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

gp-quarterly-report-review-q4-2023.docx DOCUMENT Funds

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MEMORANDUM

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

I. Executive Summary

This memorandum presents Calderwood & Harkness LLP's ("C&H") review and analysis of the quarterly status report (the "Q4 Report") delivered by Meridian Infrastructure GP IV LLC (the "GP") to Ironside Capital Management LP ("Ironside") for the fourth quarter of 2023, covering the period from October 1, 2023 through December 31, 2023. The Q4 Report covers the fourth full calendar quarter of the dormancy period that commenced on January 9, 2023, when the GP declared a Material Impediment Event under the Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP, dated August 1, 2022, as amended (the "LP Agreement").

The Q4 Report constitutes the fourth quarterly report delivered under the dormancy reporting obligation set forth in Section 7.04 of the LP Agreement and the side letter agreement between Ironside and the GP dated July 29, 2022 (the "Side Letter"). C&H has reviewed each of the prior quarterly reports in separate memoranda, and this memorandum should be read in the context of those prior analyses.

The quarter was marked by several significant developments that bear directly on the outlook for the co-investment vehicle and the underlying acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia"). The key developments during Q4 2023 are as follows:

(a) The debt commitment letter issued by Atlas National Bank, N.A. ("Atlas") and Pinnacle Credit Partners LLC ("Pinnacle") expired on October 31, 2023 without further extension, leaving the acquisition without committed debt financing for the first time since the commitment was originally obtained in August 2022;

(b) The third extended outside date under the Equity Purchase Agreement dated September 15, 2022 (the "EPA") expired on December 31, 2023, without any party exercising its termination rights under the EPA as of the date of the GP's report; and

(c) The GP reports the initiation of standstill and preservation discussions among the EPA parties, with the objective of formalizing a framework under which the parties would refrain from exercising termination rights while the feasibility of reactivation is assessed.

The co-investment vehicle remains dormant, with $22,500,000 of capital called (representing 7.5% of the $300,000,000 total commitment) and $277,500,000 in unfunded commitments. No additional capital calls have been issued since the capital-call suspension notice delivered on January 9, 2023, concurrent with the declaration of the Material Impediment Event.

Overall Assessment: The GP's Q4 2023 report is substantively compliant with the reporting obligations established under the LP Agreement and the Side Letter. The report was delivered well in advance of the applicable deadline and addresses each of the required content categories. However, certain items warrant follow-up, as detailed in this memorandum, including the need for more granular financial impact analysis regarding the Bull Run concession renegotiation and indicative replacement financing terms. Additionally, C&H draws Ironside's attention to the approaching 18-month anniversary of the dormancy commencement date, which will trigger Ironside's wind-down election right under Section 7.04(c) of the LP Agreement on July 9, 2024.

II. Compliance with Reporting Obligations

A. Timeliness of Delivery

Section 7.04(b) of the LP Agreement provides that, during any period in which a Material Impediment Event is in effect, the GP shall deliver to each limited partner holding commitments in excess of $100,000,000 a quarterly status report within forty-five (45) days following the end of each calendar quarter. This obligation is further reinforced by Section 3(d) of the Side Letter, which confirms the quarterly reporting requirement and specifies that such reports shall be delivered by electronic transmission to the addresses designated by Ironside in the LP Agreement's notice schedule.

The fourth quarter of 2023 ended on December 31, 2023. Accordingly, the 45-day deadline for delivery of the Q4 Report was February 14, 2024. The GP's report is dated January 18, 2024, and was received by Ironside via encrypted electronic transmission on January 19, 2024. The Q4 Report was thus delivered twenty-seven (27) days in advance of the contractual deadline. This is consistent with the GP's pattern of timely delivery: the Q1 2023 report was delivered 19 days early, the Q2 2023 report was delivered 22 days early, and the Q3 2023 report was delivered 30 days early. C&H notes with approval the GP's continued adherence to the reporting timeline.

B. Content Requirements

Under the LP Agreement and the Side Letter, quarterly status reports during a dormancy period must include the following content categories:

(i) a summary of the status of the underlying acquisition of Cascadia Renewables Holdings, Inc., including any amendments, waivers, or modifications to the EPA or ancillary transaction documents;

(ii) an update on all regulatory approvals that are required for the consummation of the acquisition, including the status of any pending applications, orders, or consents;

(iii) a statement of the financial position of the co-investment vehicle, including the total amount of capital called, unfunded commitments, and the current balance of any working-capital reserves;

(iv) a description of any material developments affecting the Material Impediment Event, including the status of the Bull Run Filtration Project concession renegotiation and any related legal, regulatory, or commercial developments;

(v) the GP's assessment of the expected duration of the dormancy period, including any conditions that must be satisfied before the GP anticipates being in a position to lift the Material Impediment Event and resume capital deployment; and

(vi) a summary of vehicle operating expenses incurred during the quarter and on a cumulative basis since the commencement of the dormancy period.

The Q4 Report addresses each of these required content categories. C&H's detailed analysis of the substance of the GP's disclosures in each category is set forth in Sections III through VII below. While the report is substantively compliant, we identify certain areas where additional detail would enhance the utility of the reporting for Ironside's decision-making purposes, as further described in Section VIII.

III. Status of Underlying Acquisition

A. Equity Purchase Agreement — Third Extended Outside Date Expiration

The EPA was executed on September 15, 2022 among the following parties:

Selling Shareholders:

• Timberline Growth Equity Fund III, LP, holding approximately 62% of the outstanding equity of Cascadia;

• Weir Family Trust, holding approximately 18% of the outstanding equity of Cascadia; and

• Management Rollover Pool (consisting of certain members of Cascadia's senior management team), holding approximately 20% of the outstanding equity of Cascadia, with an expected rollover of approximately 50% of their equity into the post-acquisition capital structure;

Target Company: Cascadia Renewables Holdings, Inc.; and

Acquiror: Cascadia Acquisition Corp., a Delaware corporation organized as the acquisition vehicle for Meridian Infrastructure Fund IV, LP.

The EPA contemplates a negotiated acquisition of 100% of the outstanding equity interests in Cascadia at an enterprise value of $1,950,000,000, representing an implied EV/EBITDA multiple of approximately 14.1x based on Cascadia's reported fiscal year 2021 EBITDA of $138,000,000. The equity value under the EPA is $1,050,000,000, with the balance of the enterprise value to be funded through the senior secured debt facilities described in Section V.A below.

The EPA originally provided for an outside date of December 31, 2022, by which the closing of the acquisition was required to occur (subject to certain limited exceptions). The outside date has been extended three times by the mutual agreement of the parties:

• First Amendment (dated November 22, 2022): Extended the outside date from December 31, 2022 to March 31, 2023, reflecting the pendency of the FERC §203 approval process and the early stages of the Bull Run concession renegotiation;

• Second Amendment (dated March 15, 2023): Extended the outside date from March 31, 2023 to June 30, 2023, reflecting the continued pendency of the concession renegotiation following the declaration of the Material Impediment Event;

• Third Amendment (dated June 28, 2023): Extended the outside date from June 30, 2023 to December 31, 2023, reflecting the parties' continued expectation at that time that the concession renegotiation could be resolved within the extension period.

The GP's Q4 Report confirms that the third extended outside date of December 31, 2023 expired without further amendment to the EPA. The GP further reports that, as of the date of the Q4 Report (January 18, 2024), no party has exercised its termination rights under Section 8.01(b) of the EPA, which permits any party to terminate the EPA by written notice following the expiration of the outside date, provided that the terminating party is not then in material breach of its obligations under the EPA.

The GP characterizes the current posture as a "mutual standstill in practice," noting that all parties have informally agreed to refrain from delivering termination notices while formal standstill negotiations are underway. The GP states that this practical arrangement is intended to preserve the viability of the transaction while the parties evaluate the path forward.

C&H Observation: The GP's characterization of a "mutual standstill in practice" is accurate as a description of the parties' current behavior, but we note that the absence of a formal, binding standstill agreement leaves all parties with the technical ability to deliver termination notices under EPA Section 8.01(b) at any time. An informal understanding not to terminate is not legally enforceable and does not constrain any party from changing course without prior notice. C&H has separately advised Ironside on this exposure in our memorandum dated December 18, 2023, in which we analyzed the implications of the outside date expiration and recommended that Ironside advocate for the prompt execution of a formal standstill agreement with appropriate co-investor protections. We continue to recommend that the formalization of the standstill be treated as a priority.

B. Standstill Negotiations

The GP's Q4 Report provides the following update on the status of standstill negotiations among the EPA parties. Breckenridge Sloane & Pratt LLP ("BSP"), acting as counsel to Meridian Infrastructure Fund IV, LP and the GP (lead partner Charles A. Delacroix), is in discussions with Ridgeway, Ashford & Malone PC ("RAM"), acting as counsel to Cascadia (lead partner Nina R. Castellano), and Garvey Lennox LLP ("GL"), acting as counsel to Timberline Growth Equity Fund III, LP (lead partner Steven F. Yun), regarding the terms of a proposed Mutual Standstill and Preservation Agreement (the "Standstill Agreement").

