1023-00001 · Ironside Capital Management LP · Financing

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED

CALDERWOOD & HARKNESS LLP 125 Broad Street, 44th Floor New York, New York 10004

Telephone: (212) 558-4000 Facsimile: (212) 558-3588

November 2, 2023

Matter No. 1023-00001

Via Email and Sundial Data Systems

Marcus J. Calloway Founder & Chief Investment Officer Ironside Capital Management LP 590 Madison Avenue, 38th Floor New York, New York 10022

Renata Obasi Senior Managing Director, Infrastructure Ironside Capital Management LP 590 Madison Avenue, 38th Floor New York, New York 10022

Re: Expiration of Debt Commitment Letter — Atlas National Bank, N.A. / Pinnacle Credit Partners LLC — Implications for ICM Cascadia Co-Invest, LP and the Proposed Acquisition of Cascadia Renewables Holdings, Inc.

Dear Marcus and Renata:

I. Introduction and Purpose

We write to advise Ironside Capital Management LP ("Ironside" or "ICM") that the debt commitment letter dated August 30, 2022 (the "Commitment Letter"), issued by Atlas National Bank, N.A. ("Atlas"), acting as lead arranger and administrative agent, and Pinnacle Credit Partners LLC ("Pinnacle"), acting as co-lender and syndication participant, expired by its terms on October 31, 2023 without further extension. As of the date of this letter, no replacement debt commitment letter or alternative financing arrangement has been obtained.

The Commitment Letter provided for a $975,000,000 senior secured term loan facility and a $150,000,000 revolving credit facility (collectively, the "Debt Financing") to fund, in part, the proposed acquisition (the "Acquisition") of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Target") by Cascadia Acquisition Corp. (the "Acquiror"), a special purpose acquisition vehicle formed by Meridian Infrastructure Partners Fund IV, LP ("Fund IV") and ICM Cascadia Co-Invest, LP (the "Vehicle" or the "Co-Invest").

We have confirmed with Breckenridge Sloane & Pratt LLP ("BSP"), counsel to Meridian Infrastructure Partners LP ("Meridian") and Meridian Infrastructure GP IV LLC (the "GP"), that no further extension of the Commitment Letter was agreed upon and that no replacement commitment has been obtained as of the date of this letter. BSP has not, in its communications with our office, indicated that any replacement financing discussions are currently underway, although we cannot independently verify whether Meridian or its principals have engaged in preliminary conversations with potential lenders.

This letter analyzes the implications of the Commitment Letter's expiration for: (a) the underlying Acquisition transaction; (b) the Vehicle; and (c) Ironside's strategic position. In addition, we set forth our recommendations regarding the steps that Ironside should consider taking in the near term in light of these developments. This letter should be read in conjunction with our prior memoranda and correspondence on this matter, including the memoranda and letters referenced herein.

We note at the outset that this letter is protected by the attorney-client privilege and the work-product doctrine, and its contents should not be disclosed to any third party without our prior consent.

II. Background and Timeline of the Debt Commitment Letter

We briefly summarize below the key terms and history of the Commitment Letter to provide context for the analysis that follows. A more detailed review of the Commitment Letter's substantive provisions, including flex provisions, market-flex mechanics, and conditions precedent, is set forth in our memorandum entitled Review of Debt Commitment Letter — Key Terms and Flex Provisions dated August 30, 2022, which we provided to you at the time of execution.

A. Original Terms

The Commitment Letter was executed on August 30, 2022, among the following parties:

• Atlas National Bank, N.A. — acting as lead arranger and administrative agent, committing to $650,000,000 of the senior secured term loan facility;

• Pinnacle Credit Partners LLC — acting as co-lender and syndication participant, committing to $325,000,000 of the senior secured term loan facility.

The Commitment Letter contemplated the following facilities:

• Senior Secured Term Loan Facility: $975,000,000 in aggregate ($650,000,000 committed by Atlas and $325,000,000 committed by Pinnacle), to be drawn in a single draw at the closing of the Acquisition; and

• Revolving Credit Facility: $150,000,000, committed solely by Atlas, to be available on a revolving basis following the closing of the Acquisition for working capital, capital expenditures, and general corporate purposes of Cascadia (the "Revolver"). At no point during the life of the Commitment Letter was any amount drawn under the Revolver.

The Commitment Letter was governed by New York law and was subject to the conditions precedent, representations, and market-flex provisions customary for transactions of this nature and magnitude.

The Debt Financing was a critical component of the Acquisition's sources and uses of funds. The total sources and uses for the Acquisition, as set forth in the Equity Purchase Agreement (defined below) and the Commitment Letter, were structured as follows:

Sources of Funds:

Uses of Funds:

As the foregoing table makes clear, the Debt Financing represented approximately 48.1% of total sources, and the equity commitments (Fund IV and the Co-Invest combined) represented approximately 51.9%. The transaction was structured with a loan-to-value ratio of approximately 50%, a level that was considered conservative by the lenders at the time of commitment and that reflected the perceived stability of Cascadia's contracted infrastructure revenue streams.

B. Extension History

The Commitment Letter's original expiration date was December 31, 2022, which was aligned with the original outside date set forth in the Equity Purchase Agreement dated September 15, 2022 (the "EPA"). The extension history of the Commitment Letter is as follows:

Original Expiration Date — December 31, 2022. The Commitment Letter originally provided that it would expire at 5:00 p.m. Eastern Time on December 31, 2022, unless the closing of the Acquisition occurred on or before that date or the parties agreed in writing to extend the expiration date. The original expiration date was aligned with the EPA's original outside date. However, following the notice of concession renegotiation issued by the Portland Metropolitan Water District on October 28, 2022 — which raised material questions regarding the scope and terms of one of Cascadia's most significant concession agreements — and the subsequent execution of the First Amendment to the EPA on November 22, 2022 (which extended the EPA outside date and introduced certain additional conditions), the Commitment Letter was not immediately extended in parallel with the EPA amendments. This created a temporary misalignment between the EPA timeline and the financing timeline, which was subsequently addressed through the first extension described below.

First Extension — April 30, 2023. The Commitment Letter was extended by letter agreement among Atlas, Pinnacle, and the Acquiror, extending the expiration date to April 30, 2023. The terms of the Commitment Letter were not separately modified in connection with this extension. No extension fee was charged to the Acquiror in connection with the first extension, as the extension was agreed to within the grace period contemplated by the Commitment Letter's original terms.

Second Extension — October 31, 2023. The Commitment Letter was further extended by letter agreement among Atlas, Pinnacle, and the Acquiror, extending the expiration date to October 31, 2023. In connection with this second extension, Atlas and Pinnacle required the payment of an extension fee calculated as follows:

0.25% × $975,000,000 = $2,437,500

This extension fee was paid by Meridian Infrastructure Partners Fund IV, LP. We confirmed with BSP that Fund IV absorbed this cost directly and that it was not charged to, or allocated against, the Co-Invest. This treatment is consistent with our understanding of the cost-allocation provisions of the LP Agreement and the Side Letter (each as defined below).

No Third Extension. No third extension of the Commitment Letter was sought or granted. The Commitment Letter expired by its terms at 5:00 p.m. Eastern Time on October 31, 2023. We understand from BSP that Atlas communicated to Meridian in mid-October 2023 that it was not prepared to extend the Commitment Letter on the existing terms, and that any new commitment would need to reflect current market conditions, including the substantially higher interest rate environment. We have not independently confirmed this with Atlas or its counsel, as Ironside does not have a direct relationship with the lenders.

C. Current Status of the Equity Purchase Agreement

The EPA, dated September 15, 2022, has been amended three times:

• First Amendment — dated November 22, 2022, addressing the Portland Metropolitan Water District concession renegotiation notice and extending the outside date;

• Second Amendment — dated March 15, 2023, addressing certain updated representations and warranties related to environmental compliance and further extending the outside date; and

• Third Amendment — dated June 28, 2023, extending the outside date to December 31, 2023 and modifying certain interim operating covenants applicable to Cascadia.

As amended, the EPA currently has an outside date of December 31, 2023 — approximately sixty (60) days from the date of this letter. The EPA remains technically in effect, but the financing condition precedent to closing — which requires the Acquiror to provide evidence of committed debt financing in an aggregate amount sufficient to fund the Acquisition, together with the equity commitments, on or prior to the closing date — can no longer be satisfied without the procurement of replacement financing.

Additionally, we note that the Vehicle's dormancy commenced on January 9, 2023, when the GP issued the Capital Call Suspension Notice (the "Suspension Notice") pursuant to Section 7.04 of the Limited Partnership Agreement of ICM Cascadia Co-Invest, LP dated August 1, 2022 (the "LP Agreement"), declaring the existence of a Material Impediment Event. The Suspension Notice cited the Portland Metropolitan Water District concession renegotiation, the resulting uncertainty regarding the transaction timeline, and the absence of a clear path to closing as the bases for the Material Impediment Event determination. The Vehicle has remained dormant since that date.

III. Implications of the Debt Commitment Letter Expiration

The expiration of the Commitment Letter has significant implications across multiple dimensions of this transaction. We address each in turn below.

