required content areas, and our assessment of the Q2 Report's compliance with each, are as follows:

(i) Status of the Underlying Transaction. The Q2 Report includes a narrative description of the current status of the proposed acquisition of Cascadia, including the status of the Equity Purchase Agreement (as amended), the Mutual Standstill and Preservation Agreement, and the relationship among the transaction parties. This requirement is satisfied.

(ii) Status of Regulatory Approvals and Third-Party Consents. The Q2 Report addresses the status of all three regulatory workstreams: FERC §203, Oregon Public Utility Commission ("OPUC"), and the Committee on Foreign Investment in the United States ("CFIUS"). The report specifically addresses the lapse of FERC §203 approval and the continued stay of OPUC proceedings. This requirement is satisfied.

(iii) Material Developments Affecting the Target. The Q2 Report describes the tentative concession framework reached between the Portland Metropolitan Water District and Cascadia on June 30, 2024, and provides a high-level summary of the key elements of that framework. The report also notes the absence of material litigation, regulatory enforcement actions, or operational disruptions at Cascadia during the quarter. This requirement is satisfied.

(iv) Financial Status of the Vehicle. The Q2 Report includes a capital account summary, a recap of the application of called capital, a summary of dormancy-period expenses for Q2 2024, and confirmation that no investment activity or distributions occurred. This requirement is satisfied.

(v) GP's Assessment of Prospects for Reactivation or Recommendation Regarding Wind-Down. The Q2 Report includes the GP's qualitative assessment that the tentative concession framework is a positive development, acknowledges the significant hurdles to reactivation (FERC lapse and expired financing), and indicates that the GP intends to circulate a detailed reactivation feasibility memorandum. The GP also acknowledges that the 18-month dormancy mark has been reached and that Ironside's wind-down election right has ripened. This requirement is substantially satisfied, though C&H notes that the Q2 Report does not include quantitative reactivation cost estimates, which were specifically requested by Ironside in its letter to the GP dated April 12, 2024. The GP indicated in the Q2 Report that a separate reactivation feasibility memo would follow; that memorandum was subsequently circulated on September 1, 2024 and will be reviewed under separate cover.

Overall Content Compliance Assessment: The Q2 Report is substantially compliant with the content requirements of Side Letter §3(a). All five required content areas are addressed, though the outstanding request for detailed reactivation cost estimates has not yet been fully satisfied in the body of the Q2 Report itself. C&H will continue to monitor the GP's compliance with this request and will review the forthcoming reactivation feasibility memorandum when it is received.

C. Form and Certification

The Q2 Report was signed by David R. Hargreaves, Managing Partner and Co-Founder, Meridian Infrastructure Partners LP, acting on behalf of Meridian Infrastructure GP IV LLC in its capacity as general partner of the Vehicle. Mr. Hargreaves is an authorized signatory of the GP, as confirmed by the incumbency certificate on file with C&H.

The Q2 Report bears a certification statement substantially in the form required by LP Agreement §7.04(b)(ii), which provides that the GP shall certify that the information contained in each quarterly report is accurate and complete in all material respects to the best of the GP's knowledge and belief as of the date of the report. The certification language in the Q2 Report reads as follows:

"The undersigned hereby certifies, on behalf of Meridian Infrastructure GP IV LLC, that the information set forth in this Quarterly Status Report for Q2 2024 is accurate and complete in all material respects to the best of the undersigned's knowledge and belief as of the date hereof."

Conclusion: The Q2 Report complies with the form and certification requirements of LP Agreement §7.04(b)(ii).

III. Summary of GP's Q2 2024 Report Content

Set forth below is a detailed summary of the substantive content of the Q2 Report, organized by subject matter. This section is intended to provide Ironside's investment team with a comprehensive record of the GP's disclosures and representations, supplemented by C&H's observations where relevant.

A. Transaction Status Overview

The GP reports that the proposed acquisition of 100% of the equity interests of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204, remains unconsummated as of the end of Q2 2024. The Vehicle was formed as a single-purpose co-investment vehicle to participate alongside Meridian Infrastructure Partners Fund IV, LP ("Fund IV") in the acquisition.

Target Business Overview. Cascadia's business comprises a portfolio of renewable energy and water infrastructure assets located across the Pacific Northwest, specifically:

• Fourteen (14) hydroelectric facilities located in Oregon, Washington, and Idaho, operating under FERC licenses;

• Six (6) wind farms located in Oregon and Washington, operating under long-term power purchase agreements ("PPAs") with regional utilities;

• Three (3) water-treatment concessions, including the Bull Run Filtration Project concession with the Portland Metropolitan Water District, the Deschutes County Water Treatment Facility concession, and the Boise Metropolitan Water Authority concession.

Cascadia's asset portfolio is underpinned by long-term contractual revenue streams, with PPAs and municipal water-service contracts having a weighted-average remaining life of approximately twenty-two (22) years as of the original transaction date.

Agreed Valuation. The agreed enterprise value for the acquisition is $1,950,000,000 (one billion nine hundred fifty million dollars). Based on Cascadia's audited fiscal year 2021 EBITDA of $138,000,000 and fiscal year 2021 revenue of $487,000,000 (per the audit conducted by Halstead & Greer LLP, Cascadia's independent auditor), this implies an EV/EBITDA multiple of approximately 14.1x.

Equity Purchase Agreement History. The Equity Purchase Agreement (the "EPA") was originally executed on September 15, 2022 by and among Cascadia Acquisition Corp. (as purchaser), the selling shareholders, and Cascadia (as the target company). The EPA has been amended on three occasions:

• First Amendment (November 22, 2022): Modified certain closing conditions and extended interim operating covenants in response to the concession renegotiation notice.

• Second Amendment (March 15, 2023): Further extended the outside closing date and adjusted the escrow and indemnification provisions.

• Third Amendment (June 28, 2023): Extended the outside closing date to December 31, 2023 and introduced additional conditions related to the resolution of the concession dispute.

The outside date of December 31, 2023, established by the Third Amendment, expired without the transaction closing. Notwithstanding the expiration of the outside date, no party has exercised termination rights under the EPA. The parties instead entered into the Mutual Standstill and Preservation Agreement described below.

Mutual Standstill and Preservation Agreement. On February 15, 2024, all parties to the EPA executed a Mutual Standstill and Preservation Agreement (the "Standstill Agreement"). The Standstill Agreement remains in effect as of the date of the Q2 Report. Under the Standstill Agreement, the parties have agreed to (a) preserve the transaction documents and refrain from exercising termination rights during the standstill period, (b) continue ordinary-course operations of the target business, and (c) engage in good-faith discussions regarding either reactivation of the transaction on revised terms or an orderly wind-down. The Standstill Agreement does not impose a fixed termination date but provides for termination by any party upon sixty (60) days' prior written notice.

Co-Investment Structure. The Vehicle's co-investment represents 28.57% of the total equity check for the acquisition, corresponding to $300,000,000 of the $1,050,000,000 aggregate equity commitment. The remaining 71.43% ($750,000,000) is committed by Fund IV. The allocation between Fund IV and the co-invest vehicle is governed by the Co-Investment Allocation Agreement dated July 29, 2022.

Acquisition Subsidiary. The planned acquisition subsidiary, Cascadia Acquisition Corp., a Delaware corporation, has not been funded or activated. The entity was incorporated on August 10, 2022 and remains a shell with nominal capitalization, maintained in good standing in Delaware by Cascade Systems.

B. Regulatory Approvals — Current Status

1. FERC §203 Approval — Lapsed. The acquisition of Cascadia's hydroelectric facilities requires prior approval from FERC under Section 203 of the Federal Power Act (16 U.S.C. §824b), which governs the disposition or acquisition of jurisdictional facilities, including any transfer of FERC hydroelectric licenses.

The GP obtained FERC §203 approval on December 15, 2022, under FERC Docket No. EC22-143-000. The approval was granted on standard terms and was conditioned on the timely filing of license-transfer applications for each of Cascadia's fourteen hydroelectric facilities. The FERC order included an eighteen (18)-month lapse provision, meaning the approval would automatically expire if the transaction did not close within eighteen months of the order date.

As dormancy continued, the GP sought and obtained an extension of the lapse date by means of a FERC staff letter. The extended lapse date was June 15, 2024. The GP reports that the approval lapsed as of June 15, 2024 because the transaction did not close by that date and no further extension request was filed.

Consequence of Lapse. A new FERC §203 application will be required if the transaction is reactivated. Based on precedent and the GP's consultation with its regulatory counsel (Ridgeway, Ashford & Malone PC), the estimated timeline for a fresh filing and approval is six (6) to nine (9) months from the date of submission, assuming no contested proceedings or material changes in FERC policy.

C&H Analysis. The lapse of FERC §203 approval constitutes a material adverse procedural development that adds both time and cost to any reactivation scenario. However, the original application was approved on relatively standard terms without contested proceedings, and there is no reason to believe that a re-filing would produce a different substantive outcome, provided that (a) there has been no material change in FERC's regulatory posture toward transfers of hydroelectric licenses, and (b) the transaction structure remains substantially similar to the original filing. C&H notes that additional filing fees and outside regulatory counsel costs will be incurred in connection with any re-filing, and these costs will need to be allocated between Fund IV and the Vehicle pursuant to the Co-Investment Allocation Agreement.

2. Oregon PUC (OPUC) — Stayed. The acquisition also requires approval from the Oregon Public Utility Commission under Oregon Revised Statutes Chapter 757, given Cascadia's status as the holder of regulated water-treatment concessions in Oregon. The OPUC application was filed on October 14, 2022 and assigned Docket No. UM-2287.

The proceedings have been stayed at the joint request of the transaction parties since February 2023. The GP reports that there was no communication from OPUC during Q2 2024 and no indication that the Commission intends to lift the stay on its own motion (sua sponte).

If the transaction is reactivated, the parties would need to file a joint motion to un-stay the proceedings. Depending on the length of the stay and any intervening developments—including the potential revision of concession terms in connection with the Bull Run Filtration Project—the OPUC may require that the application be updated or supplemented. C&H notes that the tentative concession framework, if finalized, could itself constitute a material change that triggers additional OPUC scrutiny or public notice requirements.

3. CFIUS — Cleared. A voluntary notice was submitted to the Committee on Foreign Investment in the United States in connection with the acquisition. CFIUS acknowledged receipt of the voluntary notice on September 20, 2022. The review concluded without the Committee identifying any unresolved national security concerns. No foreign ownership issues were identified, which is consistent with the domestic ownership structure of both the Meridian fund complex and Ironside.

The CFIUS clearance status is unchanged and does not require renewal. This clearance does not present a reactivation impediment.

C. Material Developments Affecting the Target

1. Concession Renegotiation — Tentative Framework Reached. The concession dispute that precipitated the Material Impediment Event and the Vehicle's dormancy is the most consequential issue bearing on the transaction's viability. The background and current status are summarized below.

Background. On October 28, 2022, the Portland Metropolitan Water District (the "Water District") formally notified Cascadia of its intent to renegotiate the forty (40)-year water-treatment concession for the Bull Run Filtration Project (the "Bull Run Concession"), which was originally executed circa 2018. The Water District's renegotiation demand was prompted by changed regulatory requirements under Oregon Senate Bill 1567 (2022) ("SB 1567"), which imposed new water-quality standards, filtration technology mandates, and compliance-cost-sharing frameworks applicable to public-private water-treatment partnerships in the State of Oregon.

The Bull Run Concession is a significant revenue driver for Cascadia, generating approximately $64,000,000 in annual revenue, which represents approximately 13.1% of Cascadia's fiscal year 2021 total revenue of $487,000,000.