The GP expects the Standstill Agreement to be executed during Q1 2024. The GP identifies the following key open points in the standstill negotiations:

(i) Duration of the standstill period: The parties are negotiating the length of the standstill, including whether it should be subject to automatic extensions or periodic renewal;

(ii) Conditions for reactivation vs. termination: The parties are negotiating the milestones or conditions that would trigger either a formal reactivation of the acquisition process or a termination of the EPA and related agreements;

(iii) Allocation of preservation-period expenses: The parties are negotiating the allocation of costs incurred during the standstill period, including regulatory maintenance costs, advisory fees, and vehicle operating expenses; and

(iv) Treatment of lapsed or expiring regulatory approvals and third-party commitments: The parties are negotiating the framework for addressing regulatory approvals (such as the FERC §203 approval) and third-party arrangements (such as the R&W insurance policy) that may lapse, expire, or require renewal during the standstill period.

C&H has been engaged by Ironside to review and comment on the Standstill Agreement once a draft is available, with a particular focus on ensuring that the agreement includes adequate protections for the interests of the co-investment vehicle, ICM Cascadia Co-Invest, LP. In particular, C&H intends to coordinate with BSP (Charles A. Delacroix) on the inclusion of the following Ironside-specific protections: (a) consent rights for the co-invest vehicle before any reactivation decision that would trigger additional capital calls; (b) information rights during the standstill period at least as extensive as the current dormancy reporting obligations; (c) limitations on the GP's ability to agree to material modifications to the EPA or the concession terms without co-investor consultation; and (d) a clear mechanism for the co-invest vehicle to exit the transaction in the event that the reactivation terms are materially different from the originally underwritten investment thesis.

We note for the record that the Mutual Standstill and Preservation Agreement was ultimately executed on February 15, 2024, which post-dates this memorandum but is consistent with the GP's Q4 timeline forecast. C&H will provide a separate memorandum analyzing the terms of the executed Standstill Agreement.

C. Portland Metropolitan Water District Concession Renegotiation

The GP's Q4 Report includes an update on the ongoing renegotiation of the Bull Run Filtration Project concession between Cascadia and the Portland Metropolitan Water District (the "Water District"). This renegotiation remains the central issue underlying the Material Impediment Event and the prolonged dormancy of the co-investment vehicle.

Background. On October 28, 2022, the Water District delivered a formal notification to Cascadia of its intent to renegotiate the terms of the concession agreement governing the Bull Run Filtration Project (the "Concession Agreement"). The Concession Agreement was originally executed in approximately 2018 and provides for a 40-year concession under which Cascadia operates, maintains, and receives revenue from the Bull Run filtration facilities. The project generates annual revenue of approximately $64,000,000 and represents a material component of Cascadia's overall revenue and EBITDA.

The Water District's renegotiation notice cited changed regulatory requirements under Oregon Senate Bill 1567, enacted in 2022 ("SB 1567"), which imposed new environmental and water quality standards applicable to water filtration concessions. The Water District took the position that the existing Concession Agreement did not adequately address the capital expenditure and operational requirements imposed by SB 1567 and that the concession terms required modification to ensure compliance. This renegotiation was the proximate cause of the Material Impediment Event declared by the GP on January 9, 2023, as the uncertainty regarding the Bull Run concession terms created material uncertainty regarding Cascadia's projected revenue, EBITDA, and capital expenditure requirements — all of which directly affected the underwriting of the acquisition at the agreed-upon enterprise value.

Q4 2023 Update. The GP reports that negotiations between Cascadia and the Water District continued through Q4 2023 without reaching a definitive resolution. Cascadia's Chief Executive Officer, Jonathan M. Weir, and Chief Financial Officer, Sandra K. Llewellyn, have been leading the negotiations on behalf of Cascadia. The Water District has engaged its own financial and legal advisors, and the parties have exchanged multiple revised term sheets over the course of the year.

The GP characterizes the status of the concession renegotiation as "constructive but unresolved." The GP notes that the revised concession terms under discussion would likely result in reduced annual revenue from the Bull Run project relative to the terms of the existing Concession Agreement, though the GP does not disclose specific figures or ranges in the Q4 Report. The GP further notes that the parties are also negotiating the allocation of incremental capital expenditures required to achieve compliance with SB 1567, and that the total capital expenditure obligation remains a significant point of contention.

C&H Observation: The revenue impact of the concession renegotiation remains the central variable in determining whether the underlying acquisition remains economically viable at the original enterprise value of $1,950,000,000. Any material reduction in Bull Run revenue would directly reduce Cascadia's projected EBITDA, which in turn affects the implied acquisition multiple, the leverage capacity of the business, and the return profile of the co-investment. We recommend that Ironside formally request that the GP include in future quarterly reports a more granular financial impact analysis, including (a) the estimated range of annual revenue under the revised concession terms currently being discussed, (b) the estimated incremental capital expenditure requirements under the revised terms, and (c) a pro forma EBITDA analysis reflecting the revised concession economics. Without this information, Ironside's ability to make an informed decision regarding the wind-down election right (discussed in Section VII below) will be limited.

IV. Regulatory Approvals Update

A. FERC §203 Approval

The Federal Energy Regulatory Commission ("FERC") granted approval of the proposed transaction under Section 203 of the Federal Power Act on December 15, 2022, in Docket No. EC22-143-000. The FERC order authorized the proposed acquisition of Cascadia's jurisdictional assets, subject to standard conditions, including the requirement that Cascadia complete license-transfer filings with FERC within the applicable timeframes following closing of the acquisition.

The FERC approval contains an 18-month lapse provision, under which the authorization would automatically expire if the proposed transaction has not been consummated within 18 months of the date of the order. Based on the December 15, 2022 order date, the lapse date was originally approximately June 15, 2024. The GP previously reported (in the Q2 2023 and Q3 2023 quarterly reports) that FERC staff had granted a letter extension confirming that the approval would remain effective through June 15, 2024, notwithstanding the dormancy of the transaction.

The GP's Q4 2023 Report notes the following with respect to the FERC approval:

(i) No license-transfer filings have been made during the dormancy period, as no closing of the acquisition has occurred;

(ii) The FERC approval remains in effect as of the date of the Q4 Report but is at risk of lapsing if the transaction does not close, or if no further extension is obtained from FERC, before June 15, 2024; and

(iii) The GP has not yet initiated discussions with FERC staff regarding a further extension of the lapse date beyond June 15, 2024, but intends to assess the need for such discussions in conjunction with the standstill negotiations and any reactivation analysis.

C&H Observation: The June 15, 2024 lapse date is approaching and represents a material regulatory risk. If the FERC approval lapses, a new Section 203 filing would likely be required in the event of transaction reactivation. Based on C&H's experience with similar FERC proceedings, the re-filing and approval process would likely require three to six months, depending on the complexity of any intervening changes to Cascadia's asset portfolio or market conditions. This re-filing timeline should be factored into any reactivation analysis prepared by the GP or by Ironside's internal team. C&H recommends that Ironside inquire with the GP regarding the GP's plans for seeking a further FERC extension and the expected cost and timeline for doing so.

B. Oregon PUC (OPUC)

The application for approval of the proposed change of control of Cascadia's regulated utility subsidiaries was filed with the Oregon Public Utility Commission ("OPUC") on October 14, 2022, and was assigned Docket No. UM-2287. The OPUC application process was in its early stages when the Material Impediment Event was declared in January 2023.

At the joint request of all parties to the OPUC proceeding, including Cascadia, the acquisition parties, and the OPUC Staff, the Commission entered an order staying the proceeding in February 2023. The stay was granted on the basis that the parties anticipated the concession renegotiation would be resolved within a reasonable period and that proceeding with the OPUC review during the pendency of the renegotiation would be premature, as the revised concession terms could affect the financial projections and commitments that form the basis of the OPUC application.

The GP's Q4 Report confirms that the OPUC stay remains in effect and that no substantive action has been taken by the Commission during Q4 2023. The GP does not report any communications from OPUC Staff regarding the stay or any indication that the Commission intends to lift the stay on its own motion.

Reactivation of the OPUC process would require a joint motion to lift the stay, which would need to be filed by the applicant parties. The GP estimates that, following reactivation, the OPUC review process would require approximately four to six additional months to complete, taking into account the need for updated financial projections, supplemental testimony, and any intervenor participation. This timeline estimate is consistent with C&H's experience with OPUC change-of-control proceedings of this nature.

C. CFIUS. A voluntary notice regarding the proposed transaction was filed with the Committee on Foreign Investment in the United States ("CFIUS") and was formally acknowledged on September 20, 2022. The voluntary notice was filed out of an abundance of caution, given the involvement of certain limited partners in Meridian Infrastructure Fund IV, LP with non-U.S. domiciles. CFIUS completed its review and no further action was required; clearance was effectively received.

The GP's Q4 Report notes that the CFIUS clearance is not time-limited and does not contain a lapse provision. The GP reports the CFIUS status as fully resolved. C&H concurs with this assessment and confirms that no additional CFIUS action is needed regardless of whether the transaction proceeds, is restructured, or is terminated.

V. Financing Status

A. Debt Commitment Letter Expiration

The debt commitment letter (the "Commitment Letter") was executed on August 30, 2022 by Atlas National Bank, N.A., acting as lead arranger and administrative agent, and Pinnacle Credit Partners LLC, acting as co-lender. The Commitment Letter provided for the following financing facilities:

• Senior Secured Term Loan Facility: $975,000,000 in aggregate principal amount, with Atlas committed to a $650,000,000 share and Pinnacle committed to a $325,000,000 share; and

• Revolving Credit Facility: $150,000,000 in aggregate availability, to be provided by Atlas as sole revolving lender.