A. Impact on Transaction Feasibility

The Acquisition of Cascadia at the agreed enterprise value of $1,950,000,000 was predicated on a capital structure requiring $975,000,000 in debt financing from Atlas and Pinnacle. Without the Commitment Letter in effect, the Acquisition cannot close on the currently contemplated terms. The financing gap is substantial — representing nearly half of the total transaction consideration — and cannot be bridged through equity commitments alone without a fundamental restructuring of the transaction.

No replacement debt commitment has been obtained as of the date of this letter. We are not aware of any active discussions between Meridian and potential replacement lenders, although we note that BSP has not confirmed the absence of such discussions and Meridian may be exploring alternatives that have not yet been communicated to us or to Ironside.

Market conditions in late 2023 differ materially from the conditions prevailing in August 2022 when the Commitment Letter was originally executed. In particular:

• The federal funds rate has increased substantially since August 2022, and credit spreads for infrastructure-related term loans have widened. A replacement facility, if obtainable, would almost certainly carry a higher all-in interest cost than the original Commitment Letter terms, which would reduce the projected returns to equity holders and alter the transaction economics that informed Ironside's original investment decision.

• Credit markets for infrastructure lending have tightened, reflecting broader macroeconomic uncertainty and increased lender caution regarding long-duration project finance and concession-based revenue streams. The competitive dynamics among lenders that allowed Atlas and Pinnacle to commit to $975,000,000 in term loan financing may not be replicable in the current environment without significant structural concessions.

• Even if a replacement commitment were to be obtained, the key terms — including pricing (interest rate margins and upfront fees), market-flex provisions (which could allow the arrangers to increase pricing further), conditions precedent to funding, financial maintenance covenants, and collateral requirements — would likely differ from the original Commitment Letter. These differences could affect the transaction economics, the projected internal rate of return and cash-on-cash returns, the equity contribution requirements (if a smaller debt facility requires additional equity), and the post-closing capital structure of the Target.

In addition, the revolving credit facility ($150,000,000) has also lapsed with the expiration of the Commitment Letter, eliminating the post-closing liquidity support that was a critical component of the original capital structure. The Revolver was intended to provide Cascadia with readily available liquidity for working capital needs, seasonal cash flow variability, and capital expenditure requirements in the ordinary course of business. The absence of this facility would need to be addressed in any replacement financing arrangement.

B. Impact on the Equity Purchase Agreement

The EPA contains a financing condition precedent at Section 6.03(d) that requires the Acquiror to provide evidence of committed debt financing, in form and substance reasonably satisfactory to the Selling Shareholders, at or prior to the closing of the Acquisition. With the Commitment Letter expired and no replacement commitment in place, this condition precedent cannot currently be satisfied. The inability to satisfy this condition is a material impediment to closing and, depending on how the EPA's termination provisions are construed, may give rise to termination rights in favor of one or more parties.

The EPA outside date is December 31, 2023 — approximately sixty (60) days from the date of this letter. Absent a further amendment to the EPA extending the outside date, or a waiver or modification of the financing condition precedent, any party to the EPA may terminate the agreement after December 31, 2023 if the closing has not occurred by that date. The termination rights under the EPA are structured as follows:

• Selling Shareholders: Each of the Selling Shareholders — Timberline Growth Equity Fund III, LP ("Timberline"), the Weir Family Trust (the "Weir Trust"), and the Management Rollover Pool — has the right to terminate the EPA if the closing has not occurred on or before the outside date, provided that the failure to close is not primarily attributable to a breach by such Selling Shareholder of its obligations under the EPA. We understand that Hugh Callister, a Managing Partner at Timberline, and Jonathan M. Weir, the Trustee of the Weir Trust, are the principal decision-makers for the Selling Shareholders.

• Cascadia: The Target has a parallel termination right under similar conditions.

• Cascadia Acquisition Corp.: The Acquiror also has the right to terminate after the outside date, although it would be unusual for the acquiror to exercise this right in circumstances where the failure to close is attributable to the acquiror's inability to secure financing.

We note that, as of the date of this letter, no party has indicated an intent to terminate the EPA. However, the expiration of the Commitment Letter materially weakens the Acquiror's negotiating position in any discussions regarding a further extension of the outside date or modification of other EPA terms. The Selling Shareholders are likely aware that the Acquiror currently lacks the financing necessary to close, which shifts leverage significantly in their direction. In any renegotiation of the EPA, the Selling Shareholders may seek concessions such as a reduced purchase price, an increased reverse termination fee or break-up fee, enhanced interim operating covenants, or other protective provisions that would be unfavorable to the equity sponsors.

C. Impact on ICM Cascadia Co-Invest, LP

The Vehicle has been dormant since January 9, 2023, the date on which the GP issued the Suspension Notice declaring a Material Impediment Event. During the dormancy period, the following financial position has been maintained:

• Capital Called to Date: $22,500,000, representing 7.5% of the total $300,000,000 commitment.

• Unfunded Commitment: $277,500,000, representing the balance of the total commitment that has not been drawn.

The expiration of the Commitment Letter does not, by itself, trigger any specific obligation or right under the LP Agreement. The LP Agreement does not contain a provision that is directly conditioned upon the status of the Debt Financing or the Commitment Letter. However, the Commitment Letter's expiration deepens and confirms the factual basis for the Material Impediment Event previously declared by the GP. The Material Impediment Event was originally premised on the Portland Metropolitan Water District concession renegotiation and the resulting uncertainty regarding the transaction timeline; the inability to close due to the absence of committed financing constitutes an additional and independently significant impediment.

The GP's quarterly reports to the Vehicle's limited partners — specifically the reports for Q1 2023, Q2 2023, and Q3 2023, each of which has been delivered to date — have flagged financing uncertainty as a risk factor. The Q3 2023 report, delivered on October 15, 2023, noted that the Commitment Letter's October 31, 2023 expiration date was approaching and that discussions with Atlas regarding a further extension were ongoing. The expiration of the Commitment Letter without extension confirms the concern expressed in those reports and renders the financing risk a realized event rather than a prospective one.

The Vehicle continues to incur annualized dormancy operating expenses of approximately $185,000, consisting of the following:

These expenses are being borne by the Vehicle from the working-capital reserve, which currently holds approximately $3,500,000. At the current rate of expenditure, the working-capital reserve is sufficient to sustain the Vehicle's dormancy expenses for approximately nineteen (19) years, and therefore does not present an immediate concern. However, this calculation does not account for potential additional costs that could arise in connection with a transaction reactivation, a wind-down, or any litigation or dispute.

For the avoidance of doubt, the $22,500,000 in capital called to date has been applied as follows:

We discuss the recoverability of certain of these amounts — particularly the R&W insurance deposit and due-diligence costs — in subsequent sections of this letter.

D. Impact on Representations and Warranties Insurance

The representations and warranties insurance policy issued by Northgate Specialty Insurance Co. (Policy No. NSW-RI-2022-09814) (the "R&W Policy") was bound on September 1, 2022, in connection with the execution of the EPA. The R&W Policy provides a coverage limit of $195,000,000, which represents approximately 10% of the $1,950,000,000 enterprise value. The premium for the R&W Policy was calculated at a rate of 2.5% of the coverage limit:

2.5% × $195,000,000 = $4,875,000

This premium deposit has been paid from the Vehicle's called capital, as reflected in the capital deployment table above.

The R&W Policy has been tolled during the Vehicle's dormancy period pursuant to the Side Letter between Cascadia Acquisition Corp. and Northgate Specialty Insurance Co. dated January 20, 2023 (the "Northgate Side Letter"). The Northgate Side Letter provides that the R&W Policy will remain in force but that the policy period will not commence until the earlier of (i) the closing of the Acquisition and (ii) the termination of the tolling arrangement. The tolling arrangement does not contain a definite expiration date; however, Northgate has reserved the right to revisit the terms of the R&W Policy, including the premium rate, coverage limit, exclusions, and retentions, if the transaction structure (including the financing structure, the purchase price, or the identity of the acquiror or its equity sponsors) changes materially.

Given the expiration of the Commitment Letter, Northgate may take the position that a material change in the transaction structure has occurred or is likely to occur, which could trigger a renegotiation of the R&W Policy terms. If the transaction is ultimately reactivated with replacement financing on different terms — particularly if the replacement financing results in a different capital structure, a different purchase price, or materially different representations and warranties in a revised EPA — Northgate would almost certainly require an update to the R&W Policy, potentially at an additional premium cost.

In a wind-down scenario, the recoverability of the $4,875,000 premium deposit is uncertain. R&W insurance policies typically provide limited or no refund of premiums once the policy has been bound, even if the underlying transaction does not close. Recovery would depend on the specific terms of the R&W Policy and the Northgate Side Letter, as well as on any negotiation with Northgate. We will review the relevant provisions in greater detail if Ironside determines that a wind-down is a likely outcome.