The concession renegotiation demand was identified by the GP as the basis for its November 10, 2022 notification to the LP of a Material Impediment Event under the LP Agreement, and it has been the primary obstacle to the closing of the acquisition since that date.

Tentative Framework. The GP reports that on June 30, 2024, the Water District and Cascadia reached a tentative framework (the "Framework") on revised terms for the Bull Run Concession. The GP characterizes the Framework as non-binding and preliminary, subject to finalization of definitive documentation, approval by the Water District's municipal board, and a public comment period. The key elements of the Framework, as described in the Q2 Report, are as follows:

(i) Reduced Term. The concession term would be reduced from the original forty (40) years to thirty (30) years, measured from the original execution date (i.e., the remaining term from original execution, effectively reducing the concession's residual life by approximately ten years from the perspective of a new acquirer).

(ii) Revised Rate Structure. The rate structure would be revised to incorporate new regulatory compliance costs arising under Oregon SB 1567, including costs associated with enhanced filtration technologies, increased water-quality monitoring requirements, and compliance reporting obligations. The Q2 Report does not specify whether the revised rates are expected to be higher or lower on a net basis to Cascadia, and the GP has indicated that this analysis is pending.

(iii) Partial Risk-Sharing Mechanism on Capital Expenditure Overruns. The Framework contemplates a mechanism under which capital expenditure overruns beyond a specified threshold would be shared between Cascadia and the Water District, rather than borne solely by the concessionaire. The specific threshold and sharing percentages are not disclosed in the Q2 Report.

(iv) Revised Performance Benchmarks. The performance benchmarks against which Cascadia's operation of the Bull Run facility would be measured would be updated to reflect current regulatory standards and operational best practices, as distinct from the benchmarks established in the original 2018 concession agreement.

GP's Characterization. The GP characterizes the tentative Framework as a material positive development that could remove the principal impediment to transaction reactivation. The GP notes, however, that the Framework is preliminary and non-binding, and that significant work remains before definitive terms can be established.

C&H Observation. While the emergence of a tentative framework is indeed a positive development after approximately twenty months of uncertainty, Ironside should approach this development with appropriate caution. Several important considerations warrant attention:

• The Framework is non-binding and subject to multiple approval steps, any one of which could result in material changes or a failure to reach agreement.

• The reduction in concession term from forty to thirty years and the revised rate structure will necessarily affect Cascadia's projected revenue, EBITDA, and net present value, potentially impacting the enterprise value originally agreed at $1.95 billion and the associated 14.1x EV/EBITDA multiple.

• Ironside should request detailed revenue and EBITDA impact projections from the GP and its financial advisor (Blackthorn Advisory Group LLC) once the Framework terms are finalized, and should independently evaluate whether the originally agreed purchase price remains appropriate.

• The capex risk-sharing mechanism may introduce new contingent liabilities or off-balance-sheet obligations that were not contemplated in the original transaction structure.

2. Cascadia Operating Performance. The GP provides limited updated financial information regarding Cascadia's operating performance during Q2 2024. The Q2 Report notes that Cascadia's management team—led by Chief Executive Officer Jonathan M. Weir and Chief Financial Officer Sandra K. Llewellyn—has continued to operate the business in the ordinary course during the standstill period, consistent with the obligations of the selling shareholders under the Standstill Agreement.

The GP reports that there were no material litigation matters, regulatory enforcement actions, or operational disruptions affecting Cascadia during Q2 2024, beyond the previously disclosed concession renegotiation and the regulatory matters described above.

Halstead & Greer LLP continues to serve as Cascadia's independent auditor and tax advisor. The GP did not provide updated audited or unaudited financial statements for Cascadia in the Q2 Report, though C&H notes that the Side Letter §3(a)(iv) requires reporting on the financial status of the Vehicle (which was provided) rather than the Target per se. Ironside may wish to request updated Target financials as part of its information request to the GP in connection with any reactivation assessment.

D. Financial Status of the Vehicle

1. Capital Account Summary. The GP reports the following capital account summary for ICM Cascadia Co-Invest, LP as of June 30, 2024:

The single capital call of $22,500,000 was issued on August 15, 2022, prior to the declaration of the Material Impediment Event. Capital call suspension has been in effect since January 9, 2023. No capital calls were issued during Q2 2024, and none have been issued during the entire dormancy period.

2. Application of Called Capital (Recap). The GP provides a recap of the application of the $22,500,000 in called capital, consistent with the breakdown reported in prior quarters:

This breakdown is unchanged from prior quarters. The due-diligence costs and deposits of $12,790,000 include legal fees, accounting and tax advisory fees, technical and environmental consultants' fees, regulatory filing fees, and earnest-money deposits associated with the transaction.

3. Dormancy Period Expenses. The GP reports that the annualized dormancy operating expenses of the Vehicle are estimated at approximately $185,000 per year. These expenses consist of:

• Fund administration services provided by Kendrick Thorne & Associates LLP;

• Delaware registered agent maintenance through Cascade Systems;

• Delaware franchise tax;

• Annual audit of the Vehicle's financial statements; and

• Preparation and delivery of Schedule K-1 to the LP.

For Q2 2024, the GP reports quarterly dormancy expenses of approximately $46,000, which is roughly consistent with one-quarter of the annualized estimate.

Cumulative dormancy expenses from January 9, 2023 through June 30, 2024 (approximately eighteen months) are estimated at approximately $277,500, though the Q2 Report does not provide a precise cumulative figure. C&H estimates the cumulative amount based on six quarters of dormancy at approximately $46,000 per quarter.

No distributions were made during Q2 2024, and no distributions have been made since the Vehicle's formation.

4. No Investment Activity. The GP confirms that no capital has been deployed by the Vehicle. There have been no acquisitions, dispositions, or other investment activity of any kind. The Vehicle's assets consist solely of cash (the working-capital reserve less cumulative dormancy expenses), held in the Vehicle's account at Atlas National Bank, N.A.

E. Status of Key Transaction Documents and Insurance

1. Equity Purchase Agreement and Standstill. As noted above, the EPA (as amended through the Third Amendment) has an expired outside date of December 31, 2023. No party has exercised termination rights under the EPA, and the Mutual Standstill and Preservation Agreement, executed February 15, 2024, remains in full force and effect.

The counterparties to the EPA on the sell side are:

• Timberline Growth Equity Fund III, LP — majority selling shareholder, holding 62% of Cascadia's equity. Hugh Callister is the managing partner of Timberline Growth Partners LLC, the general partner of Timberline Growth Equity Fund III.

• Weir Family Trust — selling shareholder, holding 18% of Cascadia's equity. Jonathan M. Weir (Cascadia's CEO) is a trustee and beneficiary of the trust.

• Management Rollover Pool — collective selling shareholder group, holding 20% of Cascadia's equity, with an expected 50% rollover of their equity interest into the post-closing acquisition structure (i.e., approximately 10% of pre-closing equity rolling over).

The Standstill Agreement does not amend the EPA but rather preserves the transaction documents in their current state and establishes a framework for either reactivation or orderly wind-down. Termination requires sixty (60) days' prior written notice from any party.

2. Debt Commitment Letter — Expired. The debt financing for the acquisition was to be provided under a commitment letter dated August 30, 2022, pursuant to which:

• Atlas National Bank, N.A. (as lead arranger) committed to provide $650,000,000 of the $975,000,000 senior secured term loan facility; and

• Pinnacle Credit Partners LLC committed to provide the remaining $325,000,000.

In addition, a $150,000,000 revolving credit facility was committed by Atlas National Bank. The original commitment letter had a specified expiration date, which was extended once (with an extension fee of $2,437,500 paid by Fund IV) to October 31, 2023. The commitment letter, including both the term loan and revolving credit facility commitments, expired on October 31, 2023 without further extension.

No replacement or refreshed debt financing has been arranged. Any reactivation of the transaction would require the negotiation of a new debt commitment, potentially with Atlas National Bank and Pinnacle Credit Partners or with new lenders. The GP acknowledges in the Q2 Report that current debt market conditions have evolved materially since August 2022, and that interest rate environment and credit spread changes may result in terms that differ significantly from the original commitment.

3. R&W Insurance. Northgate Specialty Insurance Co. issued a representations and warranties insurance policy (Policy No. NSW-RI-2022-09814) with a coverage limit of $195,000,000. The premium deposit of $4,875,000 was funded from the initial capital call. The policy was bound on September 1, 2022.

Due to the dormancy, Northgate and the insured parties entered into a tolling side letter dated January 20, 2023, which tolled the coverage period of the R&W policy pending resolution of the dormancy. The GP confirms that the tolling side letter remains in effect as of the date of the Q2 Report and that Northgate has not given notice of termination or non-renewal of the tolling arrangement.

C&H Note. The tolling arrangement has now been in effect for approximately eighteen (18) months, which is an extended period by market standards for R&W insurance tolling. While Northgate has not signaled any intent to terminate the tolling, there is an inherent risk that Northgate may seek to (a) impose an additional premium for the continued tolling period, (b) revise the policy terms, conditions, or exclusions to reflect changed circumstances, or (c) decline to continue tolling indefinitely and impose a sunset date. Ironside should seek confirmation from the GP regarding Northgate's current posture and any communications between Northgate and the Meridian team regarding the tolling arrangement's duration. Additionally, if the transaction is ultimately unwound rather than reactivated, the $4,875,000 premium deposit may be partially or wholly non-recoverable, depending on the terms of the policy and tolling side letter. This amount should be factored into any wind-down recovery analysis.

4. D&O Tail Policy. A directors' and officers' liability insurance tail policy was arranged with Sentinel Directors & Officers Underwriters Inc. for the benefit of Cascadia's management team in connection with the anticipated change of control. This D&O tail policy remains in standby status pursuant to the standstill arrangements. No claims have been made under the policy, and the standby status does not impose material ongoing costs on the Vehicle.

F. GP's Assessment and Forward-Looking Statements

The Q2 Report includes the GP's forward-looking assessment of the Vehicle's prospects, as required by Side Letter §3(a)(v). The key elements of the GP's assessment are as follows:

Positive Development. The GP characterizes the tentative concession framework reached on June 30, 2024 as the most significant positive development since dormancy commenced on January 9, 2023. The GP views the Framework as a potential path to removing the principal impediment to transaction reactivation, which has been the unresolved concession dispute.

Reactivation Feasibility Evaluation. The GP indicates that it is actively evaluating the feasibility of reactivating the transaction and intends to circulate a detailed reactivation feasibility memorandum to co-investors, including Ironside, in the near term. This memorandum was subsequently circulated on September 1, 2024 and will be the subject of a separate C&H review.

Acknowledged Hurdles. The GP acknowledges that the lapse of FERC §203 approval and the need for fresh debt financing represent significant hurdles to reactivation, even assuming the concession dispute is fully resolved. The GP estimates that the combined timeline for obtaining fresh FERC approval and arranging new debt financing could extend the reactivation process by nine to twelve months from the date of a reactivation decision.

Wind-Down Election Right. The GP acknowledges that the 18-month dormancy mark under LP Agreement §7.04(c) was reached on July 9, 2024 (being 18 months from the January 9, 2023 capital-call suspension date), thereby ripening Ironside's wind-down election right. The GP requests that Ironside engage in dialogue with the GP before making any election, in order to allow the GP to present its reactivation analysis and explore whether a path forward exists that serves the interests of all stakeholders.

IV. C&H Analysis: Key Issues for Ironside

Based on our review of the Q2 Report and the relevant transaction documents, C&H has identified the following key issues for Ironside's consideration. Each is discussed in detail below.

A. 18-Month Wind-Down Election Right (LP Agreement §7.04(c))

The 18-month dormancy threshold established in LP Agreement §7.04(c) was reached on July 9, 2024, calculated as eighteen (18) months from the January 9, 2023 date on which the GP suspended capital calls and declared the Vehicle dormant following the Material Impediment Event.