The total committed debt financing under the Commitment Letter was therefore $1,125,000,000, intended to fund the debt component of the acquisition consideration and to provide post-closing working capital and liquidity for the combined enterprise.

The Commitment Letter originally contained a sunset provision pursuant to which the commitments would terminate on the earlier of (a) the closing of the acquisition or (b) the expiration of the outside date under the EPA. When the EPA outside date was first extended, the commitment termination date was correspondingly extended by the lenders through an amendment to the Commitment Letter dated April 30, 2023. In connection with that extension, Meridian Infrastructure Fund IV, LP paid an extension fee of $2,437,500, calculated as 0.25% of the $975,000,000 term loan commitment. The revolving credit facility commitment was extended without an additional fee.

No further extension of the Commitment Letter was obtained. The GP's Q4 Report confirms that the debt commitment expired on October 31, 2023 and is no longer in effect as of November 1, 2023. Atlas and Pinnacle are no longer obligated to fund the acquisition financing under the terms of the expired Commitment Letter.

C&H previously advised Ironside of this development by letter dated November 2, 2023, in which we analyzed the implications of the commitment expiration for the co-investment vehicle and recommended that Ironside seek clarity from the GP regarding the availability and terms of replacement financing.

The GP's Q4 Report states that Meridian has had preliminary discussions with Atlas and with other potential lenders about a replacement financing commitment in the event of transaction reactivation. However, the GP reports that no term sheets, commitment letters, or other binding or indicative financing proposals have been received as of the date of the Q4 Report. The GP characterizes these discussions as "early-stage" and notes that lender interest will depend in significant part on the resolution of the Bull Run concession renegotiation and the resulting projected cash flows of Cascadia.

C&H Observation: The absence of committed debt financing represents a significant impediment to the reactivation of the acquisition. The Commitment Letter was obtained in August 2022 in a markedly different interest rate environment than the one prevailing as of the date of this memorandum. Any new debt commitment would likely reflect substantially changed market conditions, including higher benchmark interest rates (the federal funds rate has increased by approximately 350 basis points since the original Commitment Letter was executed), potentially different leverage parameters, and revised covenant structures. These changes could materially affect the transaction economics for both the fund-level equity and the co-investment vehicle. C&H strongly recommends that Ironside request that the GP provide indicative replacement financing terms — including expected interest rates, leverage ratios, and key covenant terms — before any decision is made regarding the reactivation of the co-investment vehicle or the issuance of additional capital calls.

B. Representations and Warranties Insurance Policy

A representations and warranties insurance policy (the "R&W Policy") was issued by Northgate Specialty Insurance Co. ("Northgate") in connection with the acquisition, bearing Policy No. NSW-RI-2022-09814. The material terms of the R&W Policy are as follows:

• Coverage Limit: $195,000,000 (representing 10% of the enterprise value of $1,950,000,000);

• Premium Deposit: $4,875,000 (representing 2.5% of the coverage limit of $195,000,000);

• Binding Date: September 1, 2022; and

• Named Insured: Cascadia Acquisition Corp. and ICM Cascadia Co-Invest, LP (as co-investor).

The R&W Policy's coverage period has been tolled during the dormancy period pursuant to a tolling side letter dated January 20, 2023, executed between Northgate Specialty and ICM Cascadia Co-Invest, LP (the "Tolling Side Letter"). The Tolling Side Letter provides that the policy coverage period shall be suspended during the dormancy period and shall recommence upon the earlier of (a) the closing of the acquisition or (b) the formal termination of the dormancy period.

The GP's Q4 Report confirms that the Tolling Side Letter remains in effect and that Northgate has not sought to terminate the tolling arrangement or withdraw from the R&W Policy. However, the GP notes that Northgate has informally communicated — through its broker, which the GP identifies but does not name in the Q4 Report — that any reactivation of the acquisition may require updated underwriting, an additional premium payment, and revised coverage terms. The GP does not provide detail regarding the nature or magnitude of the potential premium increase or coverage modifications.

C&H Observation: The potential for revised R&W insurance terms upon reactivation of the acquisition should be considered as an additional cost factor in any reactivation analysis. Depending on the nature of the coverage modifications and the magnitude of any additional premium, the revised R&W Policy terms could affect the risk allocation framework of the acquisition and the overall cost to the co-investment vehicle. C&H recommends that Ironside monitor this issue and request that the GP obtain and share indicative revised terms from Northgate in advance of any reactivation decision.

VI. Financial Position of ICM Cascadia Co-Invest, LP

A. Capital Account Summary

The GP's Q4 Report provides the following summary of the financial position of ICM Cascadia Co-Invest, LP as of December 31, 2023:

The entirety of the $22,500,000 in called capital was drawn pursuant to a single capital call notice dated August 15, 2022, issued prior to the declaration of the Material Impediment Event. No additional capital calls have been issued since the capital-call suspension notice delivered by the GP on January 9, 2023, concurrent with the declaration of the Material Impediment Event.

The capital called to date was allocated as follows:

The GP's commitment to the vehicle (at 0.01%) is $30,000, with the LP commitment (at 99.99%) totaling $299,970,000. Pursuant to the Side Letter, no management fee is payable on the co-investment vehicle during the dormancy period or otherwise. Carried interest is set at 10% above an 8% preferred return (compounded quarterly), but this provision is not currently applicable as no investment income or gains have been realized by the vehicle since its formation.

B. Vehicle Operating Expenses — Q4 2023

The GP's Q4 Report discloses total vehicle operating expenses for Q4 2023 of approximately $46,250. This figure is consistent with the annualized operating expense estimate of approximately $185,000, which equates to approximately $46,250 per quarter. The quarterly expense figure has been largely consistent across all four quarters of the dormancy period.

The GP's report identifies the following categories of operating expenses:

• Fund administration fees: Fees payable to Kendrick Thorne & Associates LLP for fund accounting, investor reporting, and administrative services during the dormancy period;

• Registered agent fees: Fees payable to Cascade Systems (Dover, Delaware) for maintenance of the vehicle's registered agent and registered office in the State of Delaware;

• Delaware franchise tax accrual: The vehicle's quarterly accrual for the Delaware limited partnership annual tax; and

• Audit and K-1 preparation accrual: The vehicle's quarterly accrual for the annual audit and preparation of Schedule K-1 forms for tax reporting purposes.

The cumulative operating expenses incurred during the dormancy period through December 31, 2023 (covering four full quarters from January 9, 2023 through December 31, 2023) total approximately $185,000.

The GP notes that these expenses are being funded from the working-capital reserve established from the initial capital call. The remaining working-capital reserve balance as of December 31, 2023 is approximately $3,315,000 ($3,500,000 initial reserve less $185,000 in cumulative dormancy operating expenses).

C&H Observation: At the current quarterly burn rate of approximately $46,250, the remaining working-capital reserve of $3,315,000 is sufficient to fund approximately 71.7 additional quarters, or approximately 17 to 18 additional years, of dormancy operating expenses, assuming no material change in the expense level. The adequacy of the working-capital reserve is therefore not a near-term concern. However, C&H notes that this calculation does not account for any extraordinary expenses that might arise, such as legal fees associated with the standstill negotiations, regulatory re-filing costs, or potential wind-down expenses. The working-capital reserve should continue to be monitored on a quarterly basis.

VII. GP's Assessment of Dormancy Duration and Outlook

The GP's Q4 Report states that the Material Impediment Event, declared on January 9, 2023 pursuant to Section 7.04 of the LP Agreement, remains in effect as of the date of the report. The GP does not anticipate lifting the Material Impediment Event in the near term.

The GP identifies the following conditions that must be satisfied, in the GP's assessment, for the dormancy period to end and for the acquisition to be reactivated:

(i) Resolution of the Bull Run concession renegotiation on terms acceptable to the acquisition parties, such that the revised concession economics can support the acquisition underwriting at an agreed-upon enterprise value;

(ii) New or reinstated debt financing on commercially reasonable terms sufficient to fund the debt component of the acquisition, taking into account the revised concession economics and current market conditions;

(iii) Reinstatement or replacement of the EPA (or execution of a new definitive agreement), including agreement among the EPA parties on revised terms (if any) and a new outside date; and

(iv) Regulatory approvals either preserved or re-obtained, including the FERC §203 approval (which is at risk of lapsing on June 15, 2024) and the OPUC approval (which requires reactivation of the stayed proceeding).

The GP does not provide a specific expected date for the resolution of these conditions or for the end of the dormancy period. The GP states that Meridian continues to assess the feasibility of transaction reactivation and expects to provide a more definitive assessment in the Q1 2024 or Q2 2024 quarterly reports, by which time the Standstill Agreement is expected to have been executed and the concession renegotiation may have progressed to a point where a more informed assessment can be made.