E. Impact on Regulatory Approvals

The Acquisition is subject to several regulatory approvals, the status of which is affected by the passage of time and the absence of committed financing. We summarize the current status of each below:

Federal Energy Regulatory Commission (FERC) — Section 203 Approval. FERC granted approval of the Acquisition pursuant to Section 203 of the Federal Power Act in Docket No. EC22-143-000, with the order issued on December 15, 2022. The approval was conditional on the filing of certain license-transfer applications following the closing of the Acquisition. FERC approvals under Section 203 are generally subject to a lapse provision if the approved transaction does not close within a specified period. In this case, the standard 18-month lapse period would have resulted in an expiration of the approval on approximately June 15, 2024. FERC staff issued a letter extending the effective period of the approval to June 15, 2024 (confirming the original 18-month period from the date of the order). This approval remains in effect as of the date of this letter, but it is now at risk. If the Acquisition does not close — or if material progress toward closing is not demonstrable — before June 15, 2024, a new Section 203 application would need to be filed, which would entail additional time, cost, and regulatory uncertainty.

Oregon Public Utility Commission (OPUC). The application for OPUC approval of the Acquisition was filed on October 14, 2022 in Docket No. UM-2287. Proceedings before the OPUC have been stayed since February 2023 at the joint request of the parties, reflecting the dormancy of the transaction. The stay remains in effect as of the date of this letter. However, the OPUC retains the authority to lift the stay, to inquire into the status of the transaction, or to dismiss the application if it determines that the transaction is unlikely to proceed. The expiration of the Commitment Letter, if it becomes known to the OPUC staff or intervening parties, could prompt such action.

Committee on Foreign Investment in the United States (CFIUS). A voluntary notice was submitted to CFIUS and was acknowledged on September 20, 2022. CFIUS completed its review without requesting additional information or initiating an investigation, effectively granting clearance. No further CFIUS action is required, and the CFIUS clearance is not subject to a lapse or expiration provision. This clearance remains in effect regardless of the status of the Commitment Letter.

IV. Ironside's Rights and Strategic Position

In light of the foregoing, we turn to an analysis of Ironside's rights under the governing documents and its strategic position as of the date of this letter.

A. Rights Under the LP Agreement

Section 7.04 of the LP Agreement governs the dormancy of the Vehicle following the declaration of a Material Impediment Event. The Material Impediment Event declaration issued by the GP on January 9, 2023 remains in effect, and the dormancy provisions of Section 7.04 continue to govern the Vehicle's operations (or, more precisely, its non-operations).

The key rights available to Ironside under Section 7.04 are as follows:

(a) No Obligation to Fund Additional Capital Calls During Dormancy. Under Section 7.04(a), no additional capital calls may be issued during the pendency of a Material Impediment Event, except for capital calls necessary to fund the Vehicle's ordinary-course operating expenses (i.e., the dormancy expenses described above). Ironside has no obligation to fund capital calls for investment purposes during dormancy.

(b) Right to Receive Quarterly Status Reports. Under Section 7.04(b), the GP is obligated to deliver quarterly status reports to the limited partners during dormancy, describing the status of the Material Impediment Event, the GP's assessment of the likelihood of resolution, and any material developments. We discuss the GP's compliance with this obligation in Section IV.B below.

(c) Wind-Down Election Right. Under Section 7.04(c), any limited partner holding in excess of 25% of the aggregate commitments may elect to wind down the Vehicle if dormancy continues for a period in excess of eighteen (18) months. Ironside is the sole limited partner of the Vehicle and holds 100% of the aggregate commitments, thereby satisfying the threshold requirement. The 18-month period, measured from the January 9, 2023 dormancy commencement date, will expire on July 9, 2024 — approximately eight (8) months from the date of this letter. As of that date, Ironside will have the right to deliver written notice to the GP electing to commence the wind-down of the Vehicle.

(d) Wind-Down Mechanics. Upon the exercise of the wind-down election right, the GP is required to take all steps necessary to wind down the Vehicle in an orderly manner, including: (i) releasing all unfunded capital commitments; (ii) distributing remaining Vehicle assets (including cash, receivables, and any recoverable deposits) to the limited partners, net of the Vehicle's outstanding expenses and obligations; and (iii) filing all necessary dissolution documents with the Delaware Secretary of State.

We note that Ironside's reservation of rights, as communicated to BSP in our letter dated January 15, 2023, remains in full force and effect. That letter expressly reserved all of Ironside's rights under the LP Agreement, the Side Letter (defined below), and applicable law, including without limitation the right to exercise the wind-down election under Section 7.04(c) at the appropriate time. BSP acknowledged receipt of that letter but did not respond substantively.

B. Side Letter Protections

The Side Letter dated July 29, 2022 between Ironside and the GP (the "Side Letter") provides for certain enhanced protections and economic terms for Ironside's participation in the Co-Invest. The material provisions of the Side Letter include:

(a) No Management Fee. The GP has agreed to waive any management fee on the Co-Invest. This provision remains in effect and has not been modified.

(b) Most Favored Nation Provisions. The Side Letter contains MFN provisions requiring the GP to extend to Ironside any more favorable terms granted to any other co-investor in the Vehicle or in any parallel co-investment vehicle formed in connection with the Acquisition. To date, we are not aware of any other co-investors having been admitted to the Vehicle or to any parallel vehicle, and the MFN provision has therefore not been triggered.

(c) Enhanced Quarterly Reporting During Dormancy. The Side Letter requires the GP to provide enhanced quarterly reporting during any period of dormancy, including detailed information regarding the status of the Acquisition, any financing developments, regulatory proceedings, and the GP's assessment of the likelihood of transaction completion. The GP has delivered quarterly reports for Q1 2023, Q2 2023, and Q3 2023. We have reviewed each report and found them to be generally compliant with the Side Letter's reporting requirements, although the Q2 2023 report was delivered four business days after the contractual deadline, which we flagged to BSP at the time.

(d) Wind-Down Election Rights. The Side Letter cross-references and reinforces the wind-down election rights set forth in LP Agreement Section 7.04(c), confirming that Ironside may exercise such rights at the applicable time without the consent of the GP.

The GP remains obligated to deliver quarterly status reports in accordance with both the LP Agreement and the Side Letter. We will continue to review each report for compliance and will promptly advise Ironside of any deficiencies or matters of concern.

C. Ironside's Exposure

Ironside's current financial exposure in connection with the Vehicle and the Acquisition is summarized as follows:

• Called Capital at Risk: $22,500,000. This amount has been deployed as described in Section III.C above (organizational expenses, placement-agent fee, R&W insurance deposit, due-diligence costs and deposits, and working-capital reserve). The recoverability of this capital in a wind-down scenario would depend on the extent to which the R&W insurance deposit, due-diligence deposits, and working-capital reserve balance can be recovered.

• Unfunded Commitment: $277,500,000. This amount cannot be called during dormancy (except for ordinary-course operating expenses, which are being funded from the existing working-capital reserve). The unfunded commitment would be released upon the exercise of the wind-down election right.

• Ongoing Dormancy Costs: Approximately $185,000 per year, borne by the Vehicle from the working-capital reserve. These costs are not separately funded by Ironside but reduce the amount of the working-capital reserve that would ultimately be distributable in a wind-down.

• Carried Interest Structure: The LP Agreement provides for a carried interest allocation to the GP of 10% above an 8% preferred return (compounded quarterly) on invested capital. This carried interest structure remains applicable in theory, but it is moot during dormancy because the Vehicle has made no investments and has generated no investment returns. In a wind-down scenario, the carried interest provisions would not be triggered because there would be no profits above the preferred return threshold to allocate.

In summary, Ironside's principal financial exposure is the $22,500,000 in called capital, of which a meaningful portion may be recoverable in a wind-down scenario, and the opportunity cost associated with the dormancy of the $300,000,000 total commitment. The unfunded commitment of $277,500,000 is not at risk during dormancy and would be released upon a wind-down.

V. Analysis of Potential Paths Forward

We have identified three principal paths forward for Ironside's consideration. Each path involves different risk, cost, and strategic considerations, which we analyze below.

A. Transaction Reactivation

The first path would involve supporting or participating in an effort to reactivate the Acquisition. This would require the following steps, among others:

Replacement Financing. Meridian would need to secure replacement debt financing on terms acceptable to all parties. Given the original Commitment Letter's provision of a $975,000,000 term loan and a $150,000,000 revolving credit facility, this is a significant capital markets undertaking. The arranging and syndication of a replacement facility of this size would likely require engagement of one or more major investment banks as lead arrangers, a marketing and syndication process, and negotiation of a new commitment letter and related fee letters. Based on current market conditions, we believe that replacement financing, if obtainable, would likely involve:

• Higher interest rate margins and upfront fees, reflecting the substantially higher base rate environment and wider credit spreads for infrastructure lending;

• More restrictive financial maintenance covenants, potentially including leverage ratio covenants, interest coverage ratio covenants, and debt service coverage ratio covenants that are tighter than those in the original Commitment Letter;

• Broader market-flex provisions, giving the arrangers greater discretion to adjust pricing and structure during syndication;

• A smaller facility size, which could require additional equity contributions from Fund IV and the Co-Invest, or alternatively, a renegotiation of the enterprise value to reduce the total consideration; and

• More extensive conditions precedent to funding, potentially including updated environmental, regulatory, and financial diligence requirements.

EPA Amendment or Replacement. The EPA would need to be further amended (a Fourth Amendment) — or, depending on the extent of changes required, a new purchase agreement might need to be negotiated and executed — with a new outside date, potentially a revised purchase price, and updated representations, warranties, and covenants to reflect developments since the original execution date. The Selling Shareholders would have significant leverage in any such renegotiation, given the acquiror's demonstrated inability to close on the previously agreed terms and timeline.