Under §7.04(c), once the 18-month dormancy threshold has been reached and has not been cured or waived, the LP has the right to elect a wind-down of the Vehicle by delivering written notice to the GP. The specific mechanics of the wind-down election are set forth in §7.04(c)(i)–(iv) of the LP Agreement and include the following principal consequences:

• Release of Unfunded Commitment. The LP's unfunded capital commitment ($277,500,000) would be released, and the GP would have no further right to call capital from the LP.

• Distribution of Remaining Assets. The GP would be required to distribute the Vehicle's remaining assets to the partners, net of all outstanding expenses, obligations, and reserves for contingent liabilities, in accordance with the distribution waterfall set forth in Article VIII of the LP Agreement.

• Orderly Dissolution. The GP would be responsible for conducting an orderly wind-down of the Vehicle's affairs, including the filing of a certificate of cancellation with the Delaware Secretary of State and the completion of all tax reporting obligations.

As a practical matter, the remaining assets available for distribution would consist primarily of the residual cash from the working-capital reserve ($3,500,000 less cumulative dormancy expenses of approximately $277,500, or approximately $3,222,500), net of any wind-down expenses (legal, accounting, and dissolution costs).

Ironside should note that the wind-down election, once exercised, is irrevocable under the LP Agreement. Accordingly, the decision to exercise the election should be made only after careful consideration of the strategic alternatives.

C&H is preparing a separate detailed memorandum analyzing the procedural requirements, mechanics, and strategic considerations of the wind-down election right, including (a) the notice requirements and form of election notice, (b) the estimated timeline and costs of wind-down, (c) the treatment of the R&W insurance premium deposit and other sunk costs, and (d) the interaction between a wind-down election and the Standstill Agreement. This memorandum is targeted for circulation during the week of July 22, 2024.

Key Strategic Consideration. The timing of the tentative concession framework (June 30, 2024) creates a significant tension between exercising the wind-down right and deferring to assess whether the transaction can be viably reactivated on terms acceptable to Ironside. On the one hand, continued dormancy imposes ongoing costs (estimated at approximately $185,000 per year in dormancy operating expenses) and maintains the overhang of Ironside's $277,500,000 unfunded commitment, which may affect Ironside's ability to deploy capital elsewhere. On the other hand, if the concession dispute is resolved on acceptable terms and the transaction closes, the co-investment could generate meaningful returns on the $300,000,000 commitment. The irreversibility of the wind-down election underscores the importance of a measured approach.

B. FERC §203 Lapse — Reactivation Implications

The lapse of the FERC §203 approval on June 15, 2024 is a material procedural setback for any reactivation scenario. The key implications are as follows:

• A new FERC §203 application under Section 203 of the Federal Power Act will be required. The prior FERC Docket No. EC22-143-000 is now closed.

• Based on precedent and the GP's regulatory counsel's estimate, the timeline for a fresh filing and approval is six (6) to nine (9) months from the date of submission. This timeline assumes an uncontested proceeding; if any party intervenes or if FERC raises sua sponte concerns, the timeline could extend significantly.

• The original approval was conditioned on the filing of license-transfer applications for each of Cascadia's fourteen (14) hydroelectric facilities. The same or similar conditions would likely be imposed in connection with a new approval.

• Additional filing fees and outside counsel costs will be incurred. Regulatory filing fees for FERC §203 applications are currently assessed based on the value of the jurisdictional facilities being transferred. Outside regulatory counsel fees (Ridgeway, Ashford & Malone PC represented the applicants in the original filing) will also be incurred.

• Under the Co-Investment Allocation Agreement, the costs of reactivation—including regulatory re-filing costs—should be allocated between Fund IV (71.43%) and the Vehicle (28.57%). Ironside should confirm the allocation methodology with the GP and ensure that any cost-sharing arrangement is clearly documented before reactivation expenses are incurred.

C. Financing Refresh Requirement

The expiration of the debt commitment letter on October 31, 2023 means that no committed financing currently exists for the acquisition. The original capital structure contemplated a $975,000,000 senior secured term loan facility and a $150,000,000 revolving credit facility, representing a total debt quantum of $1,125,000,000 against an enterprise value of $1,950,000,000 (implying a loan-to-value ratio of approximately 57.7%).

Any reactivation would require the negotiation of a new debt commitment, potentially with Atlas National Bank, N.A. and Pinnacle Credit Partners LLC (the original committed lenders) or with new lenders. Several factors make the financing refresh a significant hurdle:

• The interest rate environment has changed materially since August 2022. The federal funds target rate has increased substantially, and credit spreads in the infrastructure lending market have widened for long-duration project finance assets.

• The terms of any new commitment—including pricing, covenants, amortization schedule, and commitment fees—may be materially different from the original commitment, potentially affecting the transaction's returns and the equity check required.

• The extension fee of $2,437,500 paid by Fund IV to extend the original commitment (from its initial expiration to October 31, 2023) was borne entirely by Fund IV. The allocation of new financing costs in a reactivation scenario should be clarified, as these costs may be substantial and may include arranger fees, syndication fees, and legal fees in addition to any commitment or ticking fees.

• If the concession terms change materially (as contemplated by the Framework), lenders may require updated projections and collateral analysis, which would add time and cost to the financing process.

D. Concession Framework — Valuation Impact

The tentative concession framework involves potentially significant changes to the economics of the Bull Run Filtration Project, which is Cascadia's single largest water-treatment concession and a meaningful contributor to overall enterprise value. The key valuation considerations are as follows:

• The Bull Run Concession generates approximately $64,000,000 in annual revenue, representing approximately 13.1% of Cascadia's FY 2021 total revenue of $487,000,000. The concession's contribution to EBITDA is likely proportionally significant, though the precise margin profile is not disclosed in the Q2 Report.

• A reduction in concession term from forty to thirty years reduces the remaining revenue runway and, all else being equal, would reduce the net present value of the concession cash flows.

• A revised rate structure incorporating new regulatory compliance costs under SB 1567 could either increase or decrease net revenue to Cascadia, depending on whether the revised rates fully pass through compliance costs to the Water District's ratepayers or impose a net cost burden on the concessionaire.

• The capex risk-sharing mechanism introduces a new contingent cost element that was not present in the original concession. While the mechanism may limit downside exposure to capital expenditure overruns, it also introduces complexity and potential for disputes.

• Any material reduction in the projected value of the Bull Run Concession could affect the enterprise value originally agreed at $1,950,000,000 and the implied 14.1x EV/EBITDA multiple. Ironside should consider whether a renegotiation of the purchase price is warranted and whether the GP intends to seek a price adjustment from the sellers.

Recommendation. Ironside should request that Meridian and its financial advisor, Blackthorn Advisory Group LLC, provide an updated valuation analysis reflecting the revised concession terms before Ironside commits to any reactivation of the co-investment. This analysis should include, at a minimum, (a) updated revenue and EBITDA projections for the Bull Run Concession under the revised terms, (b) a revised discounted cash flow analysis for the overall Cascadia enterprise, and (c) sensitivity analyses reflecting different assumptions regarding the rate structure, capex risk-sharing, and concession term.

E. R&W Insurance Tolling — Continuation Risk

The R&W insurance policy issued by Northgate Specialty Insurance Co. has been tolled since January 20, 2023, a period of approximately eighteen (18) months as of the end of Q2 2024. While the GP reports that Northgate has not given notice of termination or non-renewal, the extended duration of the tolling creates several risks:

• Premium Adjustment Risk. Northgate may seek to impose an additional premium for the continued tolling period, reflecting the increased underwriting risk associated with the passage of time and changed circumstances. R&W insurance premiums are typically calculated at the time of binding based on the anticipated closing timeline; an eighteen-month (and potentially longer) tolling period is well outside the typical range.

• Policy Term Revision Risk. Northgate may seek to revise the policy terms, conditions, or exclusions to reflect developments that have occurred since the policy was bound, including the concession renegotiation, the FERC lapse, and any changes in Cascadia's financial condition or operations.

• Tolling Sunset Risk. Even in the absence of an affirmative termination notice, Northgate may seek to impose a sunset date on the tolling arrangement, after which the policy would either lapse or the coverage period would recommence regardless of whether the transaction has closed.

• Sunk Cost Risk. If the transaction is ultimately unwound, the $4,875,000 premium deposit is potentially non-recoverable, depending on the terms of the policy and tolling side letter. Ironside should factor this amount into any wind-down recovery analysis.

If reactivation occurs, C&H recommends that the existing policy terms—including the $195,000,000 coverage limit, the scope of representations and warranties covered, and the exclusions—be re-evaluated in light of the passage of time and changed circumstances, including any revisions to the concession terms and updated Cascadia financial information.

F. OPUC Proceedings

OPUC Docket No. UM-2287 proceedings remain stayed. The stay has been in effect since February 2023, approximately seventeen months. If the transaction is reactivated, the parties would need to file a joint motion to un-stay the proceedings. Given the lengthy duration of the stay, the OPUC may require:

• An updated or supplemental application reflecting changed circumstances;

• Additional public notice and comment periods;

• Review of any revised concession terms arising from the Framework, to the extent those terms affect the regulated aspects of Cascadia's operations in Oregon.

The timeline for OPUC review following un-staying is difficult to predict with precision but could add several months to the reactivation timeline. C&H will coordinate with Meridian's regulatory counsel to assess the OPUC timeline if reactivation is pursued.

V. Status Summary Table

The following table summarizes the status of key items as of June 30, 2024, compared to the prior quarter:

VI. Recommendations

Based on our review of the Q2 Report and analysis of the key issues identified above, C&H makes the following recommendations:

1. Wind-Down Election — Defer for Limited Period. C&H recommends that Ironside defer exercise of the wind-down election right under LP Agreement §7.04(c) for a limited period, in order to assess the implications of the tentative concession framework and to review the GP's forthcoming reactivation feasibility memorandum. The wind-down election right, once ripened, does not expire under the LP Agreement (it remains exercisable at any time during dormancy after the 18-month mark), so there is no urgency to exercise immediately. However, Ironside should establish an internal deadline by which a final decision will be made, taking into account the opportunity cost of continued commitment overhang and dormancy expenses. A separate strategic options memorandum analyzing the wind-down election in detail will follow, targeted for the week of July 22, 2024.

2. Information Requests. C&H recommends that Ironside deliver a formal information request to the GP, pursuant to its information rights under LP Agreement §7.02 and Side Letter §3(b), requesting the following:

(a) Detailed terms of the tentative concession framework, including the full text of any term sheet, memorandum of understanding, or other written documentation reflecting the framework agreement between the Water District and Cascadia;

(b) Updated Cascadia financial projections and valuation analysis from Blackthorn Advisory Group LLC, reflecting the impact of the revised concession terms on revenue, EBITDA, and enterprise value;

(c) Preliminary reactivation cost estimates, including estimated costs and timelines for (i) a fresh FERC §203 application, (ii) new debt financing (including arranger fees, legal costs, and any commitment or ticking fees), and (iii) un-staying and completing the OPUC proceedings;

(d) Confirmation from Northgate Specialty Insurance Co. regarding the continued effectiveness of the tolling arrangement, any anticipated premium adjustments, and any proposed changes to policy terms or conditions.

C&H will prepare a draft information request letter for Ironside's review and approval.

3. Deadline Monitoring. C&H will continue to actively monitor all relevant deadlines and dates, including (a) the wind-down election window, (b) any termination or notice deadlines under the Standstill Agreement (sixty-day notice period), (c) the status of the R&W insurance tolling arrangement, and (d) regulatory matters, including any developments at FERC or OPUC. C&H will promptly advise Ironside of any date-sensitive developments.

