1023-00001 · Ironside Capital Management LP · Financing

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MEMORANDUM

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT

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I. Executive Summary

This memorandum analyzes the extension of the debt commitment letter originally executed on August 30, 2022 by Atlas National Bank, N.A., as lead arranger and administrative agent, and Pinnacle Credit Partners LLC, as co-lender and syndication participant (collectively, the "Commitment Parties"), which was formally extended on April 30, 2023 to a new expiration date of October 31, 2023 (the "Extension"). The commitment letter relates to a $975 million senior secured term loan facility and a $150 million revolving credit facility intended to finance a portion of the proposed acquisition of Cascadia Renewables Holdings, Inc. (the "Acquisition").

In connection with the Extension, an extension fee of $2,437,500 was incurred, calculated as 0.25% of the $975 million senior secured term loan facility commitment. This fee was paid in its entirety by Meridian Infrastructure Partners Fund IV, LP ("Fund IV"), and no portion of the fee has been or should be allocated to ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest").

This memorandum addresses the following matters for the benefit of Ironside Capital Management LP ("Ironside"):

(a) the key terms of the Extension and any modifications to the original commitment letter;

(b) analysis of whether the extension fee could, under the existing contractual framework, be allocated to the Vehicle;

(c) implications of the Extension for the Vehicle's unfunded commitment obligations and dormancy governance mechanics; and

(d) considerations regarding any future extensions of the debt commitment letter, its potential expiration, and the interaction of the commitment letter timeline with the Equity Purchase Agreement outside date and applicable regulatory approvals.

As further context, the Vehicle has been dormant since January 9, 2023, when Meridian Infrastructure GP IV LLC (the "GP") issued a capital-call suspension notice declaring a Material Impediment Event under 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"). Capital calls have been suspended since that date and remain suspended as of the date of this memorandum. During the dormancy period, the Vehicle's ongoing operating costs have been limited to the agreed annual budget of approximately $185,000, consistent with the protections negotiated in the Side Letter between Ironside and the GP.

Our principal conclusion is that Ironside need not take any action with respect to the Extension or the associated extension fee. The $2,437,500 cost is properly borne by Fund IV, and there is no contractual basis under the LP Agreement, the Co-Investment Allocation Agreement, or the Side Letter to allocate any portion of this expense to the Vehicle. However, as set forth in greater detail below, there are several forward-looking considerations that warrant continued monitoring by Ironside, including the risk that the commitment letter may not be extended beyond October 31, 2023, the approaching misalignment between the debt commitment expiration and the Equity Purchase Agreement outside date, and the lapse risk associated with certain regulatory approvals.

II. Background

A. Original Debt Commitment Letter

The debt commitment letter at issue was executed on August 30, 2022 (the "Original Commitment Letter"). The parties to the Original Commitment Letter are as follows:

Lead Arranger and Administrative Agent: Atlas National Bank, N.A. ("Atlas"), with principal offices at 383 Madison Avenue, New York, NY 10179.

Co-Lender and Syndication Participant: Pinnacle Credit Partners LLC ("Pinnacle"), with principal offices at 600 Lexington Avenue, 20th Floor, New York, NY 10022.

Borrower (upon closing): Cascadia Acquisition Corp. ("AcquisitionCo"), a newly formed Delaware corporation organized for the purpose of consummating the Acquisition, to be wholly owned, directly or indirectly, by Fund IV and ICM Co-Invest.

The Original Commitment Letter provides for the following facilities:

Senior Secured Term Loan Facility. A senior secured term loan in an aggregate principal amount of $975 million, to be allocated between Atlas (commitment of $650 million) and Pinnacle (commitment of $325 million). The term loan is to be secured by substantially all of the assets of AcquisitionCo and its subsidiaries, including the equity interests of the target, and is governed by New York law.

Revolving Credit Facility. A revolving credit facility in an aggregate principal amount of $150 million, committed solely by Atlas, to be available for working capital and general corporate purposes following the closing of the Acquisition. As of the date of this memorandum, the revolving facility remains undrawn, as the Acquisition has not yet closed.

The Original Commitment Letter is governed by New York law and was originally set to expire on a date aligned with the outside date in the Equity Purchase Agreement (the "EPA"), which was initially December 31, 2022.

The purpose of the financing was to fund a portion of the $1.95 billion enterprise value acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Target"), a leading Pacific Northwest infrastructure platform with regulated and contracted renewable energy, water treatment, and utility service concessions. The following table summarizes the sources and uses for the proposed Acquisition as originally contemplated:

The equity contributions of Fund IV ($750 million) and ICM Co-Invest ($300 million) represent 71.43% and 28.57% of total equity, respectively, consistent with the Co-Investment Allocation Agreement described in Section IV.B below.

B. Transaction Status and Dormancy

Following the execution of the Original Commitment Letter and the EPA in August 2022, the transaction proceeded through a period of active due diligence and regulatory filings. However, a significant adverse development materially altered the trajectory of the Acquisition, as summarized in the timeline below:

October 28, 2022. The Portland Metropolitan Water District (the "Water District") delivered formal written notice to Cascadia of its intent to renegotiate the terms of the 40-year Bull Run Filtration Project concession agreement. This concession represents one of Cascadia's most significant infrastructure assets, generating annual revenue of approximately $64 million. The Water District's notice cited Oregon Senate Bill 1567 (2022) ("SB 1567"), which amended the Oregon Water Infrastructure Act to grant municipal water authorities expanded rights to renegotiate long-term concession agreements upon a change of control of the concessionaire. The potential renegotiation of this concession had direct and material implications for the projected cash flows underpinning the Acquisition valuation.

November 10, 2022. Meridian Infrastructure GP IV LLC formally notified Ironside of the material adverse development relating to the Bull Run Filtration Project concession renegotiation, in accordance with the GP's information-sharing obligations under the LP Agreement and the Side Letter.

November 22, 2022. The parties to the EPA executed the First Amendment to the EPA, extending the outside date from December 31, 2022 to March 31, 2023, to allow additional time for assessment of the concession renegotiation risk and its impact on the Acquisition.

January 9, 2023. Meridian Infrastructure GP IV LLC issued a capital-call suspension notice to Ironside, declaring a Material Impediment Event under Section 7.04 of the LP Agreement. The GP determined that the ongoing uncertainty surrounding the Bull Run Filtration Project concession renegotiation constituted a material impediment to the consummation of the Acquisition, thereby triggering the dormancy provisions of the LP Agreement. As of this date, the Vehicle entered dormancy, and all capital calls were suspended.

March 15, 2023. The parties to the EPA executed the Second Amendment to the EPA, extending the outside date from March 31, 2023 to June 30, 2023, to provide further time for resolution of the concession renegotiation issue and related regulatory proceedings.

As of the date of this memorandum, the Vehicle remains dormant. Of the $300 million total commitment by Ironside to ICM Co-Invest, $22,500,000 (representing 7.5% of the total commitment) was called on August 15, 2022 and funded in connection with the initial organizational activities and transaction costs of the Vehicle. The unfunded commitment of Ironside currently stands at $277,500,000. During the dormancy period, annualized operating expenses of the Vehicle are approximately $185,000, encompassing fund administration services provided by Kendrick Thorne & Associates LLP, registered agent fees, Delaware franchise tax, annual audit, and K-1 preparation. These costs are within the parameters established under the Side Letter.

C. The Extension

The Extension was formally executed on April 30, 2023, memorializing the agreement of Atlas and Pinnacle to extend the expiration date of the commitment letter to October 31, 2023. The key terms of the Extension are as follows:

Extension Date: April 30, 2023.

New Expiration Date: October 31, 2023.

Extension Fee: $2,437,500, calculated as 0.25% of the $975,000,000 senior secured term loan commitment amount.

Payor of Extension Fee: Meridian Infrastructure Partners Fund IV, LP, from Fund IV's own resources. No portion of the fee was charged to or allocated to ICM Cascadia Co-Invest, LP.

We note that, following the expiration of the originally contemplated outside date of December 31, 2022, the commitment letter had been informally held open by Atlas and Pinnacle without the imposition of additional fees, as the Commitment Parties continued to engage with Meridian regarding the status of the Acquisition and the prospect of eventual closing. The formal Extension executed on April 30, 2023 memorializes the agreed-upon terms for a defined extension period, replacing the informal arrangement that had been in place during the intervening months.

Importantly, the Extension does not alter the facility amounts, pricing terms, market flex provisions, or conditions precedent set forth in the Original Commitment Letter, other than the updated outside date alignment. The revolving credit facility of $150 million committed by Atlas was similarly extended to October 31, 2023 on the same terms.

III. Analysis of Extension Terms

A. Key Modifications

The sole substantive modification effected by the Extension is the extension of the expiration date of the commitment letter from the prior effective date (which had been aligned with the EPA first amended outside date of March 31, 2023) to October 31, 2023. All other terms, conditions, and provisions of the Original Commitment Letter remain in full force and effect without modification.

Specifically, the following material provisions are unchanged:

• Market flex provisions (including pricing flex, structural flex, and syndication flex) remain as originally negotiated and are described in greater detail in Section III.B below.

• Conditions precedent to funding continue to require, among other things: (i) execution and delivery of a definitive credit agreement in form and substance consistent with the commitment letter term sheet; (ii) the EPA remaining in full force and effect without amendment or waiver (other than amendments previously consented to by Atlas and Pinnacle); (iii) receipt of all required regulatory approvals, including approval from the Federal Energy Regulatory Commission ("FERC") under Section 203 of the Federal Power Act and from the Oregon Public Utility Commission ("OPUC"); (iv) no material adverse effect having occurred with respect to Cascadia or the Acquisition structure since August 30, 2022; and (v) other customary conditions, including delivery of financial statements, solvency certificates, and legal opinions.

• SunGard provisions (limited conditionality), which govern the circumstances under which the Commitment Parties may decline to fund, remain unchanged. The commitment letter provides that the Commitment Parties' obligation to fund is subject only to the enumerated conditions precedent and is not subject to market-out or due-diligence-out provisions beyond those expressly set forth.

• Syndication rights of Atlas and Pinnacle, including the right to syndicate portions of the term loan to additional lenders prior to or after closing, remain as originally agreed. Atlas retains the lead-left bookrunner role, and Pinnacle retains co-bookrunner status.

• Representations and covenants of the borrower and the sponsor remain in full force and effect, including the sponsor's obligation to use commercially reasonable efforts to assist in the syndication process and to provide customary information and access to management of the Target.