Regulatory Re-Filings. If the FERC Section 203 approval lapses (the current deadline being June 15, 2024), a new FERC application would need to be filed. The OPUC proceedings in Docket No. UM-2287 would need to be un-stayed and pursued to completion. Each of these processes involves time, cost, and regulatory risk.

R&W Insurance Reactivation. The R&W Policy would need to be reactivated with Northgate Specialty Insurance Co., potentially at revised terms and at an additional premium cost, as discussed in Section III.D above. If the transaction structure changes materially, Northgate may require a new underwriting process, which could result in broader exclusions, higher retentions, or a higher premium rate.

Estimated Timeline. Based on our experience with comparable transactions, we estimate that the process of securing replacement financing, amending or replacing the EPA, and obtaining any necessary regulatory re-approvals would take approximately six (6) to twelve (12) months from the date of a decision to proceed, depending on market conditions, counterparty cooperation, and regulatory timelines. This estimate assumes no material new complications or disputes arise during the reactivation process.

Assessment. Transaction reactivation is the path that preserves the greatest upside for Ironside, but it also carries significant execution risk and would require Ironside to accept continued uncertainty regarding the deployment of its capital commitment for an extended period. In our view, reactivation is feasible only if Meridian is willing and able to lead the process and to bear the substantial costs and risks associated with securing replacement financing.

B. Continued Dormancy / Standstill

The second path would involve maintaining the current dormancy status of the Vehicle while seeking to preserve the transaction framework through a standstill arrangement among the EPA parties.

EPA Outside Date. The current EPA outside date is December 31, 2023. If no party terminates the EPA after that date, the EPA would remain nominally in effect, but any party could terminate at will. This creates a precarious situation in which the Selling Shareholders or Cascadia could terminate the EPA at any time after December 31, 2023, eliminating the contractual framework for the Acquisition.

Mutual Standstill and Preservation Agreement. We recommend that Ironside consider supporting or requesting a mutual standstill and preservation agreement among the EPA parties. Such an agreement would provide that no party would exercise its termination rights under the EPA for a specified period (e.g., six months), during which the parties would attempt to resolve the financing impediment and determine whether the Acquisition can proceed on revised terms. A standstill agreement would provide Ironside with breathing room to evaluate the market, assess Meridian's financing efforts, and make a more informed decision regarding whether to support transaction reactivation or to exercise its wind-down election right when it becomes available in July 2024.

Cost Considerations. Continued dormancy costs are modest — approximately $185,000 per year — relative to the capital at stake ($22,500,000 in called capital and $300,000,000 in total commitment). The incremental cost of maintaining the Vehicle in dormancy for an additional six to twelve months is de minimis in the context of the overall transaction.

Preservation of Optionality. The principal advantage of this path is that it preserves optionality for Ironside. Ironside would retain the wind-down election right that matures on July 9, 2024, while also preserving the possibility of participating in a reactivated transaction if market conditions and counterparty dynamics prove favorable.

Assessment. In our view, continued dormancy combined with a standstill agreement represents the most prudent near-term approach. It avoids premature foreclosure of either the reactivation or wind-down options and imposes minimal incremental cost. The key risk is that one or more Selling Shareholders may refuse to enter into a standstill agreement and may instead elect to terminate the EPA, which would significantly complicate any future reactivation effort.

C. Wind-Down

The third path would involve Ironside's exercise of its wind-down election right under LP Agreement Section 7.04(c) when that right becomes available on July 9, 2024.

Timing. The wind-down election right is not currently available. As noted above, the 18-month dormancy period expires on July 9, 2024 — approximately eight (8) months from the date of this letter. Ironside cannot exercise this right prior to that date.

Wind-Down Process. Upon the exercise of the wind-down election right, the GP would be required to commence an orderly wind-down of the Vehicle, which would include:

(a) Releasing all unfunded capital commitments ($277,500,000);

(b) Terminating all service agreements and administrative arrangements;

(c) Seeking recovery of any recoverable deposits, including the R&W insurance premium deposit ($4,875,000) and any refundable due-diligence deposits (the amount of which would need to be determined through a review of the underlying agreements);

(d) Distributing remaining Vehicle assets — consisting primarily of the working-capital reserve balance and any recovered deposits — to Ironside as the sole limited partner, net of the Vehicle's outstanding expenses and wind-down costs; and

(e) Filing a Certificate of Cancellation with the Delaware Secretary of State to dissolve the Vehicle.

Estimated Recovery. The amount distributable to Ironside in a wind-down would depend on the recoverability of the R&W insurance deposit and due-diligence deposits, the wind-down expenses, and the remaining working-capital reserve balance. A preliminary and indicative estimate of recovery is as follows:

This estimate is preliminary and subject to significant uncertainty, particularly regarding the recoverability of the R&W insurance deposit. We would refine this analysis in advance of any wind-down decision.

Tax Implications. The tax implications of a wind-down — including the treatment of the called capital, any losses realized upon dissolution, and the allocation of income and deductions among the partners — should be analyzed in advance of any wind-down decision. Our tax partner, Sylvia Hartwell, is available to update the tax structuring analysis that was originally prepared in connection with the formation of the Vehicle. We recommend commissioning this updated analysis in due course, regardless of whether Ironside ultimately elects to pursue a wind-down, as the tax analysis will also be relevant if the transaction is reactivated or if Ironside continues to hold its position during an extended dormancy period.

Reputational Considerations. We note that the exercise of the wind-down election right would effectively terminate Ironside's participation in the Acquisition and would constitute a decisive departure from the Ironside–Meridian relationship in the context of this transaction. While Ironside's exercise of its contractual rights would be fully within its entitlement under the LP Agreement and the Side Letter, Ironside should consider the potential impact on its broader relationship with Meridian, which may be a relevant counterparty for future co-investment opportunities. We defer to Ironside's business judgment on this consideration, but we flag it as a factor that merits careful evaluation.

Assessment. Wind-down is the path of least risk and greatest certainty, but it forecloses any participation in the upside of the Acquisition if the transaction is ultimately reactivated. It also results in a realized loss on the majority of the $22,500,000 in called capital. We recommend that Ironside begin preliminary planning for this contingency even if it does not presently intend to exercise the wind-down right, so that the necessary procedural steps and notice requirements are well understood in advance.

VI. Recommendations

Based on our analysis of the foregoing, we respectfully recommend that Ironside consider the following actions:

1. Near-Term Engagement with Meridian (November–December 2023). Ironside should engage promptly with Meridian, through BSP and specifically through Charles A. Delacroix, the BSP partner responsible for the Meridian relationship, regarding the approaching EPA outside date of December 31, 2023. The engagement should seek to ascertain Meridian's intentions regarding (a) the pursuit of replacement financing, including any discussions with potential lenders, the expected timeline, and the anticipated terms; and (b) whether Meridian intends to seek a further amendment to the EPA or to propose a standstill arrangement with the Selling Shareholders. We are prepared to initiate this communication on Ironside's behalf upon your instruction.

2. EPA Outside Date — Support for Mutual Standstill. We recommend that Ironside support the negotiation of a mutual standstill and preservation agreement among the EPA parties, rather than permitting any party to exercise unilateral termination rights after December 31, 2023. A standstill agreement would preserve the contractual framework for the Acquisition and maintain optionality for both reactivation and orderly wind-down, while imposing minimal incremental cost on Ironside. We can prepare a term sheet or proposed framework for such an agreement for Ironside's review and discussion with Meridian.

3. GP Reporting — Q4 2023 Quarterly Report. Ironside should request that the GP's Q4 2023 quarterly report, which will be due in January 2024, specifically and comprehensively address: (a) the circumstances of the Commitment Letter expiration, including any communications with Atlas and Pinnacle; (b) any replacement financing efforts, including the identity of potential lenders, the status of discussions, and the expected timeline and terms; and (c) the status of discussions with Cascadia's Selling Shareholders, including Timberline Growth Equity Fund III, LP (Hugh Callister) and the Weir Family Trust (Jonathan M. Weir), regarding the EPA outside date and any potential amendments or standstill arrangements. We can draft this request for Ironside's review.

4. R&W Insurance — Confirmation of Tolling. Ironside should request confirmation from Northgate Specialty Insurance Co., either directly or through the GP, regarding the continued effectiveness of the Northgate Side Letter's tolling provisions and any conditions or limitations on the reactivation of the R&W Policy in the event of a transaction reactivation. This confirmation is important both for preserving Ironside's position in a reactivation scenario and for assessing the recoverability of the $4,875,000 premium deposit in a wind-down scenario.

5. Tax Planning — Updated Analysis. We recommend that Ironside commission an updated tax analysis from our tax partner, Sylvia Hartwell, addressing the tax implications of each of the three potential paths forward: continued dormancy, transaction reactivation, and wind-down. The original tax structuring analysis was prepared in connection with the formation of the Vehicle and the execution of the EPA and may not fully reflect subsequent developments, including the dormancy, the deployment of called capital, and the potential loss of certain tax attributes or positions. Ms. Hartwell is available to begin this work promptly upon your authorization.