4. Reactivation Preparedness. In parallel with the foregoing, C&H will prepare (a) a reactivation conditions checklist identifying all legal, regulatory, and documentary steps, approvals, and amendments that would be required if the decision is made to reactivate the transaction, and (b) a parallel wind-down analysis setting forth the mechanics and expected recovery of invested capital in a wind-down scenario, including the treatment of the R&W premium deposit, due-diligence costs, and other sunk costs. These analyses will enable Ironside to make a fully informed decision between the two paths once sufficient information is available.

VII. Limitations and Privilege Notice

This memorandum has been prepared by Calderwood & Harkness LLP for the sole use of Ironside Capital Management LP and its authorized personnel. It is protected by the attorney-client privilege and constitutes attorney work product under applicable law. This memorandum should not be disclosed to any third party, including the GP, other co-investors, or any regulatory authority, without the prior written consent of Calderwood & Harkness LLP. Disclosure to unauthorized third parties may result in a waiver of applicable privileges.

The analysis set forth herein is based on the Q2 2024 quarterly status report received from the GP on July 10, 2024, as well as the LP Agreement (dated July 29, 2022), the Side Letter (dated July 29, 2022), the EPA (dated September 15, 2022, as amended), the Mutual Standstill and Preservation Agreement (dated February 15, 2024), the Co-Investment Allocation Agreement (dated July 29, 2022), and other transaction documents maintained in C&H's files under Matter No. 1023-00001.

C&H has not independently verified the factual statements, financial data, or representations contained in the GP's quarterly report. Our analysis relies on the accuracy and completeness of the information provided by the GP in that report and in the GP's certifications. To the extent that any factual statements in the Q2 Report prove to be inaccurate or incomplete, the conclusions in this memorandum may need to be revised.

This memorandum does not constitute legal advice on matters outside the scope of C&H's engagement under Matter No. 1023-00001, including but not limited to tax advice, investment advice, or regulatory filings. Ironside should consult with its tax advisors, investment professionals, and other counsel as appropriate with respect to matters outside the scope of this engagement.

VIII. Signature block

We are available to discuss the contents of this memorandum and the recommendations set forth herein at your convenience. Please do not hesitate to contact us with any questions.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Theresa Kim Lead Associate, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, NY 10004 Direct: (212) 555-4823 tkim@calderwoodharkness.com

Reviewed and approved by:

________________________________________

Pamela Cross Responsible Partner, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, NY 10004 Direct: (212) 555-4110 pcross@calderwoodharkness.com

Appendix A: Key Transaction Parties Reference

Appendix B: Timeline of Key Events (Abbreviated)

This memorandum is protected by the attorney-client privilege and attorney work product doctrine. It has been prepared by Calderwood & Harkness LLP solely for the use of Ironside Capital Management LP and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Matter No. 1023-00001.

Item	Amount	Percentage
Total Committed Capital	$300,000,000	100.00%
GP Commitment	$30,000	0.01%
LP Commitment (Ironside)	$299,970,000	99.99%
Capital Called to Date	$22,500,000	7.50%
Unfunded Commitment	$277,500,000	92.50%
Expense Category	Amount
Organizational expenses	$285,000
Placement-agent fee (Rivermark Capital Markets Inc., 0.35% × $300M)	$1,050,000
R&W insurance premium deposit (Northgate Specialty Insurance Co., Policy No. NSW-RI-2022-09814; 2.5% × $195M coverage limit)	$4,875,000
Due-diligence costs and deposits	$12,790,000
Working-capital reserve	$3,500,000
Total	$22,500,000
Item	Status as of June 30, 2024	Prior Quarter Status (Q1 2024)	Change
EPA / Standstill	EPA outside date expired Dec. 31, 2023; Standstill in effect (executed Feb. 15, 2024)	EPA outside date expired; Standstill in effect	No change
FERC §203	Lapsed as of June 15, 2024	Extended to June 15, 2024; approval in effect	Adverse change — approval lapsed
OPUC (Docket UM-2287)	Stayed since Feb. 2023; no OPUC communication	Stayed; no OPUC communication	No change
CFIUS	Cleared; no further action	Cleared; no further action	No change
Debt Commitment	Expired Oct. 31, 2023; no replacement	Expired; no replacement	No change
R&W Insurance (Northgate)	Policy bound; tolling in effect since Jan. 20, 2023; no termination notice	Tolling in effect; no termination notice	No change
D&O Tail (Sentinel)	Standby status per standstill	Standby status	No change
Capital Called / Unfunded	$22.5M called / $277.5M unfunded	$22.5M / $277.5M	No change
Dormancy Duration	~18 months (Jan. 9, 2023 – June 30, 2024)	~15 months	Increased by ~3 months
Wind-Down Election Right	Ripened as of July 9, 2024	Not yet ripened (18-month threshold not reached)	Material change — right now exercisable
Concession Renegotiation	Tentative framework reached June 30, 2024 (non-binding)	Ongoing negotiations; no agreement	Positive development

GP Reactivation Assessment	Evaluating reactivation; feasibility memo forthcoming	Monitoring; no reactivation recommendation	Updated — more active posture
Party	Role	Contact / Key Person
Ironside Capital Management LP	LP / co-investor (99.99% interest in ICM Co-Invest)	Marcus J. Calloway, Founder & CIO; Renata Obasi, Senior MD, Infrastructure
ICM Cascadia Co-Invest, LP	Co-investment vehicle (Delaware LP)	— (managed by GP)
Meridian Infrastructure GP IV LLC	General partner of ICM Co-Invest (0.01% interest)	David R. Hargreaves, Managing Partner & Co-Founder
Meridian Infrastructure Partners Fund IV, LP	Sponsor / co-investor (71.43% of total equity)	David R. Hargreaves; fund counsel: Breckenridge Sloane & Pratt LLP
Cascadia Renewables Holdings, Inc.	Target company (Oregon corporation)	Jonathan M. Weir, CEO; Sandra K. Llewellyn, CFO
Cascadia Acquisition Corp.	Acquisition subsidiary (Delaware corporation; unfunded shell)	—
Timberline Growth Equity Fund III, LP	Majority selling shareholder (62% of CRH equity)	Hugh Callister, Managing Partner, Timberline Growth Partners LLC
Weir Family Trust	Selling shareholder (18% of CRH equity)	Jonathan M. Weir, Trustee
Management Rollover Pool	Selling shareholder / rollover (20% of CRH equity; 50% expected rollover)	Various Cascadia management members
Atlas National Bank, N.A.	Lead arranger (expired $650M term loan commitment; $150M RCF commitment)	—
Pinnacle Credit Partners LLC	Co-lender (expired $325M term loan commitment)	—
Northgate Specialty Insurance Co.	R&W insurer (Policy No. NSW-RI-2022-09814; $195M coverage; tolled)	—
Sentinel Directors & Officers Underwriters Inc.	D&O tail insurer (standby status)	—
Rivermark Capital Markets Inc.	Placement agent (fee: $1,050,000)	—
Kendrick Thorne & Associates LLP	Fund administrator for ICM Co-Invest	—
Cascade Systems	Delaware registered agent	—
Halstead & Greer LLP	Independent auditor and tax advisor for Cascadia	—
Blackthorn Advisory Group LLC	Financial advisor to Meridian	—
Calderwood & Harkness LLP	Counsel to Ironside Capital Management LP	Pamela Cross, Partner; Theresa Kim, Lead Associate
Breckenridge Sloane & Pratt LLP	Counsel to Meridian Infrastructure Partners	—
Ridgeway, Ashford & Malone PC	Regulatory counsel (FERC/OPUC) to transaction parties	—
Garvey Lennox LLP	Counsel to selling shareholders (Timberline / Weir Family Trust)	—
Date	Event