In summary, the Extension is a narrowly scoped amendment that preserves the entirety of the substantive terms of the Original Commitment Letter while providing an additional six months (measured from the prior effective expiration) for the Acquisition to proceed to closing.

B. Market Flex Provisions

The market flex provisions contained in the fee letter executed in connection with the Original Commitment Letter remain unchanged following the Extension. These provisions grant Atlas and Pinnacle the following rights:

Pricing Flex. The Commitment Parties retain the right to adjust the interest rate spread on the senior secured term loan upward by a specified amount (the exact parameters of which are set forth in the confidential fee letter and are not reproduced in this memorandum) to facilitate syndication of the loan.

Structural Flex. The Commitment Parties retain the right to adjust the original issue discount ("OID") on the term loan, thereby increasing the effective yield to lenders, in the event that such adjustment is necessary to achieve successful syndication.

Syndication Flex. The Commitment Parties retain the right to modify certain non-economic structural terms of the credit facility (including amortization schedules, financial covenants, and certain basket sizes) to the extent required to achieve successful syndication at the relevant time of funding.

We note, as a practical observation, that no new flex rights were granted to the Commitment Parties in connection with the Extension. However, in the current credit market environment as of April 2023 — characterized by elevated base rates, wider credit spreads relative to mid-2022 levels, and generally more conservative lender postures — it is likely that any future funding of the commitment would trigger the exercise of one or more flex rights by Atlas and Pinnacle. This is particularly true for a leveraged infrastructure acquisition of this size, where syndication market appetite has become more constrained. The potential exercise of flex rights would increase the effective borrowing cost of the term loan and should be factored into any reactivation analysis undertaken by Ironside.

C. Conditions to Extension Effectiveness

The Extension became effective upon the satisfaction of the following conditions:

1. Payment of the Extension Fee. The extension fee of $2,437,500 was paid by Meridian Infrastructure Partners Fund IV, LP to Atlas National Bank, N.A., as administrative agent, on April 30, 2023. The fee is non-refundable and was paid in immediately available funds.

2. Certification by GP. Meridian Infrastructure GP IV LLC delivered a certification to Atlas and Pinnacle confirming that the EPA remains in full force and effect, as amended by the First Amendment dated November 22, 2022 and the Second Amendment dated March 15, 2023.

3. No Default or MAC Confirmation. Meridian confirmed that no event of default or material adverse change has occurred with respect to Cascadia or the Acquisition structure since the date of the Original Commitment Letter, and that the representations and warranties of the sponsor contained in the commitment letter remain true and correct in all material respects as of the date of the Extension.

Importantly, in connection with the Extension, Atlas and Pinnacle have expressly reserved the right to decline any further extension of the commitment letter beyond October 31, 2023. The Extension letter includes a clear statement that the Commitment Parties' agreement to extend the expiration date to October 31, 2023 shall not be construed as an obligation or indication of willingness to extend the commitment letter beyond that date, and that any such further extension would require a separate agreement and the payment of additional fees as may be negotiated at that time.

IV. Cost Allocation Analysis

A central question posed by Ironside in connection with the Extension is whether any portion of the $2,437,500 extension fee could be allocated to the Vehicle, either currently or in the context of a future expense reconciliation. We have analyzed this question under the three principal contractual documents governing the relationship between Ironside and Meridian with respect to the co-investment: the LP Agreement, the Co-Investment Allocation Agreement, and the Side Letter. Our analysis and conclusions are set forth below.

A. LP Agreement Provisions on Expense Allocation

Section 5.03 of the LP Agreement governs the allocation of transaction-related expenses between the GP (Meridian Infrastructure GP IV LLC) and the limited partner (Ironside). This provision establishes the following framework:

Organizational expenses incurred in the formation and establishment of the Vehicle, including legal, accounting, and filing fees, are borne by the Vehicle and funded through capital calls.

Placement-agent fees, to the extent applicable, are borne by the Vehicle in accordance with the terms of the LP Agreement.

Transaction costs incurred in connection with the co-investment are borne by the Vehicle and funded through capital calls. "Transaction Expenses" is defined under the LP Agreement to include due diligence costs, legal fees and expenses, accounting and advisory fees, insurance costs (including costs associated with obtaining representations and warranties insurance), and regulatory filing fees directly attributable to the Vehicle's participation in the Acquisition.

Critically, debt commitment fees are not expressly enumerated as "Transaction Expenses" under the LP Agreement. The debt commitment letter is a contract between Atlas, Pinnacle, and the sponsor (Meridian, on behalf of Fund IV and AcquisitionCo). ICM Co-Invest is not a party to the commitment letter, and the Vehicle's name does not appear in the commitment letter or the related fee letter. While the Vehicle would benefit indirectly from the availability of debt financing in the Acquisition (to the extent it reduces the equity required to close), the commitment fee obligation runs directly to the sponsor and the borrower entity, not to the co-invest vehicle.

Accordingly, under the LP Agreement, there is no basis on which to treat the extension fee as a "Transaction Expense" allocable to the Vehicle.

B. Co-Investment Allocation Agreement

The Co-Investment Allocation Agreement, dated July 29, 2022, between Meridian Infrastructure Partners Fund IV, LP and ICM Cascadia Co-Invest, LP (the "Allocation Agreement") governs the allocation of economic interests, rights, and obligations between Fund IV and the Vehicle with respect to the Acquisition. The Allocation Agreement provides for the following equity split:

The Allocation Agreement addresses the sharing of transaction costs "directly related to the Acquisition" between Fund IV and the Vehicle on a pro rata basis consistent with the equity allocation percentages set forth above. This pro rata methodology applies to expenses that are properly characterizable as costs of the Acquisition borne jointly by the participating equity investors.

However, debt commitment fees — and, by extension, extension fees associated with maintaining the availability of debt financing — are characterized under the Allocation Agreement as financing costs borne by the borrower entity (Cascadia Acquisition Corp.) or the lead sponsor (Fund IV) in its capacity as the primary equity backer of the Acquisition. These costs are not treated as joint transaction costs allocable to co-investors absent express agreement to the contrary. No such express agreement exists with respect to the Extension or the associated extension fee.

Furthermore, the extension fee is, by its nature, a cost of maintaining financing availability during a period when the Acquisition has not proceeded to closing. As the Vehicle is dormant and no capital call mechanism is currently active pursuant to the Material Impediment Event declaration, there is no operative basis under the existing Allocation Agreement to allocate the $2,437,500 extension fee to ICM Co-Invest.

C. Side Letter Protections

The Side Letter dated July 29, 2022, executed between Ironside Capital Management LP and Meridian Infrastructure GP IV LLC, contains express protections against the allocation of dormancy-period costs to the Vehicle beyond an agreed operating expense budget. The Side Letter provides that, during any period in which the Vehicle is dormant (including any period following a declaration of a Material Impediment Event under Section 7.04 of the LP Agreement), the Vehicle's operating expenses shall be limited to the following categories and approximate annual amounts:

• Fund administration services (Kendrick Thorne & Associates LLP): approximately $95,000 per annum

• Registered agent fees (Delaware): approximately $3,500 per annum

• Delaware franchise tax: approximately $12,500 per annum

• Annual audit (Penrose Firth CPAs LLP): approximately $55,000 per annum

• K-1 preparation and tax compliance: approximately $19,000 per annum

• Total annualized dormancy operating expenses: approximately $185,000

The Side Letter does not contain any provision authorizing the pass-through of debt commitment extension fees, financing costs, or similar charges to the Vehicle during a dormancy period. The dormancy cost protections were negotiated by Ironside specifically to ensure that the Vehicle's limited partners would not bear the economic burden of maintaining the Acquisition infrastructure during periods of suspended activity.

We note that the Side Letter also preserves Ironside's right to receive quarterly reports from the GP regarding the status of the Vehicle and the Acquisition during dormancy, and separately addresses wind-down mechanics and election rights that are discussed in Section V.B below.

D. Conclusion on Cost Allocation

Based on our analysis of the LP Agreement, the Allocation Agreement, and the Side Letter, we reach the following conclusions with respect to the allocation of the $2,437,500 extension fee:

1. The extension fee is properly borne by Meridian Infrastructure Partners Fund IV, LP, and has been paid from Fund IV's own resources.

2. No contractual basis exists under the LP Agreement, the Allocation Agreement, or the Side Letter to allocate any portion of this fee to ICM Cascadia Co-Invest, LP.

3. Ironside should not expect to receive a capital call notice, an expense reimbursement request, or any other demand for payment related to the extension fee.

4. If the transaction is reactivated and a new or further-extended commitment letter is obtained from the Commitment Parties (or replacement lenders), cost allocation for any new commitment fees, arrangement fees, or similar financing costs should be negotiated at that time, with reference to the Allocation Agreement pro rata methodology (28.57% for ICM Co-Invest / 71.43% for Fund IV). Any such negotiation should occur prior to the resumption of capital calls and should be documented in a supplemental agreement or amendment to the Allocation Agreement.

5. Important caveat: If the Acquisition ultimately proceeds to closing, the post-closing expense reconciliation process contemplated by the Allocation Agreement could potentially include pre-closing financing costs — including commitment fees and extension fees — as part of aggregate transaction costs subject to pro rata allocation. Ironside should ensure that any such post-closing reconciliation is conducted in a manner consistent with the LP Agreement, the Allocation Agreement, and the Side Letter, and that the characterization of extension fees as joint transaction costs (rather than sponsor-borne financing costs) is not unilaterally adopted by Meridian without Ironside's prior consent.

We will continue to monitor this issue and will advise Ironside promptly if Meridian or the GP takes any position inconsistent with the analysis set forth above.

V. Implications for ICM Cascadia Co-Invest, LP

A. Unfunded Commitment Status

ICM Co-Invest's unfunded commitment to the Vehicle remains $277,500,000, representing 92.5% of the total $300 million commitment. The only capital call to date was the initial call of $22,500,000 (7.5% of total commitment), which was funded by Ironside on August 15, 2022 in connection with the Vehicle's organizational costs, initial due diligence expenses, and early transaction costs.

Capital calls remain suspended pursuant to the GP's declaration of a Material Impediment Event under Section 7.04 of the LP Agreement, effective January 9, 2023. No capital calls may be issued by the GP during the dormancy period unless and until the Material Impediment Event is rescinded by written notice of the GP to the limited partner, subject to the requirements and conditions set forth in Section 7.04(b) of the LP Agreement.