6. Wind-Down Right — Preliminary Planning. Notwithstanding that the wind-down election right does not mature until July 9, 2024, we recommend that Ironside begin preliminary planning for the potential exercise of that right. This planning should include: (a) identifying the procedural steps and notice requirements under LP Agreement Section 7.04(c), including the form and timing of the required written notice to the GP; (b) assessing the recoverability of the R&W insurance deposit and due-diligence deposits; (c) estimating the wind-down costs and distributable amounts; and (d) coordinating with Ms. Hartwell's updated tax analysis. Beginning this work now will ensure that Ironside is in a position to act promptly and decisively if and when it determines that a wind-down is the appropriate course of action.

VII. Closing

We remain available to discuss the matters addressed in this letter at your convenience, and to take any actions that Ironside directs in connection with the Commitment Letter expiration, the approaching EPA outside date, or any of the strategic alternatives analyzed herein.

We respectfully request that Ironside advise us of its preferred approach at its earliest convenience so that we may engage with BSP and other relevant parties in advance of the December 31, 2023 EPA outside date. Given the relatively short timeframe — approximately sixty days — we believe it would be prudent to initiate contact with BSP no later than the week of November 13, 2023, in order to allow sufficient time for substantive discussions and, if appropriate, the negotiation of a standstill agreement.

We also note that this letter and the analysis contained herein are based on the information available to us as of the date hereof. If additional information becomes available — including any communication from Meridian, BSP, the GP, or any other party regarding replacement financing, EPA amendments, or the status of the Acquisition — we will promptly update our analysis and recommendations accordingly.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Pamela Cross Responsible Partner, Funds & Asset Management Direct: (212) 558-4172

Email: pcross@calderwoodharkness.com

cc: Nicholas Stern, Esq., Calderwood & Harkness LLP (Billing Partner) Theresa Kim, Esq., Calderwood & Harkness LLP (Lead Associate)

Prior C&H Work Product Referenced Herein:

• C&H Memorandum: Review of Debt Commitment Letter — Key Terms and Flex Provisions (August 30, 2022)

• C&H Memorandum: Analysis of Debt Commitment Extension and Cost Allocation (April 28, 2023)

• C&H Letter to Breckenridge Sloane & Pratt LLP — Ironside's Reservation of Rights During Dormancy (January 15, 2023)

• C&H Memorandum: Dormancy Governance Framework (January 12, 2023)

• C&H Memorandum: Ironside's Rights and Remedies Under LP Agreement in Event of MAE / Failed Closing (November 18, 2022)

Source	Amount	Percentage
Fund IV — Equity Contribution	$750,000,000	71.43% of Equity
ICM Co-Invest — Equity Contribution	$300,000,000	28.57% of Equity
Total Equity	$1,050,000,000
Atlas / Pinnacle — Senior Secured Term Loan	$975,000,000
Total Sources	$2,025,000,000
Use	Amount
Enterprise Value — Cascadia Renewables Holdings, Inc.	$1,950,000,000
Estimated Transaction Costs	$50,000,000
Working-Capital Adjustment Escrow	$25,000,000
Total Uses	$2,025,000,000
Expense Category	Service Provider	Approximate Annual Cost
Fund Administration	Kendrick Thorne & Associates LLP	$72,000
Delaware Franchise Tax	State of Delaware	$45,500
Registered Agent Fees	Cascade Systems	$3,500
Annual Audit	To be determined	$42,000
K-1 Preparation and Distribution	Kendrick Thorne & Associates LLP	$22,000
Total	$185,000
Application	Amount
Organizational Expenses	$285,000
Placement-Agent Fee (Rivermark Capital Markets Inc.)	$1,050,000
R&W Insurance Deposit (Northgate Specialty Insurance Co.)	$4,875,000
Due-Diligence Costs and Deposits	$12,790,000
Working-Capital Reserve	$3,500,000
Total	$22,500,000

Item	Estimated Amount
Working-Capital Reserve (estimated balance at July 2024)	$3,315,000
R&W Insurance Premium Deposit (recovery uncertain)	$0 – $4,875,000
Refundable Due-Diligence Deposits (to be determined)	TBD
Less: Estimated Wind-Down Costs	($150,000 – $250,000)
Estimated Net Distribution	$3,065,000 – $7,940,000+