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
To: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP
From: Theresa Kim, Lead Associate, Funds & Asset Management, Calderwood & Harkness LLP Reviewed by: Pamela Cross, Responsible Partner, Funds & Asset Management, Calderwood & Harkness LLP
Date: July 15, 2024
Re: Review of Meridian Infrastructure GP IV LLC Quarterly Status Report — Q2 2024 (April 1, 2024 – June 30, 2024) — ICM Cascadia Co-Invest, LP
Matter No.: 1023-00001
Right-click to update Table of Contents
I. Executive Summary
This memorandum presents Calderwood & Harkness LLP's ("C&H") review and analysis of the quarterly status report for the second quarter of 2024 (the "Q2 Report") delivered by Meridian Infrastructure GP IV LLC (the "GP") to Ironside Capital Management LP ("Ironside" or the "LP") in its capacity as the sole limited partner holding a 99.99% limited partnership interest in ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest"), a Delaware limited partnership formed under the Delaware Revised Uniform Limited Partnership Act (EIN: 88-3921457; Delaware Secretary of State File No. 7439218).
The Q2 Report was delivered pursuant to Section 7.04 of the Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP, dated July 29, 2022 (the "LP Agreement"), and Section 3 of the Side Letter Agreement between the GP and Ironside, also dated July 29, 2022 (the "Side Letter"). Collectively, these provisions require the GP to furnish quarterly status reports to the LP during any period of dormancy following the declaration of a Material Impediment Event (as defined in the LP Agreement). The Material Impediment Event was formally declared by the GP on November 10, 2022, and dormancy commenced on January 9, 2023 with the suspension of capital calls and investment activity.
This is the sixth quarterly report delivered since dormancy commenced. C&H has prepared prior review memoranda for each of the preceding five quarters: Q1 2023, Q2 2023, Q3 2023, Q4 2023, and Q1 2024. This memorandum should be read in conjunction with those prior reviews, which are maintained in C&H's files under the above-referenced matter number.
Three developments of critical significance are reported or implicated by the Q2 Report:
1.  FERC §203 Approval Lapsed. The Federal Energy Regulatory Commission ("FERC") approval under Section 203 of the Federal Power Act, originally granted December 15, 2022 (Docket No. EC22-143-000) and subsequently extended by FERC staff letter, lapsed as of June 15, 2024 because the transaction did not close and no further extension was sought by the parties. A fresh FERC §203 application will be required for any reactivation of the acquisition.
2.  Tentative Concession Framework Reached. On June 30, 2024, the Portland Metropolitan Water District and Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") reached a tentative, non-binding framework on revised terms for the Bull Run Filtration Project water-treatment concession—the dispute that gave rise to the Material Impediment Event. The GP characterizes this as the most significant positive development since dormancy commenced.
3.  18-Month Dormancy Mark Reached. On July 9, 2024, the Vehicle reached the 18-month dormancy threshold under LP Agreement §7.04(c), measured from the January 9, 2023 capital-call suspension date. This milestone ripens Ironside's contractual right to elect a wind-down of ICM Cascadia Co-Invest, LP and to be released from its unfunded capital commitment.
Throughout Q2 2024, the Vehicle remained fully dormant. No capital calls were issued, no distributions were made, and no investment activity of any kind occurred. Capital called to date remains at $22,500,000, representing 7.5% of total committed capital, and the unfunded commitment stands at $277,500,000.
The sections that follow present our detailed compliance review of the Q2 Report's delivery and content, a comprehensive summary of the GP's reported information, and C&H's analysis of the key legal and strategic issues arising from this quarter's developments.
II. Compliance Review: Delivery and Format of Q2 Report
A. Timeliness.  Section 7.04(b) of the LP Agreement requires the GP to deliver quarterly status reports to the LP within fifteen (15) business days after the end of each calendar quarter during any period of dormancy. For purposes of this calculation, business days exclude Saturdays, Sundays, and federal holidays recognized under the LP Agreement.
The second calendar quarter of 2024 ended on June 30, 2024. Counting forward from July 1, 2024 (the first business day following the quarter-end) and excluding weekends and the Independence Day holiday observed on July 4, 2024, the fifteenth business day falls on approximately July 22, 2024.
The Q2 Report was received by Ironside via electronic delivery (encrypted PDF transmitted to the secure portal designated in the LP Agreement) on July 10, 2024. This is well within the contractual deadline and represents delivery approximately eight (8) business days ahead of the outer limit permitted under §7.04(b).
Conclusion: The Q2 Report was timely delivered. This is consistent with the GP's practice in prior quarters; all six quarterly reports to date have been delivered within the required timeframe.
B. Content Requirements
Section 3(a) of the Side Letter specifies minimum content requirements for quarterly status reports delivered during dormancy. These requirements supplement and particularize the more general reporting obligations set forth in LP Agreement §7.04(b). The Side Letter was negotiated by C&H on Ironside's behalf and is binding on the GP. The five required content areas, and our assessment of the Q2 Report's compliance with each, are as follows:
(i) Status of the Underlying Transaction. The Q2 Report includes a narrative description of the current status of the proposed acquisition of Cascadia, including the status of the Equity Purchase Agreement (as amended), the Mutual Standstill and Preservation Agreement, and the relationship among the transaction parties. This requirement is satisfied.
(ii) Status of Regulatory Approvals and Third-Party Consents. The Q2 Report addresses the status of all three regulatory workstreams: FERC §203, Oregon Public Utility Commission ("OPUC"), and the Committee on Foreign Investment in the United States ("CFIUS"). The report specifically addresses the lapse of FERC §203 approval and the continued stay of OPUC proceedings. This requirement is satisfied.
(iii) Material Developments Affecting the Target. The Q2 Report describes the tentative concession framework reached between the Portland Metropolitan Water District and Cascadia on June 30, 2024, and provides a high-level summary of the key elements of that framework. The report also notes the absence of material litigation, regulatory enforcement actions, or operational disruptions at Cascadia during the quarter. This requirement is satisfied.
(iv) Financial Status of the Vehicle. The Q2 Report includes a capital account summary, a recap of the application of called capital, a summary of dormancy-period expenses for Q2 2024, and confirmation that no investment activity or distributions occurred. This requirement is satisfied.
(v) GP's Assessment of Prospects for Reactivation or Recommendation Regarding Wind-Down. The Q2 Report includes the GP's qualitative assessment that the tentative concession framework is a positive development, acknowledges the significant hurdles to reactivation (FERC lapse and expired financing), and indicates that the GP intends to circulate a detailed reactivation feasibility memorandum. The GP also acknowledges that the 18-month dormancy mark has been reached and that Ironside's wind-down election right has ripened. This requirement is substantially satisfied, though C&H notes that the Q2 Report does not include quantitative reactivation cost estimates, which were specifically requested by Ironside in its letter to the GP dated April 12, 2024. The GP indicated in the Q2 Report that a separate reactivation feasibility memo would follow; that memorandum was subsequently circulated on September 1, 2024 and will be reviewed under separate cover.
Overall Content Compliance Assessment: The Q2 Report is substantially compliant with the content requirements of Side Letter §3(a). All five required content areas are addressed, though the outstanding request for detailed reactivation cost estimates has not yet been fully satisfied in the body of the Q2 Report itself. C&H will continue to monitor the GP's compliance with this request and will review the forthcoming reactivation feasibility memorandum when it is received.
C. Form and Certification
The Q2 Report was signed by David R. Hargreaves, Managing Partner and Co-Founder, Meridian Infrastructure Partners LP, acting on behalf of Meridian Infrastructure GP IV LLC in its capacity as general partner of the Vehicle. Mr. Hargreaves is an authorized signatory of the GP, as confirmed by the incumbency certificate on file with C&H.
The Q2 Report bears a certification statement substantially in the form required by LP Agreement §7.04(b)(ii), which provides that the GP shall certify that the information contained in each quarterly report is accurate and complete in all material respects to the best of the GP's knowledge and belief as of the date of the report. The certification language in the Q2 Report reads as follows:
"The undersigned hereby certifies, on behalf of Meridian Infrastructure GP IV LLC, that the information set forth in this Quarterly Status Report for Q2 2024 is accurate and complete in all material respects to the best of the undersigned's knowledge and belief as of the date hereof."
Conclusion: The Q2 Report complies with the form and certification requirements of LP Agreement §7.04(b)(ii).
III. Summary of GP's Q2 2024 Report Content
Set forth below is a detailed summary of the substantive content of the Q2 Report, organized by subject matter. This section is intended to provide Ironside's investment team with a comprehensive record of the GP's disclosures and representations, supplemented by C&H's observations where relevant.
A. Transaction Status Overview
The GP reports that the proposed acquisition of 100% of the equity interests of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204, remains unconsummated as of the end of Q2 2024. The Vehicle was formed as a single-purpose co-investment vehicle to participate alongside Meridian Infrastructure Partners Fund IV, LP ("Fund IV") in the acquisition.
Target Business Overview. Cascadia's business comprises a portfolio of renewable energy and water infrastructure assets located across the Pacific Northwest, specifically:
•  Fourteen (14) hydroelectric facilities located in Oregon, Washington, and Idaho, operating under FERC licenses;
•  Six (6) wind farms located in Oregon and Washington, operating under long-term power purchase agreements ("PPAs") with regional utilities;
•  Three (3) water-treatment concessions, including the Bull Run Filtration Project concession with the Portland Metropolitan Water District, the Deschutes County Water Treatment Facility concession, and the Boise Metropolitan Water Authority concession.
Cascadia's asset portfolio is underpinned by long-term contractual revenue streams, with PPAs and municipal water-service contracts having a weighted-average remaining life of approximately twenty-two (22) years as of the original transaction date.
Agreed Valuation. The agreed enterprise value for the acquisition is $1,950,000,000 (one billion nine hundred fifty million dollars). Based on Cascadia's audited fiscal year 2021 EBITDA of $138,000,000 and fiscal year 2021 revenue of $487,000,000 (per the audit conducted by Halstead & Greer LLP, Cascadia's independent auditor), this implies an EV/EBITDA multiple of approximately 14.1x.
Equity Purchase Agreement History. The Equity Purchase Agreement (the "EPA") was originally executed on September 15, 2022 by and among Cascadia Acquisition Corp. (as purchaser), the selling shareholders, and Cascadia (as the target company). The EPA has been amended on three occasions:
•  First Amendment (November 22, 2022): Modified certain closing conditions and extended interim operating covenants in response to the concession renegotiation notice.
•  Second Amendment (March 15, 2023): Further extended the outside closing date and adjusted the escrow and indemnification provisions.
•  Third Amendment (June 28, 2023): Extended the outside closing date to December 31, 2023 and introduced additional conditions related to the resolution of the concession dispute.
The outside date of December 31, 2023, established by the Third Amendment, expired without the transaction closing. Notwithstanding the expiration of the outside date, no party has exercised termination rights under the EPA. The parties instead entered into the Mutual Standstill and Preservation Agreement described below.
Mutual Standstill and Preservation Agreement. On February 15, 2024, all parties to the EPA executed a Mutual Standstill and Preservation Agreement (the "Standstill Agreement"). The Standstill Agreement remains in effect as of the date of the Q2 Report. Under the Standstill Agreement, the parties have agreed to (a) preserve the transaction documents and refrain from exercising termination rights during the standstill period, (b) continue ordinary-course operations of the target business, and (c) engage in good-faith discussions regarding either reactivation of the transaction on revised terms or an orderly wind-down. The Standstill Agreement does not impose a fixed termination date but provides for termination by any party upon sixty (60) days' prior written notice.
Co-Investment Structure. The Vehicle's co-investment represents 28.57% of the total equity check for the acquisition, corresponding to $300,000,000 of the $1,050,000,000 aggregate equity commitment. The remaining 71.43% ($750,000,000) is committed by Fund IV. The allocation between Fund IV and the co-invest vehicle is governed by the Co-Investment Allocation Agreement dated July 29, 2022.
Acquisition Subsidiary. The planned acquisition subsidiary, Cascadia Acquisition Corp., a Delaware corporation, has not been funded or activated. The entity was incorporated on August 10, 2022 and remains a shell with nominal capitalization, maintained in good standing in Delaware by Cascade Systems.
B. Regulatory Approvals — Current Status
1. FERC §203 Approval — Lapsed.  The acquisition of Cascadia's hydroelectric facilities requires prior approval from FERC under Section 203 of the Federal Power Act (16 U.S.C. §824b), which governs the disposition or acquisition of jurisdictional facilities, including any transfer of FERC hydroelectric licenses.