C&H Observation: C&H draws Ironside's particular attention to the following: under Section 7.04(c) of the LP Agreement, each limited partner holding commitments in excess of $100,000,000 has the right to elect to initiate a wind-down of the co-investment vehicle if the Material Impediment Event remains in effect for a continuous period of eighteen (18) months from the date of declaration. The Material Impediment Event was declared on January 9, 2023. The 18-month anniversary of that date is July 9, 2024. On that date, Ironside's wind-down election right will ripen, and Ironside will have the contractual ability to deliver a wind-down election notice to the GP.

The exercise of the wind-down election right would trigger a series of contractual consequences, including the obligation of the GP to use commercially reasonable efforts to return unfunded commitments and to liquidate or transfer the vehicle's assets (to the extent any remain) in an orderly manner. The wind-down process would also require the allocation of wind-down costs and the resolution of any obligations of the vehicle under the EPA, the Standstill Agreement, and other ancillary agreements.

If the GP has not provided a credible and specific path to reactivation by July 9, 2024, Ironside should carefully consider whether to exercise the wind-down election right. C&H will prepare a separate, detailed analysis of the wind-down election mechanics, consequences, and strategic considerations as the 18-month mark approaches. We expect to deliver this analysis no later than June 2024, in order to provide Ironside with sufficient time to evaluate the wind-down option before the trigger date.

VIII. Open Items and Recommended Follow-Up Actions

A. Items Requiring Ironside Response or Decision

Based on our review of the Q4 Report, C&H identifies the following items that require a response or decision from Ironside:

1. Standstill Agreement Review. C&H should be authorized to review and negotiate Ironside-specific protections in the forthcoming Mutual Standstill and Preservation Agreement. As discussed in Section III.B above, C&H intends to coordinate with BSP (Charles A. Delacroix) on the inclusion of co-invest protections, including consent rights, information rights, and exit mechanisms. Ironside should confirm that Pamela Cross (Responsible Partner, C&H) is authorized to communicate and negotiate directly with BSP on behalf of Ironside in connection with the standstill negotiations. We request written confirmation of this authorization at Ironside's earliest convenience.

2. Wind-Down Election Preparedness. C&H recommends that Ironside authorize the commencement of preliminary analysis of the wind-down election mechanics and consequences in advance of the July 9, 2024 trigger date. This analysis will include a review of the contractual provisions governing the wind-down process, an assessment of the costs and timeline associated with a wind-down, an evaluation of Ironside's exposure to any residual obligations of the vehicle, and a summary of the strategic considerations relevant to the exercise of the wind-down right. C&H estimates that this analysis will require approximately 30 to 40 hours of attorney time and requests Ironside's authorization to proceed.

3. Request for Enhanced Financial Reporting. C&H recommends that Ironside deliver a formal written request to the GP, pursuant to the Side Letter's information rights provisions, requiring that future quarterly reports include the following additional information:

(i) A quantitative estimate of the impact of the revised Bull Run concession terms on Cascadia's projected annual revenue and EBITDA, including a range of scenarios if a definitive agreement has not yet been reached; and

(ii) Indicative replacement financing terms, including expected interest rates, leverage parameters, and any preliminary term sheets or indications of interest received from potential lenders.

C&H is prepared to draft this request letter on Ironside's behalf upon authorization.

B. Items for C&H Follow-Up

The following items have been identified for C&H follow-up and will be tracked on the matter management docket:

1. Standstill Agreement Monitoring. C&H will monitor the progress of the standstill negotiations and will obtain a draft of the Mutual Standstill and Preservation Agreement for review when it becomes available. C&H will prepare a memorandum analyzing the terms of the Standstill Agreement and identifying any provisions that require modification to protect Ironside's interests.

2. Tax Year 2023 K-1 Review. C&H will coordinate with Sylvia Hartwell (Specialist Partner, Tax) on the review of the vehicle's tax year 2023 Schedule K-1 forms, which are expected to be prepared by Kendrick Thorne & Associates LLP and delivered in Q1 2024. C&H will confirm with Kendrick Thorne that the K-1 forms are being prepared on a timely basis and will review the forms upon receipt for consistency with the vehicle's financial position as reported in the quarterly status reports.

3. Annual Compliance Memorandum. C&H will prepare the annual compliance memorandum for ICM Cascadia Co-Invest, LP for fiscal year 2023, covering Delaware franchise tax obligations, annual report filing requirements, and registered agent confirmation with Cascade Systems (Dover, Delaware). This memorandum is expected to be delivered to Ironside in February 2024.

4. FERC §203 Lapse Deadline Monitoring. C&H will track the FERC §203 approval lapse deadline of June 15, 2024 and will assess the implications and timeline for a re-filing in the event that the approval lapses without a further extension. C&H will coordinate with BSP regarding any efforts by the GP to obtain a further extension from FERC staff.

5. OPUC Stay Monitoring. C&H will monitor the status of the OPUC stay in Docket No. UM-2287 and will flag any developments, including any sua sponte action by the Commission or communications from OPUC Staff regarding the continued stay of proceedings.

IX. Conclusion

Based on our review, C&H concludes that the GP's Q4 2023 quarterly status report is substantively compliant with the reporting obligations set forth in Section 7.04 of the LP Agreement and the Side Letter. The report was delivered in a timely manner, well in advance of the applicable 45-day deadline, and addresses each of the required content categories.

The fourth quarter of 2023 was marked by two significant developments: the expiration of the Atlas/Pinnacle debt commitment letter on October 31, 2023 and the expiration of the third extended outside date under the EPA on December 31, 2023. Both of these developments materially increase the uncertainty surrounding the potential reactivation of the acquisition and the deployment of the co-investment vehicle's remaining unfunded commitments. The transaction now lacks both a binding definitive agreement with an operative outside date and committed debt financing — two foundational elements that must be restored before the acquisition can proceed.

Against this backdrop, the initiation of standstill negotiations among the EPA parties is a constructive development, and the GP's expectation that a formal Standstill Agreement will be executed in Q1 2024 is a reasonable timeline. However, the formalization of the standstill is only a preservation measure and does not, in itself, address the substantive conditions that must be resolved before the dormancy period can be lifted.

The vehicle remains financially stable, with adequate working-capital reserves to cover dormancy operating expenses for the foreseeable future. The current quarterly burn rate of approximately $46,250 can be sustained by the existing reserves for approximately 17 to 18 additional years, and the vehicle has no outstanding liabilities or obligations that would require additional capital calls during the dormancy period.

Looking ahead, C&H will continue to monitor developments and will prepare additional memoranda regarding the following matters:

(i) The Mutual Standstill and Preservation Agreement, once available for review, with a focus on co-invest protections and Ironside's consent and information rights during the standstill period; and

(ii) The wind-down election right under LP Agreement §7.04(c), including a comprehensive analysis of the mechanics, costs, consequences, and strategic considerations associated with the exercise of this right, to be delivered in advance of the July 9, 2024 trigger date.

This memorandum should be read in conjunction with C&H's prior quarterly report review memoranda (Q1 2023, dated April 20, 2023; Q2 2023, dated July 18, 2023; Q3 2023, dated October 15, 2023) and our memorandum dated December 18, 2023 regarding EPA outside date expiration and standstill options. Together, these memoranda constitute a comprehensive record of C&H's ongoing review and analysis of the GP's dormancy-period reporting and the developments affecting the co-investment vehicle.

We are available to discuss any aspect of this memorandum at your convenience and look forward to receiving Ironside's instructions regarding the action items identified in Section VIII.A above.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Theresa Kim Lead Associate, Funds & Asset Management

By: ________

Owen Fischer Working Associate, Funds & Asset Management

Reviewed and Approved:

By: ________

Pamela Cross Responsible Partner, Funds & Asset Management

DISTRIBUTION

COPIES

FILE: C&H Matter No. 1023-00001

This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the named recipients and should not be disclosed, distributed, or reproduced without the prior written consent of Calderwood & Harkness LLP. Any unauthorized disclosure may result in a waiver of applicable privileges.

To:

Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP

From:

Owen Fischer, Calderwood & Harkness LLP

Reviewed By:	Pamela Cross, Responsible Partner, Calderwood & Harkness LLP
Date:	January 22, 2024
Re:	Review of Meridian Infrastructure GP IV LLC Quarterly Status Report — Q4 2023 (October 1, 2023 – December 31, 2023)
C&H Matter Number:	1023-00001
Vehicle:	ICM Cascadia Co-Invest, LP (EIN: 88-3921457; DE SOS File No. 7439218)
Category	Amount
Total committed capital	$300,000,000
Capital called to date	$22,500,000
Capital called as percentage of total commitment	7.5%
Unfunded commitment	$277,500,000
Expense Category	Amount
Organizational expenses	$285,000
Placement-agent fee (Rivermark Capital Markets Inc.) (0.35% × $300,000,000)	$1,050,000
R&W insurance premium deposit (Northgate Specialty Insurance Co.)	$4,875,000
Due-diligence costs and deposits	$12,790,000
Working-capital reserve	$3,500,000
Total	$22,500,000
Recipient	Affiliation
Marcus J. Calloway	Ironside Capital Management LP
Renata Obasi	Ironside Capital Management LP
Recipient	Affiliation / Role
Nicholas Stern	Billing Partner, Calderwood & Harkness LLP
Pamela Cross	Responsible Partner, Calderwood & Harkness LLP
Sylvia Hartwell	Specialist Partner, Tax, Calderwood & Harkness LLP

MEMORANDUM
ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
I. Executive Summary
This memorandum presents Calderwood & Harkness LLP's ("C&H") review and analysis of the quarterly status report (the "Q4 Report") delivered by Meridian Infrastructure GP IV LLC (the "GP") to Ironside Capital Management LP ("Ironside") for the fourth quarter of 2023, covering the period from October 1, 2023 through December 31, 2023. The Q4 Report covers the fourth full calendar quarter of the dormancy period that commenced on January 9, 2023, when the GP declared a Material Impediment Event under the Amended and Restated Agreement of Limited Partnership of ICM Cascadia Co-Invest, LP, dated August 1, 2022, as amended (the "LP Agreement").
The Q4 Report constitutes the fourth quarterly report delivered under the dormancy reporting obligation set forth in Section 7.04 of the LP Agreement and the side letter agreement between Ironside and the GP dated July 29, 2022 (the "Side Letter"). C&H has reviewed each of the prior quarterly reports in separate memoranda, and this memorandum should be read in the context of those prior analyses.
The quarter was marked by several significant developments that bear directly on the outlook for the co-investment vehicle and the underlying acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia"). The key developments during Q4 2023 are as follows:
(a) The debt commitment letter issued by Atlas National Bank, N.A. ("Atlas") and Pinnacle Credit Partners LLC ("Pinnacle") expired on October 31, 2023 without further extension, leaving the acquisition without committed debt financing for the first time since the commitment was originally obtained in August 2022;
(b) The third extended outside date under the Equity Purchase Agreement dated September 15, 2022 (the "EPA") expired on December 31, 2023, without any party exercising its termination rights under the EPA as of the date of the GP's report; and
(c) The GP reports the initiation of standstill and preservation discussions among the EPA parties, with the objective of formalizing a framework under which the parties would refrain from exercising termination rights while the feasibility of reactivation is assessed.
The co-investment vehicle remains dormant, with $22,500,000 of capital called (representing 7.5% of the $300,000,000 total commitment) and $277,500,000 in unfunded commitments. No additional capital calls have been issued since the capital-call suspension notice delivered on January 9, 2023, concurrent with the declaration of the Material Impediment Event.
Overall Assessment: The GP's Q4 2023 report is substantively compliant with the reporting obligations established under the LP Agreement and the Side Letter. The report was delivered well in advance of the applicable deadline and addresses each of the required content categories. However, certain items warrant follow-up, as detailed in this memorandum, including the need for more granular financial impact analysis regarding the Bull Run concession renegotiation and indicative replacement financing terms. Additionally, C&H draws Ironside's attention to the approaching 18-month anniversary of the dormancy commencement date, which will trigger Ironside's wind-down election right under Section 7.04(c) of the LP Agreement on July 9, 2024.
II. Compliance with Reporting Obligations
A. Timeliness of Delivery
Section 7.04(b) of the LP Agreement provides that, during any period in which a Material Impediment Event is in effect, the GP shall deliver to each limited partner holding commitments in excess of $100,000,000 a quarterly status report within forty-five (45) days following the end of each calendar quarter. This obligation is further reinforced by Section 3(d) of the Side Letter, which confirms the quarterly reporting requirement and specifies that such reports shall be delivered by electronic transmission to the addresses designated by Ironside in the LP Agreement's notice schedule.
The fourth quarter of 2023 ended on December 31, 2023. Accordingly, the 45-day deadline for delivery of the Q4 Report was February 14, 2024. The GP's report is dated January 18, 2024, and was received by Ironside via encrypted electronic transmission on January 19, 2024. The Q4 Report was thus delivered twenty-seven (27) days in advance of the contractual deadline. This is consistent with the GP's pattern of timely delivery: the Q1 2023 report was delivered 19 days early, the Q2 2023 report was delivered 22 days early, and the Q3 2023 report was delivered 30 days early. C&H notes with approval the GP's continued adherence to the reporting timeline.
B. Content Requirements
Under the LP Agreement and the Side Letter, quarterly status reports during a dormancy period must include the following content categories:
(i) a summary of the status of the underlying acquisition of Cascadia Renewables Holdings, Inc., including any amendments, waivers, or modifications to the EPA or ancillary transaction documents;
(ii) an update on all regulatory approvals that are required for the consummation of the acquisition, including the status of any pending applications, orders, or consents;
(iii) a statement of the financial position of the co-investment vehicle, including the total amount of capital called, unfunded commitments, and the current balance of any working-capital reserves;
(iv) a description of any material developments affecting the Material Impediment Event, including the status of the Bull Run Filtration Project concession renegotiation and any related legal, regulatory, or commercial developments;
(v) the GP's assessment of the expected duration of the dormancy period, including any conditions that must be satisfied before the GP anticipates being in a position to lift the Material Impediment Event and resume capital deployment; and
(vi) a summary of vehicle operating expenses incurred during the quarter and on a cumulative basis since the commencement of the dormancy period.
The Q4 Report addresses each of these required content categories. C&H's detailed analysis of the substance of the GP's disclosures in each category is set forth in Sections III through VII below. While the report is substantively compliant, we identify certain areas where additional detail would enhance the utility of the reporting for Ironside's decision-making purposes, as further described in Section VIII.
III. Status of Underlying Acquisition
A. Equity Purchase Agreement — Third Extended Outside Date Expiration
The EPA was executed on September 15, 2022 among the following parties:
Selling Shareholders:
•  Timberline Growth Equity Fund III, LP, holding approximately 62% of the outstanding equity of Cascadia;
•  Weir Family Trust, holding approximately 18% of the outstanding equity of Cascadia; and
•  Management Rollover Pool (consisting of certain members of Cascadia's senior management team), holding approximately 20% of the outstanding equity of Cascadia, with an expected rollover of approximately 50% of their equity into the post-acquisition capital structure;
Target Company: Cascadia Renewables Holdings, Inc.; and
Acquiror: Cascadia Acquisition Corp., a Delaware corporation organized as the acquisition vehicle for Meridian Infrastructure Fund IV, LP.
The EPA contemplates a negotiated acquisition of 100% of the outstanding equity interests in Cascadia at an enterprise value of $1,950,000,000, representing an implied EV/EBITDA multiple of approximately 14.1x based on Cascadia's reported fiscal year 2021 EBITDA of $138,000,000. The equity value under the EPA is $1,050,000,000, with the balance of the enterprise value to be funded through the senior secured debt facilities described in Section V.A below.
The EPA originally provided for an outside date of December 31, 2022, by which the closing of the acquisition was required to occur (subject to certain limited exceptions). The outside date has been extended three times by the mutual agreement of the parties:
•  First Amendment (dated November 22, 2022): Extended the outside date from December 31, 2022 to March 31, 2023, reflecting the pendency of the FERC §203 approval process and the early stages of the Bull Run concession renegotiation;
•  Second Amendment (dated March 15, 2023): Extended the outside date from March 31, 2023 to June 30, 2023, reflecting the continued pendency of the concession renegotiation following the declaration of the Material Impediment Event;
•  Third Amendment (dated June 28, 2023): Extended the outside date from June 30, 2023 to December 31, 2023, reflecting the parties' continued expectation at that time that the concession renegotiation could be resolved within the extension period.
The GP's Q4 Report confirms that the third extended outside date of December 31, 2023 expired without further amendment to the EPA. The GP further reports that, as of the date of the Q4 Report (January 18, 2024), no party has exercised its termination rights under Section 8.01(b) of the EPA, which permits any party to terminate the EPA by written notice following the expiration of the outside date, provided that the terminating party is not then in material breach of its obligations under the EPA.
The GP characterizes the current posture as a "mutual standstill in practice," noting that all parties have informally agreed to refrain from delivering termination notices while formal standstill negotiations are underway. The GP states that this practical arrangement is intended to preserve the viability of the transaction while the parties evaluate the path forward.
C&H Observation: The GP's characterization of a "mutual standstill in practice" is accurate as a description of the parties' current behavior, but we note that the absence of a formal, binding standstill agreement leaves all parties with the technical ability to deliver termination notices under EPA Section 8.01(b) at any time. An informal understanding not to terminate is not legally enforceable and does not constrain any party from changing course without prior notice. C&H has separately advised Ironside on this exposure in our memorandum dated December 18, 2023, in which we analyzed the implications of the outside date expiration and recommended that Ironside advocate for the prompt execution of a formal standstill agreement with appropriate co-investor protections. We continue to recommend that the formalization of the standstill be treated as a priority.
B. Standstill Negotiations
The GP's Q4 Report provides the following update on the status of standstill negotiations among the EPA parties. Breckenridge Sloane & Pratt LLP ("BSP"), acting as counsel to Meridian Infrastructure Fund IV, LP and the GP (lead partner Charles A. Delacroix), is in discussions with Ridgeway, Ashford & Malone PC ("RAM"), acting as counsel to Cascadia (lead partner Nina R. Castellano), and Garvey Lennox LLP ("GL"), acting as counsel to Timberline Growth Equity Fund III, LP (lead partner Steven F. Yun), regarding the terms of a proposed Mutual Standstill and Preservation Agreement (the "Standstill Agreement").
The GP expects the Standstill Agreement to be executed during Q1 2024. The GP identifies the following key open points in the standstill negotiations:
(i) Duration of the standstill period: The parties are negotiating the length of the standstill, including whether it should be subject to automatic extensions or periodic renewal;
(ii) Conditions for reactivation vs. termination: The parties are negotiating the milestones or conditions that would trigger either a formal reactivation of the acquisition process or a termination of the EPA and related agreements;
(iii) Allocation of preservation-period expenses: The parties are negotiating the allocation of costs incurred during the standstill period, including regulatory maintenance costs, advisory fees, and vehicle operating expenses; and
(iv) Treatment of lapsed or expiring regulatory approvals and third-party commitments: The parties are negotiating the framework for addressing regulatory approvals (such as the FERC §203 approval) and third-party arrangements (such as the R&W insurance policy) that may lapse, expire, or require renewal during the standstill period.
C&H has been engaged by Ironside to review and comment on the Standstill Agreement once a draft is available, with a particular focus on ensuring that the agreement includes adequate protections for the interests of the co-investment vehicle, ICM Cascadia Co-Invest, LP. In particular, C&H intends to coordinate with BSP (Charles A. Delacroix) on the inclusion of the following Ironside-specific protections: (a) consent rights for the co-invest vehicle before any reactivation decision that would trigger additional capital calls; (b) information rights during the standstill period at least as extensive as the current dormancy reporting obligations; (c) limitations on the GP's ability to agree to material modifications to the EPA or the concession terms without co-investor consultation; and (d) a clear mechanism for the co-invest vehicle to exit the transaction in the event that the reactivation terms are materially different from the originally underwritten investment thesis.
We note for the record that the Mutual Standstill and Preservation Agreement was ultimately executed on February 15, 2024, which post-dates this memorandum but is consistent with the GP's Q4 timeline forecast. C&H will provide a separate memorandum analyzing the terms of the executed Standstill Agreement.
C. Portland Metropolitan Water District Concession Renegotiation
The GP's Q4 Report includes an update on the ongoing renegotiation of the Bull Run Filtration Project concession between Cascadia and the Portland Metropolitan Water District (the "Water District"). This renegotiation remains the central issue underlying the Material Impediment Event and the prolonged dormancy of the co-investment vehicle.
Background. On October 28, 2022, the Water District delivered a formal notification to Cascadia of its intent to renegotiate the terms of the concession agreement governing the Bull Run Filtration Project (the "Concession Agreement"). The Concession Agreement was originally executed in approximately 2018 and provides for a 40-year concession under which Cascadia operates, maintains, and receives revenue from the Bull Run filtration facilities. The project generates annual revenue of approximately $64,000,000 and represents a material component of Cascadia's overall revenue and EBITDA.
The Water District's renegotiation notice cited changed regulatory requirements under Oregon Senate Bill 1567, enacted in 2022 ("SB 1567"), which imposed new environmental and water quality standards applicable to water filtration concessions. The Water District took the position that the existing Concession Agreement did not adequately address the capital expenditure and operational requirements imposed by SB 1567 and that the concession terms required modification to ensure compliance. This renegotiation was the proximate cause of the Material Impediment Event declared by the GP on January 9, 2023, as the uncertainty regarding the Bull Run concession terms created material uncertainty regarding Cascadia's projected revenue, EBITDA, and capital expenditure requirements — all of which directly affected the underwriting of the acquisition at the agreed-upon enterprise value.
Q4 2023 Update. The GP reports that negotiations between Cascadia and the Water District continued through Q4 2023 without reaching a definitive resolution. Cascadia's Chief Executive Officer, Jonathan M. Weir, and Chief Financial Officer, Sandra K. Llewellyn, have been leading the negotiations on behalf of Cascadia. The Water District has engaged its own financial and legal advisors, and the parties have exchanged multiple revised term sheets over the course of the year.
The GP characterizes the status of the concession renegotiation as "constructive but unresolved." The GP notes that the revised concession terms under discussion would likely result in reduced annual revenue from the Bull Run project relative to the terms of the existing Concession Agreement, though the GP does not disclose specific figures or ranges in the Q4 Report. The GP further notes that the parties are also negotiating the allocation of incremental capital expenditures required to achieve compliance with SB 1567, and that the total capital expenditure obligation remains a significant point of contention.
C&H Observation: The revenue impact of the concession renegotiation remains the central variable in determining whether the underlying acquisition remains economically viable at the original enterprise value of $1,950,000,000. Any material reduction in Bull Run revenue would directly reduce Cascadia's projected EBITDA, which in turn affects the implied acquisition multiple, the leverage capacity of the business, and the return profile of the co-investment. We recommend that Ironside formally request that the GP include in future quarterly reports a more granular financial impact analysis, including (a) the estimated range of annual revenue under the revised concession terms currently being discussed, (b) the estimated incremental capital expenditure requirements under the revised terms, and (c) a pro forma EBITDA analysis reflecting the revised concession economics. Without this information, Ironside's ability to make an informed decision regarding the wind-down election right (discussed in Section VII below) will be limited.
IV. Regulatory Approvals Update
A. FERC §203 Approval
The Federal Energy Regulatory Commission ("FERC") granted approval of the proposed transaction under Section 203 of the Federal Power Act on December 15, 2022, in Docket No. EC22-143-000. The FERC order authorized the proposed acquisition of Cascadia's jurisdictional assets, subject to standard conditions, including the requirement that Cascadia complete license-transfer filings with FERC within the applicable timeframes following closing of the acquisition.
The FERC approval contains an 18-month lapse provision, under which the authorization would automatically expire if the proposed transaction has not been consummated within 18 months of the date of the order. Based on the December 15, 2022 order date, the lapse date was originally approximately June 15, 2024. The GP previously reported (in the Q2 2023 and Q3 2023 quarterly reports) that FERC staff had granted a letter extension confirming that the approval would remain effective through June 15, 2024, notwithstanding the dormancy of the transaction.
The GP's Q4 2023 Report notes the following with respect to the FERC approval:
(i) No license-transfer filings have been made during the dormancy period, as no closing of the acquisition has occurred;
(ii) The FERC approval remains in effect as of the date of the Q4 Report but is at risk of lapsing if the transaction does not close, or if no further extension is obtained from FERC, before June 15, 2024; and
(iii) The GP has not yet initiated discussions with FERC staff regarding a further extension of the lapse date beyond June 15, 2024, but intends to assess the need for such discussions in conjunction with the standstill negotiations and any reactivation analysis.
C&H Observation: The June 15, 2024 lapse date is approaching and represents a material regulatory risk. If the FERC approval lapses, a new Section 203 filing would likely be required in the event of transaction reactivation. Based on C&H's experience with similar FERC proceedings, the re-filing and approval process would likely require three to six months, depending on the complexity of any intervening changes to Cascadia's asset portfolio or market conditions. This re-filing timeline should be factored into any reactivation analysis prepared by the GP or by Ironside's internal team. C&H recommends that Ironside inquire with the GP regarding the GP's plans for seeking a further FERC extension and the expected cost and timeline for doing so.
B. Oregon PUC (OPUC)
The application for approval of the proposed change of control of Cascadia's regulated utility subsidiaries was filed with the Oregon Public Utility Commission ("OPUC") on October 14, 2022, and was assigned Docket No. UM-2287. The OPUC application process was in its early stages when the Material Impediment Event was declared in January 2023.
At the joint request of all parties to the OPUC proceeding, including Cascadia, the acquisition parties, and the OPUC Staff, the Commission entered an order staying the proceeding in February 2023. The stay was granted on the basis that the parties anticipated the concession renegotiation would be resolved within a reasonable period and that proceeding with the OPUC review during the pendency of the renegotiation would be premature, as the revised concession terms could affect the financial projections and commitments that form the basis of the OPUC application.
The GP's Q4 Report confirms that the OPUC stay remains in effect and that no substantive action has been taken by the Commission during Q4 2023. The GP does not report any communications from OPUC Staff regarding the stay or any indication that the Commission intends to lift the stay on its own motion.
Reactivation of the OPUC process would require a joint motion to lift the stay, which would need to be filed by the applicant parties. The GP estimates that, following reactivation, the OPUC review process would require approximately four to six additional months to complete, taking into account the need for updated financial projections, supplemental testimony, and any intervenor participation. This timeline estimate is consistent with C&H's experience with OPUC change-of-control proceedings of this nature.
C. CFIUS.  A voluntary notice regarding the proposed transaction was filed with the Committee on Foreign Investment in the United States ("CFIUS") and was formally acknowledged on September 20, 2022. The voluntary notice was filed out of an abundance of caution, given the involvement of certain limited partners in Meridian Infrastructure Fund IV, LP with non-U.S. domiciles. CFIUS completed its review and no further action was required; clearance was effectively received.
The GP's Q4 Report notes that the CFIUS clearance is not time-limited and does not contain a lapse provision. The GP reports the CFIUS status as fully resolved. C&H concurs with this assessment and confirms that no additional CFIUS action is needed regardless of whether the transaction proceeds, is restructured, or is terminated.