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED
CALDERWOOD & HARKNESS LLP 125 Broad Street, 44th Floor New York, New York 10004
Telephone: (212) 558-4000 Facsimile: (212) 558-3588
November 2, 2023
Matter No. 1023-00001
Via Email and Sundial Data Systems
Marcus J. Calloway Founder & Chief Investment Officer Ironside Capital Management LP 590 Madison Avenue, 38th Floor New York, New York 10022
Renata Obasi Senior Managing Director, Infrastructure Ironside Capital Management LP 590 Madison Avenue, 38th Floor New York, New York 10022
Re: Expiration of Debt Commitment Letter — Atlas National Bank, N.A. / Pinnacle Credit Partners LLC — Implications for ICM Cascadia Co-Invest, LP and the Proposed Acquisition of Cascadia Renewables Holdings, Inc.
Dear Marcus and Renata:
I. Introduction and Purpose
We write to advise Ironside Capital Management LP ("Ironside" or "ICM") that the debt commitment letter dated August 30, 2022 (the "Commitment Letter"), issued by Atlas National Bank, N.A. ("Atlas"), acting as lead arranger and administrative agent, and Pinnacle Credit Partners LLC ("Pinnacle"), acting as co-lender and syndication participant, expired by its terms on October 31, 2023 without further extension. As of the date of this letter, no replacement debt commitment letter or alternative financing arrangement has been obtained.
The Commitment Letter provided for a $975,000,000 senior secured term loan facility and a $150,000,000 revolving credit facility (collectively, the "Debt Financing") to fund, in part, the proposed acquisition (the "Acquisition") of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Target") by Cascadia Acquisition Corp. (the "Acquiror"), a special purpose acquisition vehicle formed by Meridian Infrastructure Partners Fund IV, LP ("Fund IV") and ICM Cascadia Co-Invest, LP (the "Vehicle" or the "Co-Invest").
We have confirmed with Breckenridge Sloane & Pratt LLP ("BSP"), counsel to Meridian Infrastructure Partners LP ("Meridian") and Meridian Infrastructure GP IV LLC (the "GP"), that no further extension of the Commitment Letter was agreed upon and that no replacement commitment has been obtained as of the date of this letter. BSP has not, in its communications with our office, indicated that any replacement financing discussions are currently underway, although we cannot independently verify whether Meridian or its principals have engaged in preliminary conversations with potential lenders.
This letter analyzes the implications of the Commitment Letter's expiration for: (a) the underlying Acquisition transaction; (b) the Vehicle; and (c) Ironside's strategic position. In addition, we set forth our recommendations regarding the steps that Ironside should consider taking in the near term in light of these developments. This letter should be read in conjunction with our prior memoranda and correspondence on this matter, including the memoranda and letters referenced herein.
We note at the outset that this letter is protected by the attorney-client privilege and the work-product doctrine, and its contents should not be disclosed to any third party without our prior consent.
II. Background and Timeline of the Debt Commitment Letter
We briefly summarize below the key terms and history of the Commitment Letter to provide context for the analysis that follows. A more detailed review of the Commitment Letter's substantive provisions, including flex provisions, market-flex mechanics, and conditions precedent, is set forth in our memorandum entitled Review of Debt Commitment Letter — Key Terms and Flex Provisions dated August 30, 2022, which we provided to you at the time of execution.
A. Original Terms
The Commitment Letter was executed on August 30, 2022, among the following parties:
• Atlas National Bank, N.A. — acting as lead arranger and administrative agent, committing to $650,000,000 of the senior secured term loan facility;
• Pinnacle Credit Partners LLC — acting as co-lender and syndication participant, committing to $325,000,000 of the senior secured term loan facility.
The Commitment Letter contemplated the following facilities:
• Senior Secured Term Loan Facility: $975,000,000 in aggregate ($650,000,000 committed by Atlas and $325,000,000 committed by Pinnacle), to be drawn in a single draw at the closing of the Acquisition; and
• Revolving Credit Facility: $150,000,000, committed solely by Atlas, to be available on a revolving basis following the closing of the Acquisition for working capital, capital expenditures, and general corporate purposes of Cascadia (the "Revolver"). At no point during the life of the Commitment Letter was any amount drawn under the Revolver.
The Commitment Letter was governed by New York law and was subject to the conditions precedent, representations, and market-flex provisions customary for transactions of this nature and magnitude.
The Debt Financing was a critical component of the Acquisition's sources and uses of funds. The total sources and uses for the Acquisition, as set forth in the Equity Purchase Agreement (defined below) and the Commitment Letter, were structured as follows:
Sources of Funds:
Uses of Funds:
As the foregoing table makes clear, the Debt Financing represented approximately 48.1% of total sources, and the equity commitments (Fund IV and the Co-Invest combined) represented approximately 51.9%. The transaction was structured with a loan-to-value ratio of approximately 50%, a level that was considered conservative by the lenders at the time of commitment and that reflected the perceived stability of Cascadia's contracted infrastructure revenue streams.
B. Extension History
The Commitment Letter's original expiration date was December 31, 2022, which was aligned with the original outside date set forth in the Equity Purchase Agreement dated September 15, 2022 (the "EPA"). The extension history of the Commitment Letter is as follows:
Original Expiration Date — December 31, 2022. The Commitment Letter originally provided that it would expire at 5:00 p.m. Eastern Time on December 31, 2022, unless the closing of the Acquisition occurred on or before that date or the parties agreed in writing to extend the expiration date. The original expiration date was aligned with the EPA's original outside date. However, following the notice of concession renegotiation issued by the Portland Metropolitan Water District on October 28, 2022 — which raised material questions regarding the scope and terms of one of Cascadia's most significant concession agreements — and the subsequent execution of the First Amendment to the EPA on November 22, 2022 (which extended the EPA outside date and introduced certain additional conditions), the Commitment Letter was not immediately extended in parallel with the EPA amendments. This created a temporary misalignment between the EPA timeline and the financing timeline, which was subsequently addressed through the first extension described below.
First Extension — April 30, 2023. The Commitment Letter was extended by letter agreement among Atlas, Pinnacle, and the Acquiror, extending the expiration date to April 30, 2023. The terms of the Commitment Letter were not separately modified in connection with this extension. No extension fee was charged to the Acquiror in connection with the first extension, as the extension was agreed to within the grace period contemplated by the Commitment Letter's original terms.
Second Extension — October 31, 2023. The Commitment Letter was further extended by letter agreement among Atlas, Pinnacle, and the Acquiror, extending the expiration date to October 31, 2023. In connection with this second extension, Atlas and Pinnacle required the payment of an extension fee calculated as follows:
0.25% × $975,000,000 = $2,437,500
This extension fee was paid by Meridian Infrastructure Partners Fund IV, LP. We confirmed with BSP that Fund IV absorbed this cost directly and that it was not charged to, or allocated against, the Co-Invest. This treatment is consistent with our understanding of the cost-allocation provisions of the LP Agreement and the Side Letter (each as defined below).
No Third Extension. No third extension of the Commitment Letter was sought or granted. The Commitment Letter expired by its terms at 5:00 p.m. Eastern Time on October 31, 2023. We understand from BSP that Atlas communicated to Meridian in mid-October 2023 that it was not prepared to extend the Commitment Letter on the existing terms, and that any new commitment would need to reflect current market conditions, including the substantially higher interest rate environment. We have not independently confirmed this with Atlas or its counsel, as Ironside does not have a direct relationship with the lenders.
C. Current Status of the Equity Purchase Agreement
The EPA, dated September 15, 2022, has been amended three times:
• First Amendment — dated November 22, 2022, addressing the Portland Metropolitan Water District concession renegotiation notice and extending the outside date;
• Second Amendment — dated March 15, 2023, addressing certain updated representations and warranties related to environmental compliance and further extending the outside date; and
• Third Amendment — dated June 28, 2023, extending the outside date to December 31, 2023 and modifying certain interim operating covenants applicable to Cascadia.
As amended, the EPA currently has an outside date of December 31, 2023 — approximately sixty (60) days from the date of this letter. The EPA remains technically in effect, but the financing condition precedent to closing — which requires the Acquiror to provide evidence of committed debt financing in an aggregate amount sufficient to fund the Acquisition, together with the equity commitments, on or prior to the closing date — can no longer be satisfied without the procurement of replacement financing.
Additionally, we note that the Vehicle's dormancy commenced on January 9, 2023, when the GP issued the Capital Call Suspension Notice (the "Suspension Notice") pursuant to Section 7.04 of the Limited Partnership Agreement of ICM Cascadia Co-Invest, LP dated August 1, 2022 (the "LP Agreement"), declaring the existence of a Material Impediment Event. The Suspension Notice cited the Portland Metropolitan Water District concession renegotiation, the resulting uncertainty regarding the transaction timeline, and the absence of a clear path to closing as the bases for the Material Impediment Event determination. The Vehicle has remained dormant since that date.
III. Implications of the Debt Commitment Letter Expiration
The expiration of the Commitment Letter has significant implications across multiple dimensions of this transaction. We address each in turn below.
A. Impact on Transaction Feasibility
The Acquisition of Cascadia at the agreed enterprise value of $1,950,000,000 was predicated on a capital structure requiring $975,000,000 in debt financing from Atlas and Pinnacle. Without the Commitment Letter in effect, the Acquisition cannot close on the currently contemplated terms. The financing gap is substantial — representing nearly half of the total transaction consideration — and cannot be bridged through equity commitments alone without a fundamental restructuring of the transaction.
No replacement debt commitment has been obtained as of the date of this letter. We are not aware of any active discussions between Meridian and potential replacement lenders, although we note that BSP has not confirmed the absence of such discussions and Meridian may be exploring alternatives that have not yet been communicated to us or to Ironside.
Market conditions in late 2023 differ materially from the conditions prevailing in August 2022 when the Commitment Letter was originally executed. In particular:
• The federal funds rate has increased substantially since August 2022, and credit spreads for infrastructure-related term loans have widened. A replacement facility, if obtainable, would almost certainly carry a higher all-in interest cost than the original Commitment Letter terms, which would reduce the projected returns to equity holders and alter the transaction economics that informed Ironside's original investment decision.
• Credit markets for infrastructure lending have tightened, reflecting broader macroeconomic uncertainty and increased lender caution regarding long-duration project finance and concession-based revenue streams. The competitive dynamics among lenders that allowed Atlas and Pinnacle to commit to $975,000,000 in term loan financing may not be replicable in the current environment without significant structural concessions.
• Even if a replacement commitment were to be obtained, the key terms — including pricing (interest rate margins and upfront fees), market-flex provisions (which could allow the arrangers to increase pricing further), conditions precedent to funding, financial maintenance covenants, and collateral requirements — would likely differ from the original Commitment Letter. These differences could affect the transaction economics, the projected internal rate of return and cash-on-cash returns, the equity contribution requirements (if a smaller debt facility requires additional equity), and the post-closing capital structure of the Target.