The GP obtained FERC §203 approval on December 15, 2022, under FERC Docket No. EC22-143-000. The approval was granted on standard terms and was conditioned on the timely filing of license-transfer applications for each of Cascadia's fourteen hydroelectric facilities. The FERC order included an eighteen (18)-month lapse provision, meaning the approval would automatically expire if the transaction did not close within eighteen months of the order date.
As dormancy continued, the GP sought and obtained an extension of the lapse date by means of a FERC staff letter. The extended lapse date was June 15, 2024. The GP reports that the approval lapsed as of June 15, 2024 because the transaction did not close by that date and no further extension request was filed.
Consequence of Lapse. A new FERC §203 application will be required if the transaction is reactivated. Based on precedent and the GP's consultation with its regulatory counsel (Ridgeway, Ashford & Malone PC), the estimated timeline for a fresh filing and approval is six (6) to nine (9) months from the date of submission, assuming no contested proceedings or material changes in FERC policy.
C&H Analysis. The lapse of FERC §203 approval constitutes a material adverse procedural development that adds both time and cost to any reactivation scenario. However, the original application was approved on relatively standard terms without contested proceedings, and there is no reason to believe that a re-filing would produce a different substantive outcome, provided that (a) there has been no material change in FERC's regulatory posture toward transfers of hydroelectric licenses, and (b) the transaction structure remains substantially similar to the original filing. C&H notes that additional filing fees and outside regulatory counsel costs will be incurred in connection with any re-filing, and these costs will need to be allocated between Fund IV and the Vehicle pursuant to the Co-Investment Allocation Agreement.
2. Oregon PUC (OPUC) — Stayed.  The acquisition also requires approval from the Oregon Public Utility Commission under Oregon Revised Statutes Chapter 757, given Cascadia's status as the holder of regulated water-treatment concessions in Oregon. The OPUC application was filed on October 14, 2022 and assigned Docket No. UM-2287.
The proceedings have been stayed at the joint request of the transaction parties since February 2023. The GP reports that there was no communication from OPUC during Q2 2024 and no indication that the Commission intends to lift the stay on its own motion (sua sponte).
If the transaction is reactivated, the parties would need to file a joint motion to un-stay the proceedings. Depending on the length of the stay and any intervening developments—including the potential revision of concession terms in connection with the Bull Run Filtration Project—the OPUC may require that the application be updated or supplemented. C&H notes that the tentative concession framework, if finalized, could itself constitute a material change that triggers additional OPUC scrutiny or public notice requirements.
3. CFIUS — Cleared.  A voluntary notice was submitted to the Committee on Foreign Investment in the United States in connection with the acquisition. CFIUS acknowledged receipt of the voluntary notice on September 20, 2022. The review concluded without the Committee identifying any unresolved national security concerns. No foreign ownership issues were identified, which is consistent with the domestic ownership structure of both the Meridian fund complex and Ironside.
The CFIUS clearance status is unchanged and does not require renewal. This clearance does not present a reactivation impediment.
C. Material Developments Affecting the Target
1. Concession Renegotiation — Tentative Framework Reached.  The concession dispute that precipitated the Material Impediment Event and the Vehicle's dormancy is the most consequential issue bearing on the transaction's viability. The background and current status are summarized below.
Background. On October 28, 2022, the Portland Metropolitan Water District (the "Water District") formally notified Cascadia of its intent to renegotiate the forty (40)-year water-treatment concession for the Bull Run Filtration Project (the "Bull Run Concession"), which was originally executed circa 2018. The Water District's renegotiation demand was prompted by changed regulatory requirements under Oregon Senate Bill 1567 (2022) ("SB 1567"), which imposed new water-quality standards, filtration technology mandates, and compliance-cost-sharing frameworks applicable to public-private water-treatment partnerships in the State of Oregon.
The Bull Run Concession is a significant revenue driver for Cascadia, generating approximately $64,000,000 in annual revenue, which represents approximately 13.1% of Cascadia's fiscal year 2021 total revenue of $487,000,000.
The concession renegotiation demand was identified by the GP as the basis for its November 10, 2022 notification to the LP of a Material Impediment Event under the LP Agreement, and it has been the primary obstacle to the closing of the acquisition since that date.
Tentative Framework. The GP reports that on June 30, 2024, the Water District and Cascadia reached a tentative framework (the "Framework") on revised terms for the Bull Run Concession. The GP characterizes the Framework as non-binding and preliminary, subject to finalization of definitive documentation, approval by the Water District's municipal board, and a public comment period. The key elements of the Framework, as described in the Q2 Report, are as follows:
(i) Reduced Term. The concession term would be reduced from the original forty (40) years to thirty (30) years, measured from the original execution date (i.e., the remaining term from original execution, effectively reducing the concession's residual life by approximately ten years from the perspective of a new acquirer).
(ii) Revised Rate Structure. The rate structure would be revised to incorporate new regulatory compliance costs arising under Oregon SB 1567, including costs associated with enhanced filtration technologies, increased water-quality monitoring requirements, and compliance reporting obligations. The Q2 Report does not specify whether the revised rates are expected to be higher or lower on a net basis to Cascadia, and the GP has indicated that this analysis is pending.
(iii) Partial Risk-Sharing Mechanism on Capital Expenditure Overruns. The Framework contemplates a mechanism under which capital expenditure overruns beyond a specified threshold would be shared between Cascadia and the Water District, rather than borne solely by the concessionaire. The specific threshold and sharing percentages are not disclosed in the Q2 Report.
(iv) Revised Performance Benchmarks. The performance benchmarks against which Cascadia's operation of the Bull Run facility would be measured would be updated to reflect current regulatory standards and operational best practices, as distinct from the benchmarks established in the original 2018 concession agreement.
GP's Characterization. The GP characterizes the tentative Framework as a material positive development that could remove the principal impediment to transaction reactivation. The GP notes, however, that the Framework is preliminary and non-binding, and that significant work remains before definitive terms can be established.
C&H Observation. While the emergence of a tentative framework is indeed a positive development after approximately twenty months of uncertainty, Ironside should approach this development with appropriate caution. Several important considerations warrant attention:
•  The Framework is non-binding and subject to multiple approval steps, any one of which could result in material changes or a failure to reach agreement.
•  The reduction in concession term from forty to thirty years and the revised rate structure will necessarily affect Cascadia's projected revenue, EBITDA, and net present value, potentially impacting the enterprise value originally agreed at $1.95 billion and the associated 14.1x EV/EBITDA multiple.
•  Ironside should request detailed revenue and EBITDA impact projections from the GP and its financial advisor (Blackthorn Advisory Group LLC) once the Framework terms are finalized, and should independently evaluate whether the originally agreed purchase price remains appropriate.
•  The capex risk-sharing mechanism may introduce new contingent liabilities or off-balance-sheet obligations that were not contemplated in the original transaction structure.
2. Cascadia Operating Performance.  The GP provides limited updated financial information regarding Cascadia's operating performance during Q2 2024. The Q2 Report notes that Cascadia's management team—led by Chief Executive Officer Jonathan M. Weir and Chief Financial Officer Sandra K. Llewellyn—has continued to operate the business in the ordinary course during the standstill period, consistent with the obligations of the selling shareholders under the Standstill Agreement.
The GP reports that there were no material litigation matters, regulatory enforcement actions, or operational disruptions affecting Cascadia during Q2 2024, beyond the previously disclosed concession renegotiation and the regulatory matters described above.
Halstead & Greer LLP continues to serve as Cascadia's independent auditor and tax advisor. The GP did not provide updated audited or unaudited financial statements for Cascadia in the Q2 Report, though C&H notes that the Side Letter §3(a)(iv) requires reporting on the financial status of the Vehicle (which was provided) rather than the Target per se. Ironside may wish to request updated Target financials as part of its information request to the GP in connection with any reactivation assessment.
D. Financial Status of the Vehicle
1. Capital Account Summary.  The GP reports the following capital account summary for ICM Cascadia Co-Invest, LP as of June 30, 2024:
The single capital call of $22,500,000 was issued on August 15, 2022, prior to the declaration of the Material Impediment Event. Capital call suspension has been in effect since January 9, 2023. No capital calls were issued during Q2 2024, and none have been issued during the entire dormancy period.
2. Application of Called Capital (Recap).  The GP provides a recap of the application of the $22,500,000 in called capital, consistent with the breakdown reported in prior quarters:
This breakdown is unchanged from prior quarters. The due-diligence costs and deposits of $12,790,000 include legal fees, accounting and tax advisory fees, technical and environmental consultants' fees, regulatory filing fees, and earnest-money deposits associated with the transaction.
3. Dormancy Period Expenses.  The GP reports that the annualized dormancy operating expenses of the Vehicle are estimated at approximately $185,000 per year. These expenses consist of:
•  Fund administration services provided by Kendrick Thorne & Associates LLP;
•  Delaware registered agent maintenance through Cascade Systems;
•  Delaware franchise tax;
•  Annual audit of the Vehicle's financial statements; and
•  Preparation and delivery of Schedule K-1 to the LP.
For Q2 2024, the GP reports quarterly dormancy expenses of approximately $46,000, which is roughly consistent with one-quarter of the annualized estimate.
Cumulative dormancy expenses from January 9, 2023 through June 30, 2024 (approximately eighteen months) are estimated at approximately $277,500, though the Q2 Report does not provide a precise cumulative figure. C&H estimates the cumulative amount based on six quarters of dormancy at approximately $46,000 per quarter.
No distributions were made during Q2 2024, and no distributions have been made since the Vehicle's formation.
4. No Investment Activity.  The GP confirms that no capital has been deployed by the Vehicle. There have been no acquisitions, dispositions, or other investment activity of any kind. The Vehicle's assets consist solely of cash (the working-capital reserve less cumulative dormancy expenses), held in the Vehicle's account at Atlas National Bank, N.A.
E. Status of Key Transaction Documents and Insurance
1. Equity Purchase Agreement and Standstill.  As noted above, the EPA (as amended through the Third Amendment) has an expired outside date of December 31, 2023. No party has exercised termination rights under the EPA, and the Mutual Standstill and Preservation Agreement, executed February 15, 2024, remains in full force and effect.
The counterparties to the EPA on the sell side are:
•  Timberline Growth Equity Fund III, LP — majority selling shareholder, holding 62% of Cascadia's equity. Hugh Callister is the managing partner of Timberline Growth Partners LLC, the general partner of Timberline Growth Equity Fund III.
•  Weir Family Trust — selling shareholder, holding 18% of Cascadia's equity. Jonathan M. Weir (Cascadia's CEO) is a trustee and beneficiary of the trust.
•  Management Rollover Pool — collective selling shareholder group, holding 20% of Cascadia's equity, with an expected 50% rollover of their equity interest into the post-closing acquisition structure (i.e., approximately 10% of pre-closing equity rolling over).
The Standstill Agreement does not amend the EPA but rather preserves the transaction documents in their current state and establishes a framework for either reactivation or orderly wind-down. Termination requires sixty (60) days' prior written notice from any party.
2. Debt Commitment Letter — Expired.  The debt financing for the acquisition was to be provided under a commitment letter dated August 30, 2022, pursuant to which:
•  Atlas National Bank, N.A. (as lead arranger) committed to provide $650,000,000 of the $975,000,000 senior secured term loan facility; and
•  Pinnacle Credit Partners LLC committed to provide the remaining $325,000,000.
In addition, a $150,000,000 revolving credit facility was committed by Atlas National Bank. The original commitment letter had a specified expiration date, which was extended once (with an extension fee of $2,437,500 paid by Fund IV) to October 31, 2023. The commitment letter, including both the term loan and revolving credit facility commitments, expired on October 31, 2023 without further extension.
No replacement or refreshed debt financing has been arranged. Any reactivation of the transaction would require the negotiation of a new debt commitment, potentially with Atlas National Bank and Pinnacle Credit Partners or with new lenders. The GP acknowledges in the Q2 Report that current debt market conditions have evolved materially since August 2022, and that interest rate environment and credit spread changes may result in terms that differ significantly from the original commitment.