V. Financing Status
A. Debt Commitment Letter Expiration
The debt commitment letter (the "Commitment Letter") was executed on August 30, 2022 by Atlas National Bank, N.A., acting as lead arranger and administrative agent, and Pinnacle Credit Partners LLC, acting as co-lender. The Commitment Letter provided for the following financing facilities:
•  Senior Secured Term Loan Facility: $975,000,000 in aggregate principal amount, with Atlas committed to a $650,000,000 share and Pinnacle committed to a $325,000,000 share; and
•  Revolving Credit Facility: $150,000,000 in aggregate availability, to be provided by Atlas as sole revolving lender.
The total committed debt financing under the Commitment Letter was therefore $1,125,000,000, intended to fund the debt component of the acquisition consideration and to provide post-closing working capital and liquidity for the combined enterprise.
The Commitment Letter originally contained a sunset provision pursuant to which the commitments would terminate on the earlier of (a) the closing of the acquisition or (b) the expiration of the outside date under the EPA. When the EPA outside date was first extended, the commitment termination date was correspondingly extended by the lenders through an amendment to the Commitment Letter dated April 30, 2023. In connection with that extension, Meridian Infrastructure Fund IV, LP paid an extension fee of $2,437,500, calculated as 0.25% of the $975,000,000 term loan commitment. The revolving credit facility commitment was extended without an additional fee.
No further extension of the Commitment Letter was obtained. The GP's Q4 Report confirms that the debt commitment expired on October 31, 2023 and is no longer in effect as of November 1, 2023. Atlas and Pinnacle are no longer obligated to fund the acquisition financing under the terms of the expired Commitment Letter.
C&H previously advised Ironside of this development by letter dated November 2, 2023, in which we analyzed the implications of the commitment expiration for the co-investment vehicle and recommended that Ironside seek clarity from the GP regarding the availability and terms of replacement financing.
The GP's Q4 Report states that Meridian has had preliminary discussions with Atlas and with other potential lenders about a replacement financing commitment in the event of transaction reactivation. However, the GP reports that no term sheets, commitment letters, or other binding or indicative financing proposals have been received as of the date of the Q4 Report. The GP characterizes these discussions as "early-stage" and notes that lender interest will depend in significant part on the resolution of the Bull Run concession renegotiation and the resulting projected cash flows of Cascadia.
C&H Observation: The absence of committed debt financing represents a significant impediment to the reactivation of the acquisition. The Commitment Letter was obtained in August 2022 in a markedly different interest rate environment than the one prevailing as of the date of this memorandum. Any new debt commitment would likely reflect substantially changed market conditions, including higher benchmark interest rates (the federal funds rate has increased by approximately 350 basis points since the original Commitment Letter was executed), potentially different leverage parameters, and revised covenant structures. These changes could materially affect the transaction economics for both the fund-level equity and the co-investment vehicle. C&H strongly recommends that Ironside request that the GP provide indicative replacement financing terms — including expected interest rates, leverage ratios, and key covenant terms — before any decision is made regarding the reactivation of the co-investment vehicle or the issuance of additional capital calls.
B. Representations and Warranties Insurance Policy
A representations and warranties insurance policy (the "R&W Policy") was issued by Northgate Specialty Insurance Co. ("Northgate") in connection with the acquisition, bearing Policy No. NSW-RI-2022-09814. The material terms of the R&W Policy are as follows:
•  Coverage Limit: $195,000,000 (representing 10% of the enterprise value of $1,950,000,000);
•  Premium Deposit: $4,875,000 (representing 2.5% of the coverage limit of $195,000,000);
•  Binding Date: September 1, 2022; and
•  Named Insured: Cascadia Acquisition Corp. and ICM Cascadia Co-Invest, LP (as co-investor).
The R&W Policy's coverage period has been tolled during the dormancy period pursuant to a tolling side letter dated January 20, 2023, executed between Northgate Specialty and ICM Cascadia Co-Invest, LP (the "Tolling Side Letter"). The Tolling Side Letter provides that the policy coverage period shall be suspended during the dormancy period and shall recommence upon the earlier of (a) the closing of the acquisition or (b) the formal termination of the dormancy period.
The GP's Q4 Report confirms that the Tolling Side Letter remains in effect and that Northgate has not sought to terminate the tolling arrangement or withdraw from the R&W Policy. However, the GP notes that Northgate has informally communicated — through its broker, which the GP identifies but does not name in the Q4 Report — that any reactivation of the acquisition may require updated underwriting, an additional premium payment, and revised coverage terms. The GP does not provide detail regarding the nature or magnitude of the potential premium increase or coverage modifications.
C&H Observation: The potential for revised R&W insurance terms upon reactivation of the acquisition should be considered as an additional cost factor in any reactivation analysis. Depending on the nature of the coverage modifications and the magnitude of any additional premium, the revised R&W Policy terms could affect the risk allocation framework of the acquisition and the overall cost to the co-investment vehicle. C&H recommends that Ironside monitor this issue and request that the GP obtain and share indicative revised terms from Northgate in advance of any reactivation decision.
VI. Financial Position of ICM Cascadia Co-Invest, LP
A. Capital Account Summary
The GP's Q4 Report provides the following summary of the financial position of ICM Cascadia Co-Invest, LP as of December 31, 2023:
The entirety of the $22,500,000 in called capital was drawn pursuant to a single capital call notice dated August 15, 2022, issued prior to the declaration of the Material Impediment Event. No additional capital calls have been issued since the capital-call suspension notice delivered by the GP on January 9, 2023, concurrent with the declaration of the Material Impediment Event.
The capital called to date was allocated as follows:
The GP's commitment to the vehicle (at 0.01%) is $30,000, with the LP commitment (at 99.99%) totaling $299,970,000. Pursuant to the Side Letter, no management fee is payable on the co-investment vehicle during the dormancy period or otherwise. Carried interest is set at 10% above an 8% preferred return (compounded quarterly), but this provision is not currently applicable as no investment income or gains have been realized by the vehicle since its formation.
B. Vehicle Operating Expenses — Q4 2023
The GP's Q4 Report discloses total vehicle operating expenses for Q4 2023 of approximately $46,250. This figure is consistent with the annualized operating expense estimate of approximately $185,000, which equates to approximately $46,250 per quarter. The quarterly expense figure has been largely consistent across all four quarters of the dormancy period.
The GP's report identifies the following categories of operating expenses:
•  Fund administration fees: Fees payable to Kendrick Thorne & Associates LLP for fund accounting, investor reporting, and administrative services during the dormancy period;
•  Registered agent fees: Fees payable to Cascade Systems (Dover, Delaware) for maintenance of the vehicle's registered agent and registered office in the State of Delaware;
•  Delaware franchise tax accrual: The vehicle's quarterly accrual for the Delaware limited partnership annual tax; and
•  Audit and K-1 preparation accrual: The vehicle's quarterly accrual for the annual audit and preparation of Schedule K-1 forms for tax reporting purposes.
The cumulative operating expenses incurred during the dormancy period through December 31, 2023 (covering four full quarters from January 9, 2023 through December 31, 2023) total approximately $185,000.
The GP notes that these expenses are being funded from the working-capital reserve established from the initial capital call. The remaining working-capital reserve balance as of December 31, 2023 is approximately $3,315,000 ($3,500,000 initial reserve less $185,000 in cumulative dormancy operating expenses).
C&H Observation: At the current quarterly burn rate of approximately $46,250, the remaining working-capital reserve of $3,315,000 is sufficient to fund approximately 71.7 additional quarters, or approximately 17 to 18 additional years, of dormancy operating expenses, assuming no material change in the expense level. The adequacy of the working-capital reserve is therefore not a near-term concern. However, C&H notes that this calculation does not account for any extraordinary expenses that might arise, such as legal fees associated with the standstill negotiations, regulatory re-filing costs, or potential wind-down expenses. The working-capital reserve should continue to be monitored on a quarterly basis.
VII. GP's Assessment of Dormancy Duration and Outlook
The GP's Q4 Report states that the Material Impediment Event, declared on January 9, 2023 pursuant to Section 7.04 of the LP Agreement, remains in effect as of the date of the report. The GP does not anticipate lifting the Material Impediment Event in the near term.
The GP identifies the following conditions that must be satisfied, in the GP's assessment, for the dormancy period to end and for the acquisition to be reactivated:
(i) Resolution of the Bull Run concession renegotiation on terms acceptable to the acquisition parties, such that the revised concession economics can support the acquisition underwriting at an agreed-upon enterprise value;
(ii) New or reinstated debt financing on commercially reasonable terms sufficient to fund the debt component of the acquisition, taking into account the revised concession economics and current market conditions;
(iii) Reinstatement or replacement of the EPA (or execution of a new definitive agreement), including agreement among the EPA parties on revised terms (if any) and a new outside date; and
(iv) Regulatory approvals either preserved or re-obtained, including the FERC §203 approval (which is at risk of lapsing on June 15, 2024) and the OPUC approval (which requires reactivation of the stayed proceeding).
The GP does not provide a specific expected date for the resolution of these conditions or for the end of the dormancy period. The GP states that Meridian continues to assess the feasibility of transaction reactivation and expects to provide a more definitive assessment in the Q1 2024 or Q2 2024 quarterly reports, by which time the Standstill Agreement is expected to have been executed and the concession renegotiation may have progressed to a point where a more informed assessment can be made.
C&H Observation: C&H draws Ironside's particular attention to the following: under Section 7.04(c) of the LP Agreement, each limited partner holding commitments in excess of $100,000,000 has the right to elect to initiate a wind-down of the co-investment vehicle if the Material Impediment Event remains in effect for a continuous period of eighteen (18) months from the date of declaration. The Material Impediment Event was declared on January 9, 2023. The 18-month anniversary of that date is July 9, 2024. On that date, Ironside's wind-down election right will ripen, and Ironside will have the contractual ability to deliver a wind-down election notice to the GP.
The exercise of the wind-down election right would trigger a series of contractual consequences, including the obligation of the GP to use commercially reasonable efforts to return unfunded commitments and to liquidate or transfer the vehicle's assets (to the extent any remain) in an orderly manner. The wind-down process would also require the allocation of wind-down costs and the resolution of any obligations of the vehicle under the EPA, the Standstill Agreement, and other ancillary agreements.
If the GP has not provided a credible and specific path to reactivation by July 9, 2024, Ironside should carefully consider whether to exercise the wind-down election right. C&H will prepare a separate, detailed analysis of the wind-down election mechanics, consequences, and strategic considerations as the 18-month mark approaches. We expect to deliver this analysis no later than June 2024, in order to provide Ironside with sufficient time to evaluate the wind-down option before the trigger date.
VIII. Open Items and Recommended Follow-Up Actions
A. Items Requiring Ironside Response or Decision
Based on our review of the Q4 Report, C&H identifies the following items that require a response or decision from Ironside:
1.  Standstill Agreement Review. C&H should be authorized to review and negotiate Ironside-specific protections in the forthcoming Mutual Standstill and Preservation Agreement. As discussed in Section III.B above, C&H intends to coordinate with BSP (Charles A. Delacroix) on the inclusion of co-invest protections, including consent rights, information rights, and exit mechanisms. Ironside should confirm that Pamela Cross (Responsible Partner, C&H) is authorized to communicate and negotiate directly with BSP on behalf of Ironside in connection with the standstill negotiations. We request written confirmation of this authorization at Ironside's earliest convenience.
2.  Wind-Down Election Preparedness. C&H recommends that Ironside authorize the commencement of preliminary analysis of the wind-down election mechanics and consequences in advance of the July 9, 2024 trigger date. This analysis will include a review of the contractual provisions governing the wind-down process, an assessment of the costs and timeline associated with a wind-down, an evaluation of Ironside's exposure to any residual obligations of the vehicle, and a summary of the strategic considerations relevant to the exercise of the wind-down right. C&H estimates that this analysis will require approximately 30 to 40 hours of attorney time and requests Ironside's authorization to proceed.
3.  Request for Enhanced Financial Reporting. C&H recommends that Ironside deliver a formal written request to the GP, pursuant to the Side Letter's information rights provisions, requiring that future quarterly reports include the following additional information:
(i) A quantitative estimate of the impact of the revised Bull Run concession terms on Cascadia's projected annual revenue and EBITDA, including a range of scenarios if a definitive agreement has not yet been reached; and
(ii) Indicative replacement financing terms, including expected interest rates, leverage parameters, and any preliminary term sheets or indications of interest received from potential lenders.
C&H is prepared to draft this request letter on Ironside's behalf upon authorization.
B. Items for C&H Follow-Up
The following items have been identified for C&H follow-up and will be tracked on the matter management docket:
1.  Standstill Agreement Monitoring. C&H will monitor the progress of the standstill negotiations and will obtain a draft of the Mutual Standstill and Preservation Agreement for review when it becomes available. C&H will prepare a memorandum analyzing the terms of the Standstill Agreement and identifying any provisions that require modification to protect Ironside's interests.
2.  Tax Year 2023 K-1 Review. C&H will coordinate with Sylvia Hartwell (Specialist Partner, Tax) on the review of the vehicle's tax year 2023 Schedule K-1 forms, which are expected to be prepared by Kendrick Thorne & Associates LLP and delivered in Q1 2024. C&H will confirm with Kendrick Thorne that the K-1 forms are being prepared on a timely basis and will review the forms upon receipt for consistency with the vehicle's financial position as reported in the quarterly status reports.
3.  Annual Compliance Memorandum. C&H will prepare the annual compliance memorandum for ICM Cascadia Co-Invest, LP for fiscal year 2023, covering Delaware franchise tax obligations, annual report filing requirements, and registered agent confirmation with Cascade Systems (Dover, Delaware). This memorandum is expected to be delivered to Ironside in February 2024.
4.  FERC §203 Lapse Deadline Monitoring. C&H will track the FERC §203 approval lapse deadline of June 15, 2024 and will assess the implications and timeline for a re-filing in the event that the approval lapses without a further extension. C&H will coordinate with BSP regarding any efforts by the GP to obtain a further extension from FERC staff.
5.  OPUC Stay Monitoring. C&H will monitor the status of the OPUC stay in Docket No. UM-2287 and will flag any developments, including any sua sponte action by the Commission or communications from OPUC Staff regarding the continued stay of proceedings.
IX. Conclusion
Based on our review, C&H concludes that the GP's Q4 2023 quarterly status report is substantively compliant with the reporting obligations set forth in Section 7.04 of the LP Agreement and the Side Letter. The report was delivered in a timely manner, well in advance of the applicable 45-day deadline, and addresses each of the required content categories.
The fourth quarter of 2023 was marked by two significant developments: the expiration of the Atlas/Pinnacle debt commitment letter on October 31, 2023 and the expiration of the third extended outside date under the EPA on December 31, 2023. Both of these developments materially increase the uncertainty surrounding the potential reactivation of the acquisition and the deployment of the co-investment vehicle's remaining unfunded commitments. The transaction now lacks both a binding definitive agreement with an operative outside date and committed debt financing — two foundational elements that must be restored before the acquisition can proceed.
Against this backdrop, the initiation of standstill negotiations among the EPA parties is a constructive development, and the GP's expectation that a formal Standstill Agreement will be executed in Q1 2024 is a reasonable timeline. However, the formalization of the standstill is only a preservation measure and does not, in itself, address the substantive conditions that must be resolved before the dormancy period can be lifted.
The vehicle remains financially stable, with adequate working-capital reserves to cover dormancy operating expenses for the foreseeable future. The current quarterly burn rate of approximately $46,250 can be sustained by the existing reserves for approximately 17 to 18 additional years, and the vehicle has no outstanding liabilities or obligations that would require additional capital calls during the dormancy period.
Looking ahead, C&H will continue to monitor developments and will prepare additional memoranda regarding the following matters:
(i) The Mutual Standstill and Preservation Agreement, once available for review, with a focus on co-invest protections and Ironside's consent and information rights during the standstill period; and
(ii) The wind-down election right under LP Agreement §7.04(c), including a comprehensive analysis of the mechanics, costs, consequences, and strategic considerations associated with the exercise of this right, to be delivered in advance of the July 9, 2024 trigger date.
This memorandum should be read in conjunction with C&H's prior quarterly report review memoranda (Q1 2023, dated April 20, 2023; Q2 2023, dated July 18, 2023; Q3 2023, dated October 15, 2023) and our memorandum dated December 18, 2023 regarding EPA outside date expiration and standstill options. Together, these memoranda constitute a comprehensive record of C&H's ongoing review and analysis of the GP's dormancy-period reporting and the developments affecting the co-investment vehicle.
We are available to discuss any aspect of this memorandum at your convenience and look forward to receiving Ironside's instructions regarding the action items identified in Section VIII.A above.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Theresa Kim Lead Associate, Funds & Asset Management
By: ________
Owen Fischer Working Associate, Funds & Asset Management
Reviewed and Approved:
By: ________
Pamela Cross Responsible Partner, Funds & Asset Management
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FILE: C&H Matter No. 1023-00001
This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the named recipients and should not be disclosed, distributed, or reproduced without the prior written consent of Calderwood & Harkness LLP. Any unauthorized disclosure may result in a waiver of applicable privileges.
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, Calderwood & Harkness LLP
Owen Fischer, Calderwood & Harkness LLP
Reviewed By: | Pamela Cross, Responsible Partner, Calderwood & Harkness LLP
Date: | January 22, 2024
Re: | Review of Meridian Infrastructure GP IV LLC Quarterly Status Report — Q4 2023 (October 1, 2023 – December 31, 2023)
C&H Matter Number: | 1023-00001
Vehicle: | ICM Cascadia Co-Invest, LP (EIN: 88-3921457; DE SOS File No. 7439218)
Category | Amount
Total committed capital | $300,000,000
Capital called to date | $22,500,000
Capital called as percentage of total commitment | 7.5%
Unfunded commitment | $277,500,000
Expense Category | Amount
Organizational expenses | $285,000
Placement-agent fee (Rivermark Capital Markets Inc.) (0.35% × $300,000,000) | $1,050,000
R&W insurance premium deposit (Northgate Specialty Insurance Co.) | $4,875,000
Due-diligence costs and deposits | $12,790,000
Working-capital reserve | $3,500,000
Total | $22,500,000
Recipient | Affiliation
Marcus J. Calloway | Ironside Capital Management LP
Renata Obasi | Ironside Capital Management LP
Recipient | Affiliation / Role
Nicholas Stern | Billing Partner, Calderwood & Harkness LLP
Pamela Cross | Responsible Partner, Calderwood & Harkness LLP
Sylvia Hartwell | Specialist Partner, Tax, Calderwood & Harkness LLP

MEMORANDUM

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

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