The extension of the debt commitment letter has the practical effect of preserving the possibility of transaction reactivation without requiring the sponsor to source entirely new lending arrangements, at least through October 31, 2023. The availability of committed debt financing is a necessary precondition to closing the Acquisition, as the $975 million term loan constitutes approximately 48.1% of the total transaction sources. If the debt commitment were to expire without further extension, and if the transaction were subsequently reactivated, Meridian would be required to negotiate new financing arrangements from scratch — a process that would add significant time (likely several months), cost (in the form of new commitment fees, arrangement fees, and potentially higher borrowing costs given current market conditions), and execution risk to any reactivation effort.

From Ironside's perspective, the continued availability of committed debt financing modestly preserves the optionality inherent in Ironside's unfunded commitment. However, we emphasize that the dormancy status of the Vehicle and the suspension of capital calls are governed by the LP Agreement and the GP's Material Impediment Event declaration, and are not affected by the status of the debt commitment letter.

B. Dormancy Governance Considerations

The Vehicle remains in dormancy as of the date of this memorandum. The GP's obligations during the dormancy period, as set forth in the LP Agreement and supplemented by the Side Letter, include the following:

• Delivery of quarterly reports to the limited partner regarding the status of the Acquisition, any material developments affecting the Vehicle, and updated financial statements of the Vehicle.

• Maintenance of the Vehicle's organizational existence in good standing under the laws of the State of Delaware.

• Compliance with the dormancy operating expense budget established under the Side Letter.

• Prompt notification to Ironside of any material developments relating to the Acquisition, the Target, or the regulatory environment that may affect the Vehicle or the limited partner's unfunded commitment.

The GP's Q1 2023 quarterly report was delivered to Ironside and reviewed by Calderwood & Harkness in connection with our dormancy governance monitoring engagement. Our review memorandum, dated April 20, 2023, was provided to Ironside under separate cover and did not identify any material governance deficiencies or deviations from the agreed dormancy protocols.

A critical date on the dormancy governance timeline is the 18-month dormancy mark, which will occur on July 9, 2024 (18 months from the January 9, 2023 commencement of dormancy). Under Section 7.04(c) of the LP Agreement, Ironside's right to elect wind-down of the Vehicle will ripen at this date. Upon the 18-month mark, Ironside may deliver written notice to the GP electing to wind down the Vehicle, in which case the GP shall be required to commence an orderly dissolution and winding up of the Vehicle's affairs, including the return of any remaining called capital (net of expenses and liabilities) to the limited partner. This wind-down election right provides Ironside with a defined exit mechanism if the Acquisition has not reactivated or closed within 18 months of the dormancy commencement.

We emphasize that the extension of the debt commitment letter does not affect the dormancy status of the Vehicle or the calculation of the 18-month period. Dormancy commenced on January 9, 2023, and the 18-month period runs from that date regardless of whether the debt commitment letter remains in force or has expired. The two timelines — the debt commitment expiration and the dormancy wind-down election date — are contractually independent.

C. R&W Insurance Tolling

In connection with the proposed Acquisition, a representations and warranties insurance policy was bound with Northgate Specialty Insurance Co. (Policy No. NSW-RI-2022-09814), providing coverage with a limit of $195 million. A premium deposit of $4,875,000 was paid in connection with the binding of the policy. The policy remains tolled pursuant to a tolling agreement in the form of a side letter dated January 20, 2023, between Meridian and Northgate, which suspended the coverage effective period during the dormancy of the Vehicle and the Acquisition.

The extension of the debt commitment letter does not affect the tolling of the R&W insurance policy. The tolling arrangement is governed by the January 20, 2023 side letter between Meridian and Northgate and is not conditioned upon or linked to the availability of debt financing for the Acquisition.

In the event of transaction reactivation, a separate analysis would be required to determine whether the R&W policy can be reactivated on its existing terms (including coverage limits, retention amounts, and premium) or whether renegotiation or re-underwriting by Northgate would be required. Given the passage of time since the original binding of the policy and the material adverse development relating to the Bull Run Filtration Project concession, it is likely that Northgate would require updated due diligence and potentially revised terms. We will advise Ironside on this issue if and when reactivation discussions advance.

D. Regulatory Approvals

Several regulatory approvals were obtained or initiated in connection with the Acquisition, and the status of these approvals remains relevant to the overall transaction timeline and the implications of the debt commitment extension. The current status of the key regulatory approvals is as follows:

FERC Section 203 Approval. The Federal Energy Regulatory Commission granted approval for the proposed transaction under Section 203 of the Federal Power Act on December 15, 2022 (Docket No. EC22-143-000). The FERC order remains in effect but is subject to an 18-month lapse provision under FERC's standard practice, as modified by a FERC staff letter extending the effectiveness period. Based on the FERC order and staff letter, the approval would lapse if the transaction does not close by approximately June 15, 2024. If the approval lapses, a new Section 203 application would need to be filed, which would add several months to the transaction timeline and introduce the risk that FERC may impose additional conditions in light of changed circumstances.

OPUC Proceedings. The Oregon Public Utility Commission proceedings relating to the Acquisition (Docket No. UM-2287) remain stayed at the joint request of the parties since February 2023. The stay was sought to avoid expenditure of regulatory resources during the dormancy period. The stay can be lifted upon joint request of the parties, and the OPUC proceedings would then resume. The timeline for completion of the OPUC review, once resumed, is estimated at three to six months, depending on the complexity of issues raised and the level of intervenor participation.

CFIUS Clearance. The Committee on Foreign Investment in the United States ("CFIUS") review has been effectively completed, and no further action is required. CFIUS clearance is not subject to a lapse or expiration provision.

The extension of the debt commitment letter does not directly affect any of the foregoing regulatory timelines. However, the regulatory approval lapse risk — particularly with respect to the FERC Section 203 approval — compounds the consequences of further transaction delay and underscores the importance of monitoring the alignment between the debt commitment expiration date, the EPA outside date, and the regulatory approval windows.

VI. Forward-Looking Considerations

A. Risk of Non-Extension Beyond October 31, 2023

As noted in Section III.C above, Atlas and Pinnacle have expressly reserved the right to decline any further extension of the commitment letter beyond October 31, 2023. The Extension letter contains no commitment, indication of intent, or assurance from the Commitment Parties regarding their willingness to extend the commitment letter for any additional period.

If the debt commitment expires on October 31, 2023 without further extension, and the Acquisition has not closed by that date, the sponsor would need to obtain new financing commitments in order to proceed with the Acquisition. In the current credit market environment, sourcing replacement financing for a $975 million leveraged infrastructure acquisition would be a significant undertaking. Based on our assessment of current market conditions as of April 2023, we observe the following:

• Credit spreads for leveraged infrastructure acquisitions have widened relative to mid-2022 levels, reflecting higher base rates, reduced risk appetite among institutional lenders, and increased selectivity in the syndicated loan market.

• New commitment letters for transactions of this size and complexity would likely carry higher commitment fees (potentially in excess of the 0.25% extension fee paid in connection with the current Extension), more restrictive covenant packages, and less favorable flex provisions for the sponsor.

• The process of negotiating, documenting, and executing a new commitment letter — including updated lender due diligence, revised financial models, and potentially a broader syndication process — would likely require three to six months, depending on market conditions and lender appetite.

• The loss of committed financing would significantly weaken the sponsor's bargaining position vis-à-vis the seller and could undermine the credibility of the Acquisition as a viable transaction.

In light of these risks, we recommend that Ironside actively monitor Meridian's engagement with Atlas and Pinnacle regarding the Commitment Parties' willingness to extend the commitment letter beyond October 31, 2023, the fee terms that would be associated with any such further extension, and any proposed modifications to the commitment letter terms (including pricing, flex provisions, and conditions precedent) that the Commitment Parties may seek in connection with a further extension.

B. Potential Future Cost Allocation

While the current extension fee is properly borne by Fund IV, as analyzed in Section IV above, the reactivation of the Acquisition would likely give rise to negotiations regarding the allocation of financing-related costs between Fund IV and ICM Co-Invest. Specifically, if the transaction reactivates and new or further-extended financing commitments are obtained, Ironside should anticipate that Meridian may seek to allocate a portion of the following costs to the Vehicle:

• New or additional commitment fees associated with extending or replacing the debt commitment letter;

• Arrangement fees or upfront fees payable to lenders in connection with new financing;

• Increased borrowing costs resulting from the exercise of flex provisions or the negotiation of new terms in a less favorable credit market; and

• Legal, advisory, and other professional fees incurred in connection with the restructuring or renegotiation of the financing package.

We recommend that, in any such negotiation, Ironside insist that cost allocation for new financing arrangements be governed by an express agreement that references the Allocation Agreement pro rata methodology (28.57% for ICM Co-Invest / 71.43% for Fund IV) and that is documented in writing prior to the issuance of any capital calls. Ironside should also ensure that any cost allocation framework clearly distinguishes between (a) costs attributable to the sponsor's decision to maintain financing availability during the dormancy period (which should remain the responsibility of Fund IV) and (b) costs that are genuinely attributable to the reactivated Acquisition and that benefit both equity participants on a pro rata basis.

Additionally, if the economics of the Acquisition change materially — for example, as a result of a revised enterprise value reflecting the impact of the Bull Run Filtration Project concession renegotiation on Cascadia's cash flows — the underlying cost allocation methodology may need to be revisited. A material reduction in enterprise value would alter the leverage profile of the Acquisition, potentially affecting the size and terms of the debt financing and, in turn, the allocation of financing costs between the equity participants. Any such change should be evaluated in the context of the Allocation Agreement and the LP Agreement, and Ironside should have the opportunity to review and consent to any revised cost allocation framework.

C. EPA Outside Date Alignment

The Second Amendment to the EPA, executed on March 15, 2023, extended the outside date from March 31, 2023 to June 30, 2023. The debt commitment letter, as extended, now expires on October 31, 2023 — four months beyond the current EPA outside date. This misalignment creates a potential issue: if the EPA outside date is not extended beyond June 30, 2023, either party to the EPA may have the right to terminate the agreement after that date, which would render the debt commitment moot (as the EPA's remaining in full force and effect is a condition precedent to funding under the commitment letter).