3. R&W Insurance.  Northgate Specialty Insurance Co. issued a representations and warranties insurance policy (Policy No. NSW-RI-2022-09814) with a coverage limit of $195,000,000. The premium deposit of $4,875,000 was funded from the initial capital call. The policy was bound on September 1, 2022.
Due to the dormancy, Northgate and the insured parties entered into a tolling side letter dated January 20, 2023, which tolled the coverage period of the R&W policy pending resolution of the dormancy. The GP confirms that the tolling side letter remains in effect as of the date of the Q2 Report and that Northgate has not given notice of termination or non-renewal of the tolling arrangement.
C&H Note. The tolling arrangement has now been in effect for approximately eighteen (18) months, which is an extended period by market standards for R&W insurance tolling. While Northgate has not signaled any intent to terminate the tolling, there is an inherent risk that Northgate may seek to (a) impose an additional premium for the continued tolling period, (b) revise the policy terms, conditions, or exclusions to reflect changed circumstances, or (c) decline to continue tolling indefinitely and impose a sunset date. Ironside should seek confirmation from the GP regarding Northgate's current posture and any communications between Northgate and the Meridian team regarding the tolling arrangement's duration. Additionally, if the transaction is ultimately unwound rather than reactivated, the $4,875,000 premium deposit may be partially or wholly non-recoverable, depending on the terms of the policy and tolling side letter. This amount should be factored into any wind-down recovery analysis.
4. D&O Tail Policy.  A directors' and officers' liability insurance tail policy was arranged with Sentinel Directors & Officers Underwriters Inc. for the benefit of Cascadia's management team in connection with the anticipated change of control. This D&O tail policy remains in standby status pursuant to the standstill arrangements. No claims have been made under the policy, and the standby status does not impose material ongoing costs on the Vehicle.
F. GP's Assessment and Forward-Looking Statements
The Q2 Report includes the GP's forward-looking assessment of the Vehicle's prospects, as required by Side Letter §3(a)(v). The key elements of the GP's assessment are as follows:
Positive Development. The GP characterizes the tentative concession framework reached on June 30, 2024 as the most significant positive development since dormancy commenced on January 9, 2023. The GP views the Framework as a potential path to removing the principal impediment to transaction reactivation, which has been the unresolved concession dispute.
Reactivation Feasibility Evaluation. The GP indicates that it is actively evaluating the feasibility of reactivating the transaction and intends to circulate a detailed reactivation feasibility memorandum to co-investors, including Ironside, in the near term. This memorandum was subsequently circulated on September 1, 2024 and will be the subject of a separate C&H review.
Acknowledged Hurdles. The GP acknowledges that the lapse of FERC §203 approval and the need for fresh debt financing represent significant hurdles to reactivation, even assuming the concession dispute is fully resolved. The GP estimates that the combined timeline for obtaining fresh FERC approval and arranging new debt financing could extend the reactivation process by nine to twelve months from the date of a reactivation decision.
Wind-Down Election Right. The GP acknowledges that the 18-month dormancy mark under LP Agreement §7.04(c) was reached on July 9, 2024 (being 18 months from the January 9, 2023 capital-call suspension date), thereby ripening Ironside's wind-down election right. The GP requests that Ironside engage in dialogue with the GP before making any election, in order to allow the GP to present its reactivation analysis and explore whether a path forward exists that serves the interests of all stakeholders.
IV. C&H Analysis: Key Issues for Ironside
Based on our review of the Q2 Report and the relevant transaction documents, C&H has identified the following key issues for Ironside's consideration. Each is discussed in detail below.
A. 18-Month Wind-Down Election Right (LP Agreement §7.04(c))
The 18-month dormancy threshold established in LP Agreement §7.04(c) was reached on July 9, 2024, calculated as eighteen (18) months from the January 9, 2023 date on which the GP suspended capital calls and declared the Vehicle dormant following the Material Impediment Event.
Under §7.04(c), once the 18-month dormancy threshold has been reached and has not been cured or waived, the LP has the right to elect a wind-down of the Vehicle by delivering written notice to the GP. The specific mechanics of the wind-down election are set forth in §7.04(c)(i)–(iv) of the LP Agreement and include the following principal consequences:
•  Release of Unfunded Commitment. The LP's unfunded capital commitment ($277,500,000) would be released, and the GP would have no further right to call capital from the LP.
•  Distribution of Remaining Assets. The GP would be required to distribute the Vehicle's remaining assets to the partners, net of all outstanding expenses, obligations, and reserves for contingent liabilities, in accordance with the distribution waterfall set forth in Article VIII of the LP Agreement.
•  Orderly Dissolution. The GP would be responsible for conducting an orderly wind-down of the Vehicle's affairs, including the filing of a certificate of cancellation with the Delaware Secretary of State and the completion of all tax reporting obligations.
As a practical matter, the remaining assets available for distribution would consist primarily of the residual cash from the working-capital reserve ($3,500,000 less cumulative dormancy expenses of approximately $277,500, or approximately $3,222,500), net of any wind-down expenses (legal, accounting, and dissolution costs).
Ironside should note that the wind-down election, once exercised, is irrevocable under the LP Agreement. Accordingly, the decision to exercise the election should be made only after careful consideration of the strategic alternatives.
C&H is preparing a separate detailed memorandum analyzing the procedural requirements, mechanics, and strategic considerations of the wind-down election right, including (a) the notice requirements and form of election notice, (b) the estimated timeline and costs of wind-down, (c) the treatment of the R&W insurance premium deposit and other sunk costs, and (d) the interaction between a wind-down election and the Standstill Agreement. This memorandum is targeted for circulation during the week of July 22, 2024.
Key Strategic Consideration. The timing of the tentative concession framework (June 30, 2024) creates a significant tension between exercising the wind-down right and deferring to assess whether the transaction can be viably reactivated on terms acceptable to Ironside. On the one hand, continued dormancy imposes ongoing costs (estimated at approximately $185,000 per year in dormancy operating expenses) and maintains the overhang of Ironside's $277,500,000 unfunded commitment, which may affect Ironside's ability to deploy capital elsewhere. On the other hand, if the concession dispute is resolved on acceptable terms and the transaction closes, the co-investment could generate meaningful returns on the $300,000,000 commitment. The irreversibility of the wind-down election underscores the importance of a measured approach.
B. FERC §203 Lapse — Reactivation Implications
The lapse of the FERC §203 approval on June 15, 2024 is a material procedural setback for any reactivation scenario. The key implications are as follows:
•  A new FERC §203 application under Section 203 of the Federal Power Act will be required. The prior FERC Docket No. EC22-143-000 is now closed.
•  Based on precedent and the GP's regulatory counsel's estimate, the timeline for a fresh filing and approval is six (6) to nine (9) months from the date of submission. This timeline assumes an uncontested proceeding; if any party intervenes or if FERC raises sua sponte concerns, the timeline could extend significantly.
•  The original approval was conditioned on the filing of license-transfer applications for each of Cascadia's fourteen (14) hydroelectric facilities. The same or similar conditions would likely be imposed in connection with a new approval.
•  Additional filing fees and outside counsel costs will be incurred. Regulatory filing fees for FERC §203 applications are currently assessed based on the value of the jurisdictional facilities being transferred. Outside regulatory counsel fees (Ridgeway, Ashford & Malone PC represented the applicants in the original filing) will also be incurred.
•  Under the Co-Investment Allocation Agreement, the costs of reactivation—including regulatory re-filing costs—should be allocated between Fund IV (71.43%) and the Vehicle (28.57%). Ironside should confirm the allocation methodology with the GP and ensure that any cost-sharing arrangement is clearly documented before reactivation expenses are incurred.
C. Financing Refresh Requirement
The expiration of the debt commitment letter on October 31, 2023 means that no committed financing currently exists for the acquisition. The original capital structure contemplated a $975,000,000 senior secured term loan facility and a $150,000,000 revolving credit facility, representing a total debt quantum of $1,125,000,000 against an enterprise value of $1,950,000,000 (implying a loan-to-value ratio of approximately 57.7%).
Any reactivation would require the negotiation of a new debt commitment, potentially with Atlas National Bank, N.A. and Pinnacle Credit Partners LLC (the original committed lenders) or with new lenders. Several factors make the financing refresh a significant hurdle:
•  The interest rate environment has changed materially since August 2022. The federal funds target rate has increased substantially, and credit spreads in the infrastructure lending market have widened for long-duration project finance assets.
•  The terms of any new commitment—including pricing, covenants, amortization schedule, and commitment fees—may be materially different from the original commitment, potentially affecting the transaction's returns and the equity check required.
•  The extension fee of $2,437,500 paid by Fund IV to extend the original commitment (from its initial expiration to October 31, 2023) was borne entirely by Fund IV. The allocation of new financing costs in a reactivation scenario should be clarified, as these costs may be substantial and may include arranger fees, syndication fees, and legal fees in addition to any commitment or ticking fees.
•  If the concession terms change materially (as contemplated by the Framework), lenders may require updated projections and collateral analysis, which would add time and cost to the financing process.
D. Concession Framework — Valuation Impact
The tentative concession framework involves potentially significant changes to the economics of the Bull Run Filtration Project, which is Cascadia's single largest water-treatment concession and a meaningful contributor to overall enterprise value. The key valuation considerations are as follows:
•  The Bull Run Concession generates approximately $64,000,000 in annual revenue, representing approximately 13.1% of Cascadia's FY 2021 total revenue of $487,000,000. The concession's contribution to EBITDA is likely proportionally significant, though the precise margin profile is not disclosed in the Q2 Report.
•  A reduction in concession term from forty to thirty years reduces the remaining revenue runway and, all else being equal, would reduce the net present value of the concession cash flows.
•  A revised rate structure incorporating new regulatory compliance costs under SB 1567 could either increase or decrease net revenue to Cascadia, depending on whether the revised rates fully pass through compliance costs to the Water District's ratepayers or impose a net cost burden on the concessionaire.
•  The capex risk-sharing mechanism introduces a new contingent cost element that was not present in the original concession. While the mechanism may limit downside exposure to capital expenditure overruns, it also introduces complexity and potential for disputes.
•  Any material reduction in the projected value of the Bull Run Concession could affect the enterprise value originally agreed at $1,950,000,000 and the implied 14.1x EV/EBITDA multiple. Ironside should consider whether a renegotiation of the purchase price is warranted and whether the GP intends to seek a price adjustment from the sellers.
Recommendation. Ironside should request that Meridian and its financial advisor, Blackthorn Advisory Group LLC, provide an updated valuation analysis reflecting the revised concession terms before Ironside commits to any reactivation of the co-investment. This analysis should include, at a minimum, (a) updated revenue and EBITDA projections for the Bull Run Concession under the revised terms, (b) a revised discounted cash flow analysis for the overall Cascadia enterprise, and (c) sensitivity analyses reflecting different assumptions regarding the rate structure, capex risk-sharing, and concession term.
E. R&W Insurance Tolling — Continuation Risk
The R&W insurance policy issued by Northgate Specialty Insurance Co. has been tolled since January 20, 2023, a period of approximately eighteen (18) months as of the end of Q2 2024. While the GP reports that Northgate has not given notice of termination or non-renewal, the extended duration of the tolling creates several risks:
•  Premium Adjustment Risk. Northgate may seek to impose an additional premium for the continued tolling period, reflecting the increased underwriting risk associated with the passage of time and changed circumstances. R&W insurance premiums are typically calculated at the time of binding based on the anticipated closing timeline; an eighteen-month (and potentially longer) tolling period is well outside the typical range.
•  Policy Term Revision Risk. Northgate may seek to revise the policy terms, conditions, or exclusions to reflect developments that have occurred since the policy was bound, including the concession renegotiation, the FERC lapse, and any changes in Cascadia's financial condition or operations.
•  Tolling Sunset Risk. Even in the absence of an affirmative termination notice, Northgate may seek to impose a sunset date on the tolling arrangement, after which the policy would either lapse or the coverage period would recommence regardless of whether the transaction has closed.
•  Sunk Cost Risk. If the transaction is ultimately unwound, the $4,875,000 premium deposit is potentially non-recoverable, depending on the terms of the policy and tolling side letter. Ironside should factor this amount into any wind-down recovery analysis.