In addition, the revolving credit facility ($150,000,000) has also lapsed with the expiration of the Commitment Letter, eliminating the post-closing liquidity support that was a critical component of the original capital structure. The Revolver was intended to provide Cascadia with readily available liquidity for working capital needs, seasonal cash flow variability, and capital expenditure requirements in the ordinary course of business. The absence of this facility would need to be addressed in any replacement financing arrangement.
B. Impact on the Equity Purchase Agreement
The EPA contains a financing condition precedent at Section 6.03(d) that requires the Acquiror to provide evidence of committed debt financing, in form and substance reasonably satisfactory to the Selling Shareholders, at or prior to the closing of the Acquisition. With the Commitment Letter expired and no replacement commitment in place, this condition precedent cannot currently be satisfied. The inability to satisfy this condition is a material impediment to closing and, depending on how the EPA's termination provisions are construed, may give rise to termination rights in favor of one or more parties.
The EPA outside date is December 31, 2023 — approximately sixty (60) days from the date of this letter. Absent a further amendment to the EPA extending the outside date, or a waiver or modification of the financing condition precedent, any party to the EPA may terminate the agreement after December 31, 2023 if the closing has not occurred by that date. The termination rights under the EPA are structured as follows:
• Selling Shareholders: Each of the Selling Shareholders — Timberline Growth Equity Fund III, LP ("Timberline"), the Weir Family Trust (the "Weir Trust"), and the Management Rollover Pool — has the right to terminate the EPA if the closing has not occurred on or before the outside date, provided that the failure to close is not primarily attributable to a breach by such Selling Shareholder of its obligations under the EPA. We understand that Hugh Callister, a Managing Partner at Timberline, and Jonathan M. Weir, the Trustee of the Weir Trust, are the principal decision-makers for the Selling Shareholders.
• Cascadia: The Target has a parallel termination right under similar conditions.
• Cascadia Acquisition Corp.: The Acquiror also has the right to terminate after the outside date, although it would be unusual for the acquiror to exercise this right in circumstances where the failure to close is attributable to the acquiror's inability to secure financing.
We note that, as of the date of this letter, no party has indicated an intent to terminate the EPA. However, the expiration of the Commitment Letter materially weakens the Acquiror's negotiating position in any discussions regarding a further extension of the outside date or modification of other EPA terms. The Selling Shareholders are likely aware that the Acquiror currently lacks the financing necessary to close, which shifts leverage significantly in their direction. In any renegotiation of the EPA, the Selling Shareholders may seek concessions such as a reduced purchase price, an increased reverse termination fee or break-up fee, enhanced interim operating covenants, or other protective provisions that would be unfavorable to the equity sponsors.
C. Impact on ICM Cascadia Co-Invest, LP
The Vehicle has been dormant since January 9, 2023, the date on which the GP issued the Suspension Notice declaring a Material Impediment Event. During the dormancy period, the following financial position has been maintained:
• Capital Called to Date: $22,500,000, representing 7.5% of the total $300,000,000 commitment.
• Unfunded Commitment: $277,500,000, representing the balance of the total commitment that has not been drawn.
The expiration of the Commitment Letter does not, by itself, trigger any specific obligation or right under the LP Agreement. The LP Agreement does not contain a provision that is directly conditioned upon the status of the Debt Financing or the Commitment Letter. However, the Commitment Letter's expiration deepens and confirms the factual basis for the Material Impediment Event previously declared by the GP. The Material Impediment Event was originally premised on the Portland Metropolitan Water District concession renegotiation and the resulting uncertainty regarding the transaction timeline; the inability to close due to the absence of committed financing constitutes an additional and independently significant impediment.
The GP's quarterly reports to the Vehicle's limited partners — specifically the reports for Q1 2023, Q2 2023, and Q3 2023, each of which has been delivered to date — have flagged financing uncertainty as a risk factor. The Q3 2023 report, delivered on October 15, 2023, noted that the Commitment Letter's October 31, 2023 expiration date was approaching and that discussions with Atlas regarding a further extension were ongoing. The expiration of the Commitment Letter without extension confirms the concern expressed in those reports and renders the financing risk a realized event rather than a prospective one.
The Vehicle continues to incur annualized dormancy operating expenses of approximately $185,000, consisting of the following:
These expenses are being borne by the Vehicle from the working-capital reserve, which currently holds approximately $3,500,000. At the current rate of expenditure, the working-capital reserve is sufficient to sustain the Vehicle's dormancy expenses for approximately nineteen (19) years, and therefore does not present an immediate concern. However, this calculation does not account for potential additional costs that could arise in connection with a transaction reactivation, a wind-down, or any litigation or dispute.
For the avoidance of doubt, the $22,500,000 in capital called to date has been applied as follows:
We discuss the recoverability of certain of these amounts — particularly the R&W insurance deposit and due-diligence costs — in subsequent sections of this letter.
D. Impact on Representations and Warranties Insurance
The representations and warranties insurance policy issued by Northgate Specialty Insurance Co. (Policy No. NSW-RI-2022-09814) (the "R&W Policy") was bound on September 1, 2022, in connection with the execution of the EPA. The R&W Policy provides a coverage limit of $195,000,000, which represents approximately 10% of the $1,950,000,000 enterprise value. The premium for the R&W Policy was calculated at a rate of 2.5% of the coverage limit:
2.5% × $195,000,000 = $4,875,000
This premium deposit has been paid from the Vehicle's called capital, as reflected in the capital deployment table above.
The R&W Policy has been tolled during the Vehicle's dormancy period pursuant to the Side Letter between Cascadia Acquisition Corp. and Northgate Specialty Insurance Co. dated January 20, 2023 (the "Northgate Side Letter"). The Northgate Side Letter provides that the R&W Policy will remain in force but that the policy period will not commence until the earlier of (i) the closing of the Acquisition and (ii) the termination of the tolling arrangement. The tolling arrangement does not contain a definite expiration date; however, Northgate has reserved the right to revisit the terms of the R&W Policy, including the premium rate, coverage limit, exclusions, and retentions, if the transaction structure (including the financing structure, the purchase price, or the identity of the acquiror or its equity sponsors) changes materially.
Given the expiration of the Commitment Letter, Northgate may take the position that a material change in the transaction structure has occurred or is likely to occur, which could trigger a renegotiation of the R&W Policy terms. If the transaction is ultimately reactivated with replacement financing on different terms — particularly if the replacement financing results in a different capital structure, a different purchase price, or materially different representations and warranties in a revised EPA — Northgate would almost certainly require an update to the R&W Policy, potentially at an additional premium cost.
In a wind-down scenario, the recoverability of the $4,875,000 premium deposit is uncertain. R&W insurance policies typically provide limited or no refund of premiums once the policy has been bound, even if the underlying transaction does not close. Recovery would depend on the specific terms of the R&W Policy and the Northgate Side Letter, as well as on any negotiation with Northgate. We will review the relevant provisions in greater detail if Ironside determines that a wind-down is a likely outcome.
E. Impact on Regulatory Approvals
The Acquisition is subject to several regulatory approvals, the status of which is affected by the passage of time and the absence of committed financing. We summarize the current status of each below:
Federal Energy Regulatory Commission (FERC) — Section 203 Approval. FERC granted approval of the Acquisition pursuant to Section 203 of the Federal Power Act in Docket No. EC22-143-000, with the order issued on December 15, 2022. The approval was conditional on the filing of certain license-transfer applications following the closing of the Acquisition. FERC approvals under Section 203 are generally subject to a lapse provision if the approved transaction does not close within a specified period. In this case, the standard 18-month lapse period would have resulted in an expiration of the approval on approximately June 15, 2024. FERC staff issued a letter extending the effective period of the approval to June 15, 2024 (confirming the original 18-month period from the date of the order). This approval remains in effect as of the date of this letter, but it is now at risk. If the Acquisition does not close — or if material progress toward closing is not demonstrable — before June 15, 2024, a new Section 203 application would need to be filed, which would entail additional time, cost, and regulatory uncertainty.
Oregon Public Utility Commission (OPUC). The application for OPUC approval of the Acquisition was filed on October 14, 2022 in Docket No. UM-2287. Proceedings before the OPUC have been stayed since February 2023 at the joint request of the parties, reflecting the dormancy of the transaction. The stay remains in effect as of the date of this letter. However, the OPUC retains the authority to lift the stay, to inquire into the status of the transaction, or to dismiss the application if it determines that the transaction is unlikely to proceed. The expiration of the Commitment Letter, if it becomes known to the OPUC staff or intervening parties, could prompt such action.
Committee on Foreign Investment in the United States (CFIUS). A voluntary notice was submitted to CFIUS and was acknowledged on September 20, 2022. CFIUS completed its review without requesting additional information or initiating an investigation, effectively granting clearance. No further CFIUS action is required, and the CFIUS clearance is not subject to a lapse or expiration provision. This clearance remains in effect regardless of the status of the Commitment Letter.
IV. Ironside's Rights and Strategic Position
In light of the foregoing, we turn to an analysis of Ironside's rights under the governing documents and its strategic position as of the date of this letter.
A. Rights Under the LP Agreement
Section 7.04 of the LP Agreement governs the dormancy of the Vehicle following the declaration of a Material Impediment Event. The Material Impediment Event declaration issued by the GP on January 9, 2023 remains in effect, and the dormancy provisions of Section 7.04 continue to govern the Vehicle's operations (or, more precisely, its non-operations).
The key rights available to Ironside under Section 7.04 are as follows:
(a) No Obligation to Fund Additional Capital Calls During Dormancy. Under Section 7.04(a), no additional capital calls may be issued during the pendency of a Material Impediment Event, except for capital calls necessary to fund the Vehicle's ordinary-course operating expenses (i.e., the dormancy expenses described above). Ironside has no obligation to fund capital calls for investment purposes during dormancy.
(b) Right to Receive Quarterly Status Reports. Under Section 7.04(b), the GP is obligated to deliver quarterly status reports to the limited partners during dormancy, describing the status of the Material Impediment Event, the GP's assessment of the likelihood of resolution, and any material developments. We discuss the GP's compliance with this obligation in Section IV.B below.
(c) Wind-Down Election Right. Under Section 7.04(c), any limited partner holding in excess of 25% of the aggregate commitments may elect to wind down the Vehicle if dormancy continues for a period in excess of eighteen (18) months. Ironside is the sole limited partner of the Vehicle and holds 100% of the aggregate commitments, thereby satisfying the threshold requirement. The 18-month period, measured from the January 9, 2023 dormancy commencement date, will expire on July 9, 2024 — approximately eight (8) months from the date of this letter. As of that date, Ironside will have the right to deliver written notice to the GP electing to commence the wind-down of the Vehicle.
(d) Wind-Down Mechanics. Upon the exercise of the wind-down election right, the GP is required to take all steps necessary to wind down the Vehicle in an orderly manner, including: (i) releasing all unfunded capital commitments; (ii) distributing remaining Vehicle assets (including cash, receivables, and any recoverable deposits) to the limited partners, net of the Vehicle's outstanding expenses and obligations; and (iii) filing all necessary dissolution documents with the Delaware Secretary of State.
We note that Ironside's reservation of rights, as communicated to BSP in our letter dated January 15, 2023, remains in full force and effect. That letter expressly reserved all of Ironside's rights under the LP Agreement, the Side Letter (defined below), and applicable law, including without limitation the right to exercise the wind-down election under Section 7.04(c) at the appropriate time. BSP acknowledged receipt of that letter but did not respond substantively.
B. Side Letter Protections
The Side Letter dated July 29, 2022 between Ironside and the GP (the "Side Letter") provides for certain enhanced protections and economic terms for Ironside's participation in the Co-Invest. The material provisions of the Side Letter include:
(a) No Management Fee. The GP has agreed to waive any management fee on the Co-Invest. This provision remains in effect and has not been modified.
(b) Most Favored Nation Provisions. The Side Letter contains MFN provisions requiring the GP to extend to Ironside any more favorable terms granted to any other co-investor in the Vehicle or in any parallel co-investment vehicle formed in connection with the Acquisition. To date, we are not aware of any other co-investors having been admitted to the Vehicle or to any parallel vehicle, and the MFN provision has therefore not been triggered.
(c) Enhanced Quarterly Reporting During Dormancy. The Side Letter requires the GP to provide enhanced quarterly reporting during any period of dormancy, including detailed information regarding the status of the Acquisition, any financing developments, regulatory proceedings, and the GP's assessment of the likelihood of transaction completion. The GP has delivered quarterly reports for Q1 2023, Q2 2023, and Q3 2023. We have reviewed each report and found them to be generally compliant with the Side Letter's reporting requirements, although the Q2 2023 report was delivered four business days after the contractual deadline, which we flagged to BSP at the time.
(d) Wind-Down Election Rights. The Side Letter cross-references and reinforces the wind-down election rights set forth in LP Agreement Section 7.04(c), confirming that Ironside may exercise such rights at the applicable time without the consent of the GP.
The GP remains obligated to deliver quarterly status reports in accordance with both the LP Agreement and the Side Letter. We will continue to review each report for compliance and will promptly advise Ironside of any deficiencies or matters of concern.
C. Ironside's Exposure
Ironside's current financial exposure in connection with the Vehicle and the Acquisition is summarized as follows:
• Called Capital at Risk: $22,500,000. This amount has been deployed as described in Section III.C above (organizational expenses, placement-agent fee, R&W insurance deposit, due-diligence costs and deposits, and working-capital reserve). The recoverability of this capital in a wind-down scenario would depend on the extent to which the R&W insurance deposit, due-diligence deposits, and working-capital reserve balance can be recovered.
• Unfunded Commitment: $277,500,000. This amount cannot be called during dormancy (except for ordinary-course operating expenses, which are being funded from the existing working-capital reserve). The unfunded commitment would be released upon the exercise of the wind-down election right.
• Ongoing Dormancy Costs: Approximately $185,000 per year, borne by the Vehicle from the working-capital reserve. These costs are not separately funded by Ironside but reduce the amount of the working-capital reserve that would ultimately be distributable in a wind-down.
• Carried Interest Structure: The LP Agreement provides for a carried interest allocation to the GP of 10% above an 8% preferred return (compounded quarterly) on invested capital. This carried interest structure remains applicable in theory, but it is moot during dormancy because the Vehicle has made no investments and has generated no investment returns. In a wind-down scenario, the carried interest provisions would not be triggered because there would be no profits above the preferred return threshold to allocate.
In summary, Ironside's principal financial exposure is the $22,500,000 in called capital, of which a meaningful portion may be recoverable in a wind-down scenario, and the opportunity cost associated with the dormancy of the $300,000,000 total commitment. The unfunded commitment of $277,500,000 is not at risk during dormancy and would be released upon a wind-down.
V. Analysis of Potential Paths Forward
We have identified three principal paths forward for Ironside's consideration. Each path involves different risk, cost, and strategic considerations, which we analyze below.
A. Transaction Reactivation
The first path would involve supporting or participating in an effort to reactivate the Acquisition. This would require the following steps, among others:
Replacement Financing. Meridian would need to secure replacement debt financing on terms acceptable to all parties. Given the original Commitment Letter's provision of a $975,000,000 term loan and a $150,000,000 revolving credit facility, this is a significant capital markets undertaking. The arranging and syndication of a replacement facility of this size would likely require engagement of one or more major investment banks as lead arrangers, a marketing and syndication process, and negotiation of a new commitment letter and related fee letters. Based on current market conditions, we believe that replacement financing, if obtainable, would likely involve:
• Higher interest rate margins and upfront fees, reflecting the substantially higher base rate environment and wider credit spreads for infrastructure lending;
• More restrictive financial maintenance covenants, potentially including leverage ratio covenants, interest coverage ratio covenants, and debt service coverage ratio covenants that are tighter than those in the original Commitment Letter;
• Broader market-flex provisions, giving the arrangers greater discretion to adjust pricing and structure during syndication;
• A smaller facility size, which could require additional equity contributions from Fund IV and the Co-Invest, or alternatively, a renegotiation of the enterprise value to reduce the total consideration; and
• More extensive conditions precedent to funding, potentially including updated environmental, regulatory, and financial diligence requirements.
EPA Amendment or Replacement. The EPA would need to be further amended (a Fourth Amendment) — or, depending on the extent of changes required, a new purchase agreement might need to be negotiated and executed — with a new outside date, potentially a revised purchase price, and updated representations, warranties, and covenants to reflect developments since the original execution date. The Selling Shareholders would have significant leverage in any such renegotiation, given the acquiror's demonstrated inability to close on the previously agreed terms and timeline.
Regulatory Re-Filings. If the FERC Section 203 approval lapses (the current deadline being June 15, 2024), a new FERC application would need to be filed. The OPUC proceedings in Docket No. UM-2287 would need to be un-stayed and pursued to completion. Each of these processes involves time, cost, and regulatory risk.
R&W Insurance Reactivation. The R&W Policy would need to be reactivated with Northgate Specialty Insurance Co., potentially at revised terms and at an additional premium cost, as discussed in Section III.D above. If the transaction structure changes materially, Northgate may require a new underwriting process, which could result in broader exclusions, higher retentions, or a higher premium rate.
Estimated Timeline. Based on our experience with comparable transactions, we estimate that the process of securing replacement financing, amending or replacing the EPA, and obtaining any necessary regulatory re-approvals would take approximately six (6) to twelve (12) months from the date of a decision to proceed, depending on market conditions, counterparty cooperation, and regulatory timelines. This estimate assumes no material new complications or disputes arise during the reactivation process.
Assessment. Transaction reactivation is the path that preserves the greatest upside for Ironside, but it also carries significant execution risk and would require Ironside to accept continued uncertainty regarding the deployment of its capital commitment for an extended period. In our view, reactivation is feasible only if Meridian is willing and able to lead the process and to bear the substantial costs and risks associated with securing replacement financing.
B. Continued Dormancy / Standstill
The second path would involve maintaining the current dormancy status of the Vehicle while seeking to preserve the transaction framework through a standstill arrangement among the EPA parties.
EPA Outside Date. The current EPA outside date is December 31, 2023. If no party terminates the EPA after that date, the EPA would remain nominally in effect, but any party could terminate at will. This creates a precarious situation in which the Selling Shareholders or Cascadia could terminate the EPA at any time after December 31, 2023, eliminating the contractual framework for the Acquisition.
Mutual Standstill and Preservation Agreement. We recommend that Ironside consider supporting or requesting a mutual standstill and preservation agreement among the EPA parties. Such an agreement would provide that no party would exercise its termination rights under the EPA for a specified period (e.g., six months), during which the parties would attempt to resolve the financing impediment and determine whether the Acquisition can proceed on revised terms. A standstill agreement would provide Ironside with breathing room to evaluate the market, assess Meridian's financing efforts, and make a more informed decision regarding whether to support transaction reactivation or to exercise its wind-down election right when it becomes available in July 2024.
Cost Considerations. Continued dormancy costs are modest — approximately $185,000 per year — relative to the capital at stake ($22,500,000 in called capital and $300,000,000 in total commitment). The incremental cost of maintaining the Vehicle in dormancy for an additional six to twelve months is de minimis in the context of the overall transaction.
Preservation of Optionality. The principal advantage of this path is that it preserves optionality for Ironside. Ironside would retain the wind-down election right that matures on July 9, 2024, while also preserving the possibility of participating in a reactivated transaction if market conditions and counterparty dynamics prove favorable.
Assessment. In our view, continued dormancy combined with a standstill agreement represents the most prudent near-term approach. It avoids premature foreclosure of either the reactivation or wind-down options and imposes minimal incremental cost. The key risk is that one or more Selling Shareholders may refuse to enter into a standstill agreement and may instead elect to terminate the EPA, which would significantly complicate any future reactivation effort.
C. Wind-Down
The third path would involve Ironside's exercise of its wind-down election right under LP Agreement Section 7.04(c) when that right becomes available on July 9, 2024.
Timing. The wind-down election right is not currently available. As noted above, the 18-month dormancy period expires on July 9, 2024 — approximately eight (8) months from the date of this letter. Ironside cannot exercise this right prior to that date.
Wind-Down Process. Upon the exercise of the wind-down election right, the GP would be required to commence an orderly wind-down of the Vehicle, which would include:
(a) Releasing all unfunded capital commitments ($277,500,000);
(b) Terminating all service agreements and administrative arrangements;
(c) Seeking recovery of any recoverable deposits, including the R&W insurance premium deposit ($4,875,000) and any refundable due-diligence deposits (the amount of which would need to be determined through a review of the underlying agreements);
(d) Distributing remaining Vehicle assets — consisting primarily of the working-capital reserve balance and any recovered deposits — to Ironside as the sole limited partner, net of the Vehicle's outstanding expenses and wind-down costs; and
(e) Filing a Certificate of Cancellation with the Delaware Secretary of State to dissolve the Vehicle.
Estimated Recovery. The amount distributable to Ironside in a wind-down would depend on the recoverability of the R&W insurance deposit and due-diligence deposits, the wind-down expenses, and the remaining working-capital reserve balance. A preliminary and indicative estimate of recovery is as follows:
This estimate is preliminary and subject to significant uncertainty, particularly regarding the recoverability of the R&W insurance deposit. We would refine this analysis in advance of any wind-down decision.
Tax Implications. The tax implications of a wind-down — including the treatment of the called capital, any losses realized upon dissolution, and the allocation of income and deductions among the partners — should be analyzed in advance of any wind-down decision. Our tax partner, Sylvia Hartwell, is available to update the tax structuring analysis that