We anticipate that a Third Amendment to the EPA will be required to extend the outside date to at least align with, and preferably exceed, the October 31, 2023 debt commitment expiration. Based on our understanding of the current status of discussions between Meridian and the seller, negotiations regarding a further extension of the EPA outside date are expected to commence in the coming weeks. Any such Third Amendment may also address other matters, including updated representations regarding the status of the Bull Run Filtration Project concession renegotiation, revised termination fee provisions, and potentially updated financial metrics or valuation parameters.

Calderwood & Harkness will advise Ironside on the terms of any proposed Third Amendment to the EPA and its implications for the Vehicle, including any changes that may affect the Vehicle's rights, obligations, or economic interests in the Acquisition. We will circulate a separate memorandum analyzing the Third Amendment promptly upon its execution or, if Ironside desires, upon receipt of a draft for review and comment.

VII. Recommendations

Based on the foregoing analysis, we make the following recommendations to Ironside:

1. No action required regarding the extension fee. Meridian Infrastructure Partners Fund IV, LP has properly borne the $2,437,500 extension fee, and there is no contractual basis under the LP Agreement, the Allocation Agreement, or the Side Letter for allocation of any portion of this cost to ICM Cascadia Co-Invest, LP. No capital call, expense reimbursement request, or other demand related to the extension fee should be expected, and Ironside should decline any such request if one is made.

2. Monitor willingness for further extension. Ironside should actively monitor Meridian's ongoing engagement with Atlas National Bank, N.A. and Pinnacle Credit Partners LLC regarding the Commitment Parties' willingness to extend the commitment letter beyond the current October 31, 2023 expiration date, the fee terms associated with any such further extension, and any proposed modifications to the commitment letter terms. We recommend that Ironside request regular updates from Meridian on this topic through the GP quarterly reporting process and through direct communication as appropriate.

3. Track alignment of debt commitment and EPA outside date. Ironside should closely track the alignment between the debt commitment expiration date (October 31, 2023) and the EPA outside date (currently June 30, 2023 per the Second Amendment). A Third Amendment to the EPA extending the outside date is anticipated, and Ironside should review and assess the terms of any such amendment in coordination with Calderwood & Harkness.

4. Preserve cost allocation protections. Ironside should preserve its position under the Side Letter and the LP Agreement regarding cost allocation protections for any future financing costs that may arise in connection with reactivation of the Acquisition. In particular, Ironside should ensure that any new or revised financing arrangement includes an express agreement on cost sharing between Fund IV and ICM Co-Invest that is consistent with the Allocation Agreement pro rata methodology and documented in writing prior to any capital calls.

5. Continue dormancy governance monitoring. Ironside should continue its active monitoring of the Vehicle's dormancy governance, including review of the GP's quarterly reports, verification of compliance with the dormancy operating expense budget, and tracking of the 18-month wind-down election date of July 9, 2024. Calderwood & Harkness will continue to review each quarterly report and provide a summary memorandum to Ironside.

6. Note FERC approval lapse risk. Ironside should note the approximately June 15, 2024 lapse date for the FERC Section 203 approval (Docket No. EC22-143-000) as an additional factor in assessing the viability and timeline of any potential reactivation of the Acquisition. The FERC lapse date falls approximately five weeks before the 18-month dormancy wind-down election date, and both dates should be considered in Ironside's planning horizon.

We remain available to discuss any aspect of this memorandum and the matters addressed herein at your convenience. Please do not hesitate to contact Pamela Cross (212-558-XXXX), Nicholas Stern (212-558-XXXX), or Theresa Kim (212-558-XXXX) with any questions.

VIII. Appendices

Appendix A — Summary of Debt Commitment Letter Key Terms

Appendix B — Extension Fee Calculation

Appendix C — Sources and Uses Summary

Appendix D — Cost Allocation Framework

Appendix E — Key Dates and Deadlines

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

TO:

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

FROM:

Nicholas Stern, Billing Partner, Calderwood & Harkness LLP

Theresa Kim, Lead Associate, Calderwood & Harkness LLP

DATE:	April 28, 2023
RE:	Analysis of Debt Commitment Letter Extension and Cost Allocation Between Meridian Infrastructure Partners Fund IV, LP and ICM Cascadia Co-Invest, LP
MATTER NO.:	1023-00001
Sources	Amount	Uses	Amount
Equity — Fund IV	$750,000,000	Enterprise Value	$1,950,000,000
Equity — ICM Co-Invest	$300,000,000	Estimated Transaction Costs	$50,000,000
Senior Secured Term Loan	$975,000,000	Working-Capital Adjustment Escrow	$25,000,000
Total Sources	$2,025,000,000	Total Uses	$2,025,000,000
Entity	Equity Commitment	Pro Rata Share
Meridian Infrastructure Partners Fund IV, LP	$750,000,000	71.43%
ICM Cascadia Co-Invest, LP	$300,000,000	28.57%
Total	$1,050,000,000	100.00%
Term	Detail
Commitment Parties	Atlas National Bank, N.A. (Lead Arranger / Administrative Agent); Pinnacle Credit Partners LLC (Co-Lender / Syndication Participant)
Borrower	Cascadia Acquisition Corp. (newly formed Delaware corporation)
Senior Secured Term Loan	$975,000,000
— Atlas Commitment	$650,000,000
— Pinnacle Commitment	$325,000,000
Revolving Credit Facility	$150,000,000 (Atlas only; undrawn)
Total Debt Commitment	$1,125,000,000
Pricing (Term Loan)	Per confidential fee letter; subject to market flex
Maturity	Seven years from closing date
Security	First-priority lien on substantially all assets of AcquisitionCo and subsidiaries, including equity of the Target
Conditions Precedent	Execution of definitive credit agreement; EPA in full force and effect; FERC and OPUC approvals; no material adverse effect; customary closing conditions
Market Flex	Pricing flex (spread adjustment); Structural flex (OID adjustment); Syndication flex

SunGard Provisions	Limited conditionality; no market-out or due-diligence-out beyond enumerated conditions
Governing Law	New York
Original Expiration	Aligned with EPA outside date (originally December 31, 2022)
Extended Expiration	October 31, 2023 (per Extension dated April 30, 2023)
Extension Fee	$2,437,500 (0.25% × $975,000,000)
Component	Detail
Fee Basis	Senior Secured Term Loan Commitment
Commitment Amount	$975,000,000
Fee Rate	0.25%
Calculation	0.25% × $975,000,000
Extension Fee	$2,437,500
Payor	Meridian Infrastructure Partners Fund IV, LP
Payment Date	April 30, 2023
Payee	Atlas National Bank, N.A. (as administrative agent for the Commitment Parties)
Refundable	No
Allocated to ICM Co-Invest	No — fee borne entirely by Fund IV
Sources	Amount ($M)	% of Total
Fund IV Equity	$750.0	37.04%
ICM Co-Invest Equity	$300.0	14.81%
Senior Secured Term Loan	$975.0	48.15%
Total Sources	$2,025.0	100.00%
Uses	Amount ($M)	% of Total
Enterprise Value	$1,950.0	96.30%
Estimated Transaction Costs	$50.0	2.47%
Working-Capital Adjustment Escrow	$25.0	1.23%

Total Uses	$2,025.0	100.00%
Cost Category	LP Agreement §5.03	Allocation Agreement (Pro Rata)	Side Letter (Dormancy Protections)	Extension Fee Classification
Organizational Expenses	Borne by Vehicle	N/A	Included in dormancy budget	Not applicable
Due Diligence Costs	"Transaction Expense" — borne by Vehicle	Shared pro rata (28.57% / 71.43%)	Not addressed (pre-dormancy cost)	Not applicable
Legal / Accounting Fees	"Transaction Expense" — borne by Vehicle	Shared pro rata (28.57% / 71.43%)	Capped during dormancy (~$185K/yr)	Not applicable
Regulatory Filing Fees	"Transaction Expense" — borne by Vehicle	Shared pro rata (28.57% / 71.43%)	Not addressed (pre-dormancy cost)	Not applicable
Debt Commitment Fees	Not enumerated as Transaction Expense	Financing cost borne by borrower/sponsor	Not authorized for pass-through during dormancy	Extension fee not allocable to Vehicle
Extension Fee ($2,437,500)	No basis for allocation	No basis for allocation (financing cost, not joint transaction cost)	Expressly excluded from dormancy cost budget	Properly borne by Fund IV
Future Commitment / Arrangement Fees (upon reactivation)	To be determined	Subject to negotiation; pro rata methodology (28.57% / 71.43%) as reference	Must be agreed before capital calls resume	To be negotiated
Date	Event	Status / Notes
July 29, 2022	LP Agreement, Allocation Agreement, and Side Letter executed	Completed
August 15, 2022	Initial capital call ($22.5M) funded by Ironside	Completed
August 30, 2022	Original Debt Commitment Letter executed	Completed
October 28, 2022	Portland Metropolitan Water District concession renegotiation notice	Adverse development
November 10, 2022	Meridian notification to Ironside of material adverse development	Completed
November 22, 2022	First Amendment to EPA (outside date extended to March 31, 2023)	Completed
December 15, 2022	FERC §203 approval received (Docket No. EC22-143-000)	In effect; subject to lapse
December 31, 2022	Original EPA outside date (superseded by First Amendment)	Superseded
January 9, 2023	Material Impediment Event declared; Vehicle enters dormancy	In effect
January 20, 2023	R&W insurance tolling side letter executed with Northgate	In effect
February 2023	OPUC proceedings (Docket No. UM-2287) stayed	Stay in effect
March 15, 2023	Second Amendment to EPA (outside date extended to June 30, 2023)	In effect
March 31, 2023	First amended EPA outside date (superseded by Second Amendment)	Superseded
April 20, 2023	C&H review memo on Q1 2023 GP quarterly report	Completed
April 28, 2023	Date of this Memorandum	Current

April 30, 2023	Debt Commitment Letter Extension executed; extension fee paid	Effective
June 30, 2023	Current EPA outside date (per Second Amendment)	Upcoming — Third Amendment anticipated
October 31, 2023	Extended Debt Commitment Letter expiration	Upcoming — further extension uncertain
~June 15, 2024	FERC §203 approval estimated lapse date	Upcoming — monitoring required
July 9, 2024	18-month dormancy mark; Ironside wind-down election right ripens	Upcoming — strategic decision date

MEMORANDUM
PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT
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I. Executive Summary
This memorandum analyzes the extension of the debt commitment letter originally executed on August 30, 2022 by Atlas National Bank, N.A., as lead arranger and administrative agent, and Pinnacle Credit Partners LLC, as co-lender and syndication participant (collectively, the "Commitment Parties"), which was formally extended on April 30, 2023 to a new expiration date of October 31, 2023 (the "Extension"). The commitment letter relates to a $975 million senior secured term loan facility and a $150 million revolving credit facility intended to finance a portion of the proposed acquisition of Cascadia Renewables Holdings, Inc. (the "Acquisition").
In connection with the Extension, an extension fee of $2,437,500 was incurred, calculated as 0.25% of the $975 million senior secured term loan facility commitment. This fee was paid in its entirety by Meridian Infrastructure Partners Fund IV, LP ("Fund IV"), and no portion of the fee has been or should be allocated to ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest").
This memorandum addresses the following matters for the benefit of Ironside Capital Management LP ("Ironside"):
(a) the key terms of the Extension and any modifications to the original commitment letter;
(b) analysis of whether the extension fee could, under the existing contractual framework, be allocated to the Vehicle;
(c) implications of the Extension for the Vehicle's unfunded commitment obligations and dormancy governance mechanics; and
(d) considerations regarding any future extensions of the debt commitment letter, its potential expiration, and the interaction of the commitment letter timeline with the Equity Purchase Agreement outside date and applicable regulatory approvals.
As further context, the Vehicle has been dormant since January 9, 2023, when Meridian Infrastructure GP IV LLC (the "GP") issued a capital-call suspension notice declaring a Material Impediment Event under 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"). Capital calls have been suspended since that date and remain suspended as of the date of this memorandum. During the dormancy period, the Vehicle's ongoing operating costs have been limited to the agreed annual budget of approximately $185,000, consistent with the protections negotiated in the Side Letter between Ironside and the GP.
Our principal conclusion is that Ironside need not take any action with respect to the Extension or the associated extension fee. The $2,437,500 cost is properly borne by Fund IV, and there is no contractual basis under the LP Agreement, the Co-Investment Allocation Agreement, or the Side Letter to allocate any portion of this expense to the Vehicle. However, as set forth in greater detail below, there are several forward-looking considerations that warrant continued monitoring by Ironside, including the risk that the commitment letter may not be extended beyond October 31, 2023, the approaching misalignment between the debt commitment expiration and the Equity Purchase Agreement outside date, and the lapse risk associated with certain regulatory approvals.
II. Background
A. Original Debt Commitment Letter
The debt commitment letter at issue was executed on August 30, 2022 (the "Original Commitment Letter"). The parties to the Original Commitment Letter are as follows:
Lead Arranger and Administrative Agent: Atlas National Bank, N.A. ("Atlas"), with principal offices at 383 Madison Avenue, New York, NY 10179.
Co-Lender and Syndication Participant: Pinnacle Credit Partners LLC ("Pinnacle"), with principal offices at 600 Lexington Avenue, 20th Floor, New York, NY 10022.
Borrower (upon closing): Cascadia Acquisition Corp. ("AcquisitionCo"), a newly formed Delaware corporation organized for the purpose of consummating the Acquisition, to be wholly owned, directly or indirectly, by Fund IV and ICM Co-Invest.
The Original Commitment Letter provides for the following facilities:
Senior Secured Term Loan Facility. A senior secured term loan in an aggregate principal amount of $975 million, to be allocated between Atlas (commitment of $650 million) and Pinnacle (commitment of $325 million). The term loan is to be secured by substantially all of the assets of AcquisitionCo and its subsidiaries, including the equity interests of the target, and is governed by New York law.
Revolving Credit Facility. A revolving credit facility in an aggregate principal amount of $150 million, committed solely by Atlas, to be available for working capital and general corporate purposes following the closing of the Acquisition. As of the date of this memorandum, the revolving facility remains undrawn, as the Acquisition has not yet closed.
The Original Commitment Letter is governed by New York law and was originally set to expire on a date aligned with the outside date in the Equity Purchase Agreement (the "EPA"), which was initially December 31, 2022.
The purpose of the financing was to fund a portion of the $1.95 billion enterprise value acquisition of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Target"), a leading Pacific Northwest infrastructure platform with regulated and contracted renewable energy, water treatment, and utility service concessions. The following table summarizes the sources and uses for the proposed Acquisition as originally contemplated:
The equity contributions of Fund IV ($750 million) and ICM Co-Invest ($300 million) represent 71.43% and 28.57% of total equity, respectively, consistent with the Co-Investment Allocation Agreement described in Section IV.B below.
B. Transaction Status and Dormancy
Following the execution of the Original Commitment Letter and the EPA in August 2022, the transaction proceeded through a period of active due diligence and regulatory filings. However, a significant adverse development materially altered the trajectory of the Acquisition, as summarized in the timeline below:
October 28, 2022. The Portland Metropolitan Water District (the "Water District") delivered formal written notice to Cascadia of its intent to renegotiate the terms of the 40-year Bull Run Filtration Project concession agreement. This concession represents one of Cascadia's most significant infrastructure assets, generating annual revenue of approximately $64 million. The Water District's notice cited Oregon Senate Bill 1567 (2022) ("SB 1567"), which amended the Oregon Water Infrastructure Act to grant municipal water authorities expanded rights to renegotiate long-term concession agreements upon a change of control of the concessionaire. The potential renegotiation of this concession had direct and material implications for the projected cash flows underpinning the Acquisition valuation.
November 10, 2022. Meridian Infrastructure GP IV LLC formally notified Ironside of the material adverse development relating to the Bull Run Filtration Project concession renegotiation, in accordance with the GP's information-sharing obligations under the LP Agreement and the Side Letter.
November 22, 2022. The parties to the EPA executed the First Amendment to the EPA, extending the outside date from December 31, 2022 to March 31, 2023, to allow additional time for assessment of the concession renegotiation risk and its impact on the Acquisition.
January 9, 2023. Meridian Infrastructure GP IV LLC issued a capital-call suspension notice to Ironside, declaring a Material Impediment Event under Section 7.04 of the LP Agreement. The GP determined that the ongoing uncertainty surrounding the Bull Run Filtration Project concession renegotiation constituted a material impediment to the consummation of the Acquisition, thereby triggering the dormancy provisions of the LP Agreement. As of this date, the Vehicle entered dormancy, and all capital calls were suspended.
March 15, 2023. The parties to the EPA executed the Second Amendment to the EPA, extending the outside date from March 31, 2023 to June 30, 2023, to provide further time for resolution of the concession renegotiation issue and related regulatory proceedings.
As of the date of this memorandum, the Vehicle remains dormant. Of the $300 million total commitment by Ironside to ICM Co-Invest, $22,500,000 (representing 7.5% of the total commitment) was called on August 15, 2022 and funded in connection with the initial organizational activities and transaction costs of the Vehicle. The unfunded commitment of Ironside currently stands at $277,500,000. During the dormancy period, annualized operating expenses of the Vehicle are approximately $185,000, encompassing fund administration services provided by Kendrick Thorne & Associates LLP, registered agent fees, Delaware franchise tax, annual audit, and K-1 preparation. These costs are within the parameters established under the Side Letter.
C. The Extension
The Extension was formally executed on April 30, 2023, memorializing the agreement of Atlas and Pinnacle to extend the expiration date of the commitment letter to October 31, 2023. The key terms of the Extension are as follows:
Extension Date: April 30, 2023.
New Expiration Date: October 31, 2023.
Extension Fee: $2,437,500, calculated as 0.25% of the $975,000,000 senior secured term loan commitment amount.
Payor of Extension Fee: Meridian Infrastructure Partners Fund IV, LP, from Fund IV's own resources. No portion of the fee was charged to or allocated to ICM Cascadia Co-Invest, LP.
We note that, following the expiration of the originally contemplated outside date of December 31, 2022, the commitment letter had been informally held open by Atlas and Pinnacle without the imposition of additional fees, as the Commitment Parties continued to engage with Meridian regarding the status of the Acquisition and the prospect of eventual closing. The formal Extension executed on April 30, 2023 memorializes the agreed-upon terms for a defined extension period, replacing the informal arrangement that had been in place during the intervening months.
Importantly, the Extension does not alter the facility amounts, pricing terms, market flex provisions, or conditions precedent set forth in the Original Commitment Letter, other than the updated outside date alignment. The revolving credit facility of $150 million committed by Atlas was similarly extended to October 31, 2023 on the same terms.
III. Analysis of Extension Terms
A. Key Modifications
The sole substantive modification effected by the Extension is the extension of the expiration date of the commitment letter from the prior effective date (which had been aligned with the EPA first amended outside date of March 31, 2023) to October 31, 2023. All other terms, conditions, and provisions of the Original Commitment Letter remain in full force and effect without modification.
Specifically, the following material provisions are unchanged:
• Market flex provisions (including pricing flex, structural flex, and syndication flex) remain as originally negotiated and are described in greater detail in Section III.B below.
• Conditions precedent to funding continue to require, among other things: (i) execution and delivery of a definitive credit agreement in form and substance consistent with the commitment letter term sheet; (ii) the EPA remaining in full force and effect without amendment or waiver (other than amendments previously consented to by Atlas and Pinnacle); (iii) receipt of all required regulatory approvals, including approval from the Federal Energy Regulatory Commission ("FERC") under Section 203 of the Federal Power Act and from the Oregon Public Utility Commission ("OPUC"); (iv) no material adverse effect having occurred with respect to Cascadia or the Acquisition structure since August 30, 2022; and (v) other customary conditions, including delivery of financial statements, solvency certificates, and legal opinions.
• SunGard provisions (limited conditionality), which govern the circumstances under which the Commitment Parties may decline to fund, remain unchanged. The commitment letter provides that the Commitment Parties' obligation to fund is subject only to the enumerated conditions precedent and is not subject to market-out or due-diligence-out provisions beyond those expressly set forth.
• Syndication rights of Atlas and Pinnacle, including the right to syndicate portions of the term loan to additional lenders prior to or after closing, remain as originally agreed. Atlas retains the lead-left bookrunner role, and Pinnacle retains co-bookrunner status.
• Representations and covenants of the borrower and the sponsor remain in full force and effect, including the sponsor's obligation to use commercially reasonable efforts to assist in the syndication process and to provide customary information and access to management of the Target.
In summary, the Extension is a narrowly scoped amendment that preserves the entirety of the substantive terms of the Original Commitment Letter while providing an additional six months (measured from the prior effective expiration) for the Acquisition to proceed to closing.
B. Market Flex Provisions
The market flex provisions contained in the fee letter executed in connection with the Original Commitment Letter remain unchanged following the Extension. These provisions grant Atlas and Pinnacle the following rights:
Pricing Flex. The Commitment Parties retain the right to adjust the interest rate spread on the senior secured term loan upward by a specified amount (the exact parameters of which are set forth in the confidential fee letter and are not reproduced in this memorandum) to facilitate syndication of the loan.
Structural Flex. The Commitment Parties retain the right to adjust the original issue discount ("OID") on the term loan, thereby increasing the effective yield to lenders, in the event that such adjustment is necessary to achieve successful syndication.
Syndication Flex. The Commitment Parties retain the right to modify certain non-economic structural terms of the credit facility (including amortization schedules, financial covenants, and certain basket sizes) to the extent required to achieve successful syndication at the relevant time of funding.
We note, as a practical observation, that no new flex rights were granted to the Commitment Parties in connection with the Extension. However, in the current credit market environment as of April 2023 — characterized by elevated base rates, wider credit spreads relative to mid-2022 levels, and generally more conservative lender postures — it is likely that any future funding of the commitment would trigger the exercise of one or more flex rights by Atlas and Pinnacle. This is particularly true for a leveraged infrastructure acquisition of this size, where syndication market appetite has become more constrained. The potential exercise of flex rights would increase the effective borrowing cost of the term loan and should be factored into any reactivation analysis undertaken by Ironside.
C. Conditions to Extension Effectiveness
The Extension became effective upon the satisfaction of the following conditions:
1. Payment of the Extension Fee. The extension fee of $2,437,500 was paid by Meridian Infrastructure Partners Fund IV, LP to Atlas National Bank, N.A., as administrative agent, on April 30, 2023. The fee is non-refundable and was paid in immediately available funds.
2. Certification by GP. Meridian Infrastructure GP IV LLC delivered a certification to Atlas and Pinnacle confirming that the EPA remains in full force and effect, as amended by the First Amendment dated November 22, 2022 and the Second Amendment dated March 15, 2023.
3. No Default or MAC Confirmation. Meridian confirmed that no event of default or material adverse change has occurred with respect to Cascadia or the Acquisition structure since the date of the Original Commitment Letter, and that the representations and warranties of the sponsor contained in the commitment letter remain true and correct in all material respects as of the date of the Extension.
Importantly, in connection with the Extension, Atlas and Pinnacle have expressly reserved the right to decline any further extension of the commitment letter beyond October 31, 2023. The Extension letter includes a clear statement that the Commitment Parties' agreement to extend the expiration date to October 31, 2023 shall not be construed as an obligation or indication of willingness to extend the commitment letter beyond that date, and that any such further extension would require a separate agreement and the payment of additional fees as may be negotiated at that time.
IV. Cost Allocation Analysis
A central question posed by Ironside in connection with the Extension is whether any portion of the $2,437,500 extension fee could be allocated to the Vehicle, either currently or in the context of a future expense reconciliation. We have analyzed this question under the three principal contractual documents governing the relationship between Ironside and Meridian with respect to the co-investment: the LP Agreement, the Co-Investment Allocation Agreement, and the Side Letter. Our analysis and conclusions are set forth below.
A. LP Agreement Provisions on Expense Allocation
Section 5.03 of the LP Agreement governs the allocation of transaction-related expenses between the GP (Meridian Infrastructure GP IV LLC) and the limited partner (Ironside). This provision establishes the following framework:
Organizational expenses incurred in the formation and establishment of the Vehicle, including legal, accounting, and filing fees, are borne by the Vehicle and funded through capital calls.
Placement-agent fees, to the extent applicable, are borne by the Vehicle in accordance with the terms of the LP Agreement.
Transaction costs incurred in connection with the co-investment are borne by the Vehicle and funded through capital calls. "Transaction Expenses" is defined under the LP Agreement to include due diligence costs, legal fees and expenses, accounting and advisory fees, insurance costs (including costs associated with obtaining representations and warranties insurance), and regulatory filing fees directly attributable to the Vehicle's participation in the Acquisition.
Critically, debt commitment fees are not expressly enumerated as "Transaction Expenses" under the LP Agreement. The debt commitment letter is a contract between Atlas, Pinnacle, and the sponsor (Meridian, on behalf of Fund IV and AcquisitionCo). ICM Co-Invest is not a party to the commitment letter, and the Vehicle's name does not appear in the commitment letter or the related fee letter. While the Vehicle would benefit indirectly from the availability of debt financing in the Acquisition (to the extent it reduces the equity required to close), the commitment fee obligation runs directly to the sponsor and the borrower entity, not to the co-invest vehicle.
Accordingly, under the LP Agreement, there is no basis on which to treat the extension fee as a "Transaction Expense" allocable to the Vehicle.
B. Co-Investment Allocation Agreement
The Co-Investment Allocation Agreement, dated July 29, 2022, between Meridian Infrastructure Partners Fund IV, LP and ICM Cascadia Co-Invest, LP (the "Allocation Agreement") governs the allocation of economic interests, rights, and obligations between Fund IV and the Vehicle with respect to the Acquisition. The Allocation Agreement provides for the following equity split:
The Allocation Agreement addresses the sharing of transaction costs "directly related to the Acquisition" between Fund IV and the Vehicle on a pro rata basis consistent with the equity allocation percentages set forth above. This pro rata methodology applies to expenses that are properly characterizable as costs of the Acquisition borne jointly by the participating equity investors.
However, debt commitment fees — and, by extension, extension fees associated with maintaining the availability of debt financing — are characterized under the Allocation Agreement as financing costs borne by the borrower entity (Cascadia Acquisition Corp.) or the lead sponsor (Fund IV) in its capacity as the primary equity backer of the Acquisition. These costs are not treated as joint transaction costs allocable to co-investors absent express agreement to the contrary. No such express agreement exists with respect to the Extension or the associated extension fee.
Furthermore, the extension fee is, by its nature, a cost of maintaining financing availability during a period when the Acquisition has not proceeded to closing. As the Vehicle is dormant and no capital call mechanism is currently active pursuant to the Material Impediment Event declaration, there is no operative basis under the existing Allocation Agreement to allocate the $2,437,500 extension fee to ICM Co-Invest.
C. Side Letter Protections
The Side Letter dated July 29, 2022, executed between Ironside Capital Management LP and Meridian Infrastructure GP IV LLC, contains express protections against the allocation of dormancy-period costs to the Vehicle beyond an agreed operating expense budget. The Side Letter provides that, during any period in which the Vehicle is dormant (including any period following a declaration of a Material Impediment Event under Section 7.04 of the LP Agreement), the Vehicle's operating expenses shall be limited to the following categories and approximate annual amounts:
• Fund administration services (Kendrick Thorne & Associates LLP): approximately $95,000 per annum
• Registered agent fees (Delaware): approximately $3,500 per annum
• Delaware franchise tax: approximately $12,500 per annum
• Annual audit (Penrose Firth CPAs LLP): approximately $55,000 per annum
• K-1 preparation and tax compliance: approximately $19,000 per annum
• Total annualized dormancy operating expenses: approximately $185,000
The Side Letter does not contain any provision authorizing the pass-through of debt commitment extension fees, financing costs, or similar charges to the Vehicle during a dormancy period. The dormancy cost protections were negotiated by Ironside specifically to ensure that the Vehicle's limited partners would not bear the economic burden of maintaining the Acquisition infrastructure during periods of suspended activity.
We note that the Side Letter also preserves Ironside's right to receive quarterly reports from the GP regarding the status of the Vehicle and the Acquisition during dormancy, and separately addresses wind-down mechanics and election rights that are discussed in Section V.B below.
D. Conclusion on Cost Allocation
Based on our analysis of the LP Agreement, the Allocation Agreement, and the Side Letter, we reach the following conclusions with respect to the allocation of the $2,437,500 extension fee:
1. The extension fee is properly borne by Meridian Infrastructure Partners Fund IV, LP, and has been paid from Fund IV's own resources.
2. No contractual basis exists under the LP Agreement, the Allocation Agreement, or the Side Letter to allocate any portion of this fee to ICM Cascadia Co-Invest, LP.
3. Ironside should not expect to receive a capital call notice, an expense reimbursement request, or any other demand for payment related to the extension fee.
4. If the transaction is reactivated and a new or further-extended commitment letter is obtained from the Commitment Parties (or replacement lenders), cost allocation for any new commitment fees, arrangement fees, or similar financing costs should be negotiated at that time, with reference to the Allocation Agreement pro rata methodology (28.57% for ICM Co-Invest / 71.43% for Fund IV). Any such negotiation should occur prior to the resumption of capital calls and should be documented in a supplemental agreement or amendment to the Allocation Agreement.
5. Important caveat: If the Acquisition ultimately proceeds to closing, the post-closing expense reconciliation process contemplated by the Allocation Agreement could potentially include pre-closing financing costs — including commitment fees and extension fees — as part of aggregate transaction costs subject to pro rata allocation. Ironside should ensure that any such post-closing reconciliation is conducted in a manner consistent with the LP Agreement, the Allocation Agreement, and the Side Letter, and that the characterization of extension fees as joint transaction costs (rather than sponsor-borne financing costs) is not unilaterally adopted by Meridian without Ironside's prior consent.
We will continue to monitor this issue and will advise Ironside promptly if Meridian or the GP takes any position inconsistent with the analysis set forth above.
V. Implications for ICM Cascadia Co-Invest, LP
A. Unfunded Commitment Status
ICM Co-Invest's unfunded commitment to the Vehicle remains $277,500,000, representing 92.5% of the total $300 million commitment. The only capital call to date was the initial call of $22,500,000 (7.5% of total commitment), which was funded by Ironside on August 15, 2022 in connection with the Vehicle's organizational costs, initial due diligence expenses, and early transaction costs.
Capital calls remain suspended pursuant to the GP's declaration of a Material Impediment Event under Section 7.04 of the LP Agreement, effective January 9, 2023. No capital calls may be issued by the GP during the dormancy period unless and until the Material Impediment Event is rescinded by written notice of the GP to the limited partner, subject to the requirements and conditions set forth in Section 7.04(b) of the LP Agreement.
The extension of the debt commitment letter has the practical effect of preserving the possibility of transaction reactivation without requiring the sponsor to source entirely new lending arrangements, at least through October 31, 2023. The availability of committed debt financing is a necessary precondition to closing the Acquisition, as the $975 million term loan constitutes approximately 48.1% of the total transaction sources. If the debt commitment were to expire without further extension, and if the transaction were subsequently reactivated, Meridian would be required to negotiate new financing arrangements from scratch — a process that would add significant time (likely several months), cost (in the form of new commitment fees, arrangement fees, and potentially higher borrowing costs given current market conditions), and execution risk to any reactivation effort.
From Ironside's perspective, the continued availability of committed debt financing modestly preserves the optionality inherent in Ironside's unfunded commitment. However, we emphasize that the dormancy status of the Vehicle and the suspension of capital calls are governed by the LP Agreement and the GP's Material Impediment Event declaration, and are not affected by the status of the debt commitment letter.
B. Dormancy Governance Considerations
The Vehicle remains in dormancy as of the date of this memorandum. The GP's obligations during the dormancy period, as set forth in the LP Agreement and supplemented by the Side Letter, include the following:
• Delivery of quarterly reports to the limited partner regarding the status of the Acquisition, any material developments affecting the Vehicle, and updated financial statements of the Vehicle.
• Maintenance of the Vehicle's organizational existence in good standing under the laws of the State of Delaware.
• Compliance with the dormancy operating expense budget established under the Side Letter.
• Prompt notification to Ironside of any material developments relating to the Acquisition, the Target, or the regulatory environment that may affect the Vehicle or the limited partner's unfunded commitment.
The GP's Q1 2023 quarterly report was delivered to Ironside and reviewed by Calderwood & Harkness in connection with our dormancy governance monitoring engagement. Our review memorandum, dated April 20, 2023, was provided to Ironside under separate cover and did not identify any material governance deficiencies or deviations from the agreed dormancy protocols.
A critical date on the dormancy governance timeline is the 18-month dormancy mark, which will occur on July 9, 2024 (18 months from the January 9, 2023 commencement of dormancy). Under Section 7.04(c) of the LP Agreement, Ironside's right to elect wind-down of the Vehicle will ripen at this date. Upon the 18-month mark, Ironside may deliver written notice to the GP electing to wind down the Vehicle, in which case the GP shall be required to commence an orderly dissolution and winding up of the Vehicle's affairs, including the return of any remaining called capital (net of expenses and liabilities) to the limited partner. This wind-down election right provides Ironside with a defined exit mechanism if the Acquisition has not reactivated or closed within 18 months of the dormancy commencement.
We emphasize that the extension of the debt commitment letter does not affect the dormancy status of the Vehicle or the calculation of the 18-month period. Dormancy commenced on January 9, 2023, and the 18-month period runs from that date regardless of whether the debt commitment letter remains in force or has expired. The two timelines — the debt commitment expiration and the dormancy wind-down election date — are contractually independent.
C. R&W Insurance Tolling
In connection with the proposed Acquisition, a representations and warranties insurance policy was bound with Northgate Specialty Insurance Co. (Policy No. NSW-RI-2022-09814), providing coverage with a limit of $195 million. A premium deposit of $4,875,000 was paid in connection with the binding of the policy. The policy remains tolled pursuant to a tolling agreement in the form of a side letter dated January 20, 2023, between Meridian and Northgate, which suspended the coverage effective period during the dormancy of the Vehicle and the Acquisition.
The extension of the debt commitment letter does not affect the tolling of the R&W insurance policy. The tolling arrangement is governed by the January 20, 2023 side letter between Meridian and Northgate and is not conditioned upon or linked to the availability of debt financing for the Acquisition.
In the event of transaction reactivation, a separate analysis would be required to determine whether the R&W policy can be reactivated on its existing terms (including coverage limits, retention amounts, and premium) or whether renegotiation or re-underwriting by Northgate would be required. Given the passage of time since the original binding of the policy and the material adverse development relating to the Bull Run Filtration Project concession, it is likely that Northgate would require updated due diligence and potentially revised terms. We will advise Ironside on this issue if and when reactivation discussions advance.
D. Regulatory Approvals
Several regulatory approvals were obtained or initiated in connection with the Acquisition, and the status of these approvals remains relevant to the overall transaction timeline and the implications of the debt commitment extension. The current status of the key regulatory approvals is as follows:
FERC Section 203 Approval. The Federal Energy Regulatory Commission granted approval for the proposed transaction under Section 203 of the Federal Power Act on December 15, 2022 (Docket No. EC22-143-000). The FERC order remains in effect but is subject to an 18-month lapse provision under FERC's standard practice, as modified by a FERC staff letter extending the effectiveness period. Based on the FERC order and staff letter, the approval would lapse if the transaction does not close by approximately June 15, 2024. If the approval lapses, a new Section 203 application would need to be filed, which would add several months to the transaction timeline and introduce the risk that FERC may impose additional conditions in light of changed circumstances.
OPUC Proceedings. The Oregon Public Utility Commission proceedings relating to the Acquisition (Docket No. UM-2287) remain stayed at the joint request of the parties since February 2023. The stay was sought to avoid expenditure of regulatory resources during the dormancy period. The stay can be lifted upon joint request of the parties, and the OPUC proceedings would then resume. The timeline for completion of the OPUC review, once resumed, is estimated at three to six months, depending on the complexity of issues raised and the level of intervenor participation.
CFIUS Clearance. The Committee on Foreign Investment in the United States ("CFIUS") review has been effectively completed, and no further action is required. CFIUS clearance is not subject to a lapse or expiration provision.
The extension of the debt commitment letter does not directly affect any of the foregoing regulatory timelines. However, the regulatory approval lapse risk — particularly with respect to the FERC Section 203 approval — compounds the consequences of further transaction delay and underscores the importance of monitoring the alignment between the debt commitment expiration date, the EPA outside date, and the regulatory approval windows.
VI. Forward-Looking Considerations
A. Risk of Non-Extension Beyond October 31, 2023
As noted in Section III.C above, Atlas and Pinnacle have expressly reserved the right to decline any further extension of the commitment letter beyond October 31, 2023. The Extension letter contains no commitment, indication of intent, or assurance from the Commitment Parties regarding their willingness to extend the commitment letter for any additional period.
If the debt commitment expires on October 31, 2023 without further extension, and the Acquisition has not closed by that date, the sponsor would need to obtain new financing commitments in order to proceed with the Acquisition. In the current credit market environment, sourcing replacement financing for a $975 million leveraged infrastructure acquisition would be a significant undertaking. Based on our assessment of current market conditions as of April 2023, we observe the following:
• Credit spreads for leveraged infrastructure acquisitions have widened relative to mid-2022 levels, reflecting higher base rates, reduced risk appetite among institutional lenders, and increased selectivity in the syndicated loan market.
• New commitment letters for transactions of this size and complexity would likely carry higher commitment fees (potentially in excess of the 0.25% extension fee paid in connection with the current Extension), more restrictive covenant packages, and less favorable flex provisions for the sponsor.
• The process of negotiating, documenting, and executing a new commitment letter — including updated lender due diligence, revised financial models, and potentially a broader syndication process — would likely require three to six months, depending on market conditions and lender appetite.
• The loss of committed financing would significantly weaken the sponsor's bargaining position vis-à-vis the seller and could undermine the credibility of the Acquisition as a viable transaction.
In light of these risks, we recommend that Ironside actively monitor Meridian's engagement with Atlas and Pinnacle regarding the Commitment Parties' willingness to extend the commitment letter beyond October 31, 2023, the fee terms that would be associated with any such further extension, and any proposed modifications to the commitment letter terms (including pricing, flex provisions, and conditions precedent) that the Commitment Parties may seek in connection with a further extension.
B. Potential Future Cost Allocation
While the current extension fee is properly borne by Fund IV, as analyzed in Section IV above, the reactivation of the Acquisition would likely give rise to negotiations regarding the allocation of financing-related costs between Fund IV and ICM Co-Invest. Specifically, if the transaction reactivates and new or further-extended financing commitments are obtained, Ironside should anticipate that Meridian may seek to allocate a portion of the following costs to the Vehicle:
• New or additional commitment fees associated with extending or replacing the debt commitment letter;
• Arrangement fees or upfront fees payable to lenders in connection with new financing;
• Increased borrowing costs resulting from the exercise of flex provisions or the negotiation of new terms in a less favorable credit market; and
• Legal, advisory, and other professional fees incurred in connection with the restructuring or renegotiation of the financing package.
We recommend that, in any such negotiation, Ironside insist that cost allocation for new financing arrangements be governed by an express agreement that references the Allocation Agreement pro rata methodology (28.57% for ICM Co-Invest / 71.43% for Fund IV) and that is documented in writing prior to the issuance of any capital calls. Ironside should also ensure that any cost allocation framework clearly distinguishes between (a) costs attributable to the sponsor's decision to maintain financing availability during the dormancy period (which should remain the responsibility of Fund IV) and (b) costs that are genuinely attributable to the reactivated Acquisition and that benefit both equity participants on a pro rata basis.
Additionally, if the economics of the Acquisition change materially — for example, as a result of a revised enterprise value reflecting the impact of the Bull Run Filtration Project concession renegotiation on Cascadia's cash flows — the underlying cost allocation methodology may need to be revisited. A material reduction in enterprise value would alter the leverage profile of the Acquisition, potentially affecting the size and terms of the debt financing and, in turn, the allocation of financing costs between the equity participants. Any such change should be evaluated in the context of the Allocation Agreement and the LP Agreement, and Ironside should have the opportunity to review and consent to any revised cost allocation framework.
C. EPA Outside Date Alignment
The Second Amendment to the EPA, executed on March 15, 2023, extended the outside date from March 31, 2023 to June 30, 2023. The debt commitment letter, as extended, now expires on October 31, 2023 — four months beyond the current EPA outside date. This misalignment creates a potential issue: if the EPA outside date is not extended beyond June 30, 2023, either party to the EPA may have the right to terminate the agreement after that date, which would render the debt commitment moot (as the EPA's remaining in full force and effect is a condition precedent to funding under the commitment letter).
We anticipate that a Third Amendment to the EPA will be required to extend the outside date to at least align with, and preferably exceed, the October 31, 2023 debt commitment expiration. Based on our understanding of the current status of discussions between Meridian and the seller, negotiations regarding a further extension of the EPA outside date are expected to commence in the coming weeks. Any such Third Amendment may also address other matters, including updated representations regarding the status of the Bull Run Filtration Project concession renegotiation, revised termination fee provisions, and potentially updated financial metrics or valuation parameters.
Calderwood & Harkness will advise Ironside on the terms of any proposed Third Amendment to the EPA and its implications for the Vehicle, including any changes that may affect the Vehicle's rights, obligations, or economic interests in the Acquisition. We will circulate a separate memorandum analyzing the Third Amendment promptly upon its execution or, if Ironside desires, upon receipt of a draft for review and comment.
VII. Recommendations
Based on the foregoing analysis, we make the following recommendations to Ironside:
1. No action required regarding the extension fee. Meridian Infrastructure Partners Fund IV, LP has properly borne the $2,437,500 extension fee, and there is no contractual basis under the LP Agreement, the Allocation Agreement, or the Side Letter for allocation of any portion of this cost to ICM Cascadia Co-Invest, LP. No capital call, expense reimbursement request, or other demand related to the extension fee should be expected, and Ironside should decline any such request if one is made.
2. Monitor willingness for further extension. Ironside should actively monitor Meridian's ongoing engagement with Atlas National Bank, N.A. and Pinnacle Credit Partners LLC regarding the Commitment Parties' willingness to extend the commitment letter beyond the current October 31, 2023 expiration date, the fee terms associated with any such further extension, and any proposed modifications to the commitment letter terms. We recommend that Ironside request regular updates from Meridian on this topic through the GP quarterly reporting process and through direct communication as appropriate.
3. Track alignment of debt commitment and EPA outside date. Ironside should closely track the alignment between the debt commitment expiration date (October 31, 2023) and the EPA outside date (currently June 30, 2023 per the Second Amendment). A Third Amendment to the EPA extending the outside date is anticipated, and Ironside should review and assess the terms of any such amendment in coordination with Calderwood & Harkness.
4. Preserve cost allocation protections. Ironside should preserve its position under the Side Letter and the LP Agreement regarding cost allocation protections for any future financing costs that may arise in connection with reactivation of the Acquisition. In particular, Ironside should ensure that any new or revised financing arrangement includes an express agreement on cost sharing between Fund IV and ICM Co-Invest that is consistent with the Allocation Agreement pro rata methodology and documented in writing prior to any capital calls.
5. Continue dormancy governance monitoring. Ironside should continue its active monitoring of the Vehicle's dormancy governance, including review of the GP's quarterly reports, verification of compliance with the dormancy operating expense budget, and tracking of the 18-month wind-down election date of July 9, 2024. Calderwood & Harkness will continue to review each quarterly report and provide a summary memorandum to Ironside.
6. Note FERC approval lapse risk. Ironside should note the approximately June 15, 2024 lapse date for the FERC Section 203 approval (Docket No. EC22-143-000) as an additional factor in assessing the viability and timeline of any potential reactivation of the Acquisition. The FERC lapse date falls approximately five weeks before the 18-month dormancy wind-down election date, and both dates should be considered in Ironside's planning horizon.
We remain available to discuss any aspect of this memorandum and the matters addressed herein at your convenience. Please do not hesitate to contact Pamela Cross (212-558-XXXX), Nicholas Stern (212-558-XXXX), or Theresa Kim (212-558-XXXX) with any questions.
VIII. Appendices
Appendix A — Summary of Debt Commitment Letter Key Terms
Appendix B — Extension Fee Calculation
Appendix C — Sources and Uses Summary
Appendix D — Cost Allocation Framework
Appendix E — Key Dates and Deadlines
This memorandum is prepared by Calderwood & Harkness LLP for the sole use of Ironside Capital Management LP in connection with Matter No. 1023-00001. This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
TO: | Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP
Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP
FROM: | Pamela Cross, Responsible Partner, Calderwood & Harkness LLP
Nicholas Stern, Billing Partner, Calderwood & Harkness LLP
Theresa Kim, Lead Associate, Calderwood & Harkness LLP
DATE: | April 28, 2023
RE: | Analysis of Debt Commitment Letter Extension and Cost Allocation Between Meridian Infrastructure Partners Fund IV, LP and ICM Cascadia Co-Invest, LP
MATTER NO.: | 1023-00001
Sources | Amount | Uses | Amount
Equity — Fund IV | $750,000,000 | Enterprise Value | $1,950,000,000
Equity — ICM Co-Invest | $300,000,000 | Estimated Transaction Costs | $50,000,000
Senior Secured Term Loan | $975,000,000 | Working-Capital Adjustment Escrow | $25,000,000
Total Sources | $2,025,000,000 | Total Uses | $2,025,000,000
Entity | Equity Commitment | Pro Rata Share
Meridian Infrastructure Partners Fund IV, LP | $750,000,000 | 71.43%
ICM Cascadia Co-Invest, LP | $300,000,000 | 28.57%
Total | $1,050,000,000 | 100.00%
Term | Detail
Commitment Parties | Atlas National Bank, N.A. (Lead Arranger / Administrative Agent); Pinnacle Credit Partners LLC (Co-Lender / Syndication Participant)
Borrower | Cascadia Acquisition Corp. (newly formed Delaware corporation)
Senior Secured Term Loan | $975,000,000
— Atlas Commitment | $650,000,000
— Pinnacle Commitment | $325,000,000
Revolving Credit Facility | $150,000,000 (Atlas only; undrawn)
Total Debt Commitment | $1,125,000,000
Pricing (Term Loan) | Per confidential fee letter; subject to market flex
Maturity | Seven years from closing date
Security | First-priority lien on substantially all assets of AcquisitionCo and subsidiaries, including equity of the Target
Conditions Precedent | Execution of definitive credit agreement; EPA in full force and effect; FERC and OPUC approvals; no material adverse effect; customary closing conditions
Market Flex | Pricing flex (spread adjustment); Structural flex (OID adjustment); Syndication flex
SunGard Provisions | Limited conditionality; no market-out or due-diligence-out beyond enumerated conditions
Governing Law | New York
Original Expiration | Aligned with EPA outside date (originally December 31, 2022)
Extended Expiration | October 31, 2023 (per Extension dated April 30, 2023)
Extension Fee | $2,437,500 (0.25% × $975,000,000)
Component | Detail
Fee Basis | Senior Secured Term Loan Commitment
Commitment Amount | $975,000,000
Fee Rate | 0.25%
Calculation | 0.25% × $975,000,000
Extension Fee | $2,437,500
Payor | Meridian Infrastructure Partners Fund IV, LP
Payment Date | April 30, 2023
Payee | Atlas National Bank, N.A. (as administrative agent for the Commitment Parties)
Refundable | No
Allocated to ICM Co-Invest | No — fee borne entirely by Fund IV
Sources | Amount ($M) | % of Total
Fund IV Equity | $750.0 | 37.04%
ICM Co-Invest Equity | $300.0 | 14.81%
Senior Secured Term Loan | $975.0 | 48.15%
Total Sources | $2,025.0 | 100.00%
Uses | Amount ($M) | % of Total
Enterprise Value | $1,950.0 | 96.30%
Estimated Transaction Costs | $50.0 | 2.47%
Working-Capital Adjustment Escrow | $25.0 | 1.23%
Total Uses | $2,025.0 | 100.00%
Cost Category | LP Agreement §5.03 | Allocation Agreement (Pro Rata) | Side Letter (Dormancy Protections) | Extension Fee Classification
Organizational Expenses | Borne by Vehicle | N/A | Included in dormancy budget | Not applicable
Due Diligence Costs | "Transaction Expense" — borne by Vehicle | Shared pro rata (28.57% / 71.43%) | Not addressed (pre-dormancy cost) | Not applicable
Legal / Accounting Fees | "Transaction Expense" — borne by Vehicle | Shared pro rata (28.57% / 71.43%) | Capped during dormancy (~$185K/yr) | Not applicable
Regulatory Filing Fees | "Transaction Expense" — borne by Vehicle | Shared pro rata (28.57% / 71.43%) | Not addressed (pre-dormancy cost) | Not applicable
Debt Commitment Fees | Not enumerated as Transaction Expense | Financing cost borne by borrower/sponsor | Not authorized for pass-through during dormancy | Extension fee not allocable to Vehicle
Extension Fee ($2,437,500) | No basis for allocation | No basis for allocation (financing cost, not joint transaction cost) | Expressly excluded from dormancy cost budget | Properly borne by Fund IV
Future Commitment / Arrangement Fees (upon reactivation) | To be determined | Subject to negotiation; pro rata methodology (28.57% / 71.43%) as reference | Must be agreed before capital calls resume | To be negotiated
Date | Event | Status / Notes
July 29, 2022 | LP Agreement, Allocation Agreement, and Side Letter executed | Completed
August 15, 2022 | Initial capital call ($22.5M) funded by Ironside | Completed
August 30, 2022 | Original Debt Commitment Letter executed | Completed
October 28, 2022 | Portland Metropolitan Water District concession renegotiation notice | Adverse development
November 10, 2022 | Meridian notification to Ironside of material adverse development | Completed
November 22, 2022 | First Amendment to EPA (outside date extended to March 31, 2023) | Completed
December 15, 2022 | FERC §203 approval received (Docket No. EC22-143-000) | In effect; subject to lapse
December 31, 2022 | Original EPA outside date (superseded by First Amendment) | Superseded
January 9, 2023 | Material Impediment Event declared; Vehicle enters dormancy | In effect
January 20, 2023 | R&W insurance tolling side letter executed with Northgate | In effect
February 2023 | OPUC proceedings (Docket No. UM-2287) stayed | Stay in effect
March 15, 2023 | Second Amendment to EPA (outside date extended to June 30, 2023) | In effect
March 31, 2023 | First amended EPA outside date (superseded by Second Amendment) | Superseded
April 20, 2023 | C&H review memo on Q1 2023 GP quarterly report | Completed
April 28, 2023 | Date of this Memorandum | Current
April 30, 2023 | Debt Commitment Letter Extension executed; extension fee paid | Effective
June 30, 2023 | Current EPA outside date (per Second Amendment) | Upcoming — Third Amendment anticipated
October 31, 2023 | Extended Debt Commitment Letter expiration | Upcoming — further extension uncertain
~June 15, 2024 | FERC §203 approval estimated lapse date | Upcoming — monitoring required
July 9, 2024 | 18-month dormancy mark; Ironside wind-down election right ripens | Upcoming — strategic decision date

MEMORANDUM

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT

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