If reactivation occurs, C&H recommends that the existing policy terms—including the $195,000,000 coverage limit, the scope of representations and warranties covered, and the exclusions—be re-evaluated in light of the passage of time and changed circumstances, including any revisions to the concession terms and updated Cascadia financial information.
F. OPUC Proceedings
OPUC Docket No. UM-2287 proceedings remain stayed. The stay has been in effect since February 2023, approximately seventeen months. If the transaction is reactivated, the parties would need to file a joint motion to un-stay the proceedings. Given the lengthy duration of the stay, the OPUC may require:
•  An updated or supplemental application reflecting changed circumstances;
•  Additional public notice and comment periods;
•  Review of any revised concession terms arising from the Framework, to the extent those terms affect the regulated aspects of Cascadia's operations in Oregon.
The timeline for OPUC review following un-staying is difficult to predict with precision but could add several months to the reactivation timeline. C&H will coordinate with Meridian's regulatory counsel to assess the OPUC timeline if reactivation is pursued.
V. Status Summary Table
The following table summarizes the status of key items as of June 30, 2024, compared to the prior quarter:
VI. Recommendations
Based on our review of the Q2 Report and analysis of the key issues identified above, C&H makes the following recommendations:
1.  Wind-Down Election — Defer for Limited Period. C&H recommends that Ironside defer exercise of the wind-down election right under LP Agreement §7.04(c) for a limited period, in order to assess the implications of the tentative concession framework and to review the GP's forthcoming reactivation feasibility memorandum. The wind-down election right, once ripened, does not expire under the LP Agreement (it remains exercisable at any time during dormancy after the 18-month mark), so there is no urgency to exercise immediately. However, Ironside should establish an internal deadline by which a final decision will be made, taking into account the opportunity cost of continued commitment overhang and dormancy expenses. A separate strategic options memorandum analyzing the wind-down election in detail will follow, targeted for the week of July 22, 2024.
2.  Information Requests. C&H recommends that Ironside deliver a formal information request to the GP, pursuant to its information rights under LP Agreement §7.02 and Side Letter §3(b), requesting the following:
(a) Detailed terms of the tentative concession framework, including the full text of any term sheet, memorandum of understanding, or other written documentation reflecting the framework agreement between the Water District and Cascadia;
(b) Updated Cascadia financial projections and valuation analysis from Blackthorn Advisory Group LLC, reflecting the impact of the revised concession terms on revenue, EBITDA, and enterprise value;
(c) Preliminary reactivation cost estimates, including estimated costs and timelines for (i) a fresh FERC §203 application, (ii) new debt financing (including arranger fees, legal costs, and any commitment or ticking fees), and (iii) un-staying and completing the OPUC proceedings;
(d) Confirmation from Northgate Specialty Insurance Co. regarding the continued effectiveness of the tolling arrangement, any anticipated premium adjustments, and any proposed changes to policy terms or conditions.
C&H will prepare a draft information request letter for Ironside's review and approval.
3.  Deadline Monitoring. C&H will continue to actively monitor all relevant deadlines and dates, including (a) the wind-down election window, (b) any termination or notice deadlines under the Standstill Agreement (sixty-day notice period), (c) the status of the R&W insurance tolling arrangement, and (d) regulatory matters, including any developments at FERC or OPUC. C&H will promptly advise Ironside of any date-sensitive developments.
4.  Reactivation Preparedness. In parallel with the foregoing, C&H will prepare (a) a reactivation conditions checklist identifying all legal, regulatory, and documentary steps, approvals, and amendments that would be required if the decision is made to reactivate the transaction, and (b) a parallel wind-down analysis setting forth the mechanics and expected recovery of invested capital in a wind-down scenario, including the treatment of the R&W premium deposit, due-diligence costs, and other sunk costs. These analyses will enable Ironside to make a fully informed decision between the two paths once sufficient information is available.
VII. Limitations and Privilege Notice
This memorandum has been prepared by Calderwood & Harkness LLP for the sole use of Ironside Capital Management LP and its authorized personnel. It is protected by the attorney-client privilege and constitutes attorney work product under applicable law. This memorandum should not be disclosed to any third party, including the GP, other co-investors, or any regulatory authority, without the prior written consent of Calderwood & Harkness LLP. Disclosure to unauthorized third parties may result in a waiver of applicable privileges.
The analysis set forth herein is based on the Q2 2024 quarterly status report received from the GP on July 10, 2024, as well as the LP Agreement (dated July 29, 2022), the Side Letter (dated July 29, 2022), the EPA (dated September 15, 2022, as amended), the Mutual Standstill and Preservation Agreement (dated February 15, 2024), the Co-Investment Allocation Agreement (dated July 29, 2022), and other transaction documents maintained in C&H's files under Matter No. 1023-00001.
C&H has not independently verified the factual statements, financial data, or representations contained in the GP's quarterly report. Our analysis relies on the accuracy and completeness of the information provided by the GP in that report and in the GP's certifications. To the extent that any factual statements in the Q2 Report prove to be inaccurate or incomplete, the conclusions in this memorandum may need to be revised.
This memorandum does not constitute legal advice on matters outside the scope of C&H's engagement under Matter No. 1023-00001, including but not limited to tax advice, investment advice, or regulatory filings. Ironside should consult with its tax advisors, investment professionals, and other counsel as appropriate with respect to matters outside the scope of this engagement.
VIII. Signature block
We are available to discuss the contents of this memorandum and the recommendations set forth herein at your convenience. Please do not hesitate to contact us with any questions.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Theresa Kim Lead Associate, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, NY 10004 Direct: (212) 555-4823 tkim@calderwoodharkness.com
Reviewed and approved by:
________________________________________
Pamela Cross Responsible Partner, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, NY 10004 Direct: (212) 555-4110 pcross@calderwoodharkness.com
Appendix A: Key Transaction Parties Reference
Appendix B: Timeline of Key Events (Abbreviated)
This memorandum is protected by the attorney-client privilege and attorney work product doctrine. It has been prepared by Calderwood & Harkness LLP solely for the use of Ironside Capital Management LP and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Matter No. 1023-00001.
Item | Amount | Percentage
Total Committed Capital | $300,000,000 | 100.00%
GP Commitment | $30,000 | 0.01%
LP Commitment (Ironside) | $299,970,000 | 99.99%
Capital Called to Date | $22,500,000 | 7.50%
Unfunded Commitment | $277,500,000 | 92.50%
Expense Category | Amount
Organizational expenses | $285,000
Placement-agent fee (Rivermark Capital Markets Inc., 0.35% × $300M) | $1,050,000
R&W insurance premium deposit (Northgate Specialty Insurance Co., Policy No. NSW-RI-2022-09814; 2.5% × $195M coverage limit) | $4,875,000
Due-diligence costs and deposits | $12,790,000
Working-capital reserve | $3,500,000
Total | $22,500,000
Item | Status as of June 30, 2024 | Prior Quarter Status (Q1 2024) | Change
EPA / Standstill | EPA outside date expired Dec. 31, 2023; Standstill in effect (executed Feb. 15, 2024) | EPA outside date expired; Standstill in effect | No change
FERC §203 | Lapsed as of June 15, 2024 | Extended to June 15, 2024; approval in effect | Adverse change — approval lapsed
OPUC (Docket UM-2287) | Stayed since Feb. 2023; no OPUC communication | Stayed; no OPUC communication | No change
CFIUS | Cleared; no further action | Cleared; no further action | No change
Debt Commitment | Expired Oct. 31, 2023; no replacement | Expired; no replacement | No change
R&W Insurance (Northgate) | Policy bound; tolling in effect since Jan. 20, 2023; no termination notice | Tolling in effect; no termination notice | No change
D&O Tail (Sentinel) | Standby status per standstill | Standby status | No change
Capital Called / Unfunded | $22.5M called / $277.5M unfunded | $22.5M / $277.5M | No change
Dormancy Duration | ~18 months (Jan. 9, 2023 – June 30, 2024) | ~15 months | Increased by ~3 months
Wind-Down Election Right | Ripened as of July 9, 2024 | Not yet ripened (18-month threshold not reached) | Material change — right now exercisable
Concession Renegotiation | Tentative framework reached June 30, 2024 (non-binding) | Ongoing negotiations; no agreement | Positive development
GP Reactivation Assessment | Evaluating reactivation; feasibility memo forthcoming | Monitoring; no reactivation recommendation | Updated — more active posture
Party | Role | Contact / Key Person
Ironside Capital Management LP | LP / co-investor (99.99% interest in ICM Co-Invest) | Marcus J. Calloway, Founder & CIO; Renata Obasi, Senior MD, Infrastructure
ICM Cascadia Co-Invest, LP | Co-investment vehicle (Delaware LP) | — (managed by GP)
Meridian Infrastructure GP IV LLC | General partner of ICM Co-Invest (0.01% interest) | David R. Hargreaves, Managing Partner & Co-Founder
Meridian Infrastructure Partners Fund IV, LP | Sponsor / co-investor (71.43% of total equity) | David R. Hargreaves; fund counsel: Breckenridge Sloane & Pratt LLP
Cascadia Renewables Holdings, Inc. | Target company (Oregon corporation) | Jonathan M. Weir, CEO; Sandra K. Llewellyn, CFO
Cascadia Acquisition Corp. | Acquisition subsidiary (Delaware corporation; unfunded shell) | —
Timberline Growth Equity Fund III, LP | Majority selling shareholder (62% of CRH equity) | Hugh Callister, Managing Partner, Timberline Growth Partners LLC
Weir Family Trust | Selling shareholder (18% of CRH equity) | Jonathan M. Weir, Trustee
Management Rollover Pool | Selling shareholder / rollover (20% of CRH equity; 50% expected rollover) | Various Cascadia management members
Atlas National Bank, N.A. | Lead arranger (expired $650M term loan commitment; $150M RCF commitment) | —
Pinnacle Credit Partners LLC | Co-lender (expired $325M term loan commitment) | —
Northgate Specialty Insurance Co. | R&W insurer (Policy No. NSW-RI-2022-09814; $195M coverage; tolled) | —
Sentinel Directors & Officers Underwriters Inc. | D&O tail insurer (standby status) | —
Rivermark Capital Markets Inc. | Placement agent (fee: $1,050,000) | —
Kendrick Thorne & Associates LLP | Fund administrator for ICM Co-Invest | —
Cascade Systems | Delaware registered agent | —
Halstead & Greer LLP | Independent auditor and tax advisor for Cascadia | —
Blackthorn Advisory Group LLC | Financial advisor to Meridian | —
Calderwood & Harkness LLP | Counsel to Ironside Capital Management LP | Pamela Cross, Partner; Theresa Kim, Lead Associate
Breckenridge Sloane & Pratt LLP | Counsel to Meridian Infrastructure Partners | —
Ridgeway, Ashford & Malone PC | Regulatory counsel (FERC/OPUC) to transaction parties | —
Garvey Lennox LLP | Counsel to selling shareholders (Timberline / Weir Family Trust) | —
Date | Event
July 14, 2022 | C&H engagement opened (Matter No. 1023-00001)
July 22, 2022 | ICM Cascadia Co-Invest, LP formed (Delaware LP; Certificate of Limited Partnership filed with DE SOS)
July 29, 2022 | First close; LP Agreement and Side Letter executed; Co-Investment Allocation Agreement executed
August 15, 2022 | Capital call issued ($22,500,000; 7.5% of commitment); funded by Ironside
August 30, 2022 | Debt commitment letter executed (Atlas National Bank, N.A. and Pinnacle Credit Partners LLC; $975M term loan + $150M RCF)
September 1, 2022 | R&W insurance policy bound (Northgate Specialty Insurance Co.; Policy No. NSW-RI-2022-09814; $195M coverage)
September 15, 2022 | Equity Purchase Agreement executed by all parties
September 20, 2022 | CFIUS voluntary notice acknowledged; review concluded without unresolved national security concerns
October 14, 2022 | OPUC application filed (Docket No. UM-2287)
October 19, 2022 | FERC §203 application filed (Docket No. EC22-143-000)
October 28, 2022 | Portland Metropolitan Water District notifies Cascadia of intent to renegotiate Bull Run Concession (citing Oregon SB 1567)
November 10, 2022 | GP declares Material Impediment Event (Meridian MAD notification) under LP Agreement
November 22, 2022 | First Amendment to EPA executed (modified closing conditions; extended interim operating covenants)
December 15, 2022 | FERC §203 approval received (Docket No. EC22-143-000; 18-month lapse provision)
January 9, 2023 | Dormancy commences; capital-call suspension; investment activity suspended
January 20, 2023 | R&W insurance tolling side letter executed with Northgate Specialty Insurance Co.
February 2023 | OPUC Docket No. UM-2287 proceedings stayed at joint request of parties
March 15, 2023 | Second Amendment to EPA executed (extended outside date; adjusted escrow/indemnification)
April 30, 2023 | Debt commitment letter extended (extension fee of $2,437,500 paid by Fund IV; new expiration: Oct. 31, 2023)
June 28, 2023 | Third Amendment to EPA executed (outside date extended to Dec. 31, 2023; additional closing conditions re: concession)
October 31, 2023 | Debt commitment letter expires (term loan and RCF; no further extension)
December 31, 2023 | EPA outside date expires without closing; no party exercises termination rights
February 15, 2024 | Mutual Standstill and Preservation Agreement executed by all EPA parties
June 15, 2024 | FERC §203 approval lapses (extended 18-month window expires; no further extension sought)
June 30, 2024 | Tentative concession framework reached between Portland Metropolitan Water District and Cascadia
July 9, 2024 | 18-month dormancy mark reached under LP Agreement §7.04(c); Ironside's wind-down election right ripens
July 10, 2024 | Q2 2024 quarterly status report received by Ironside from the GP

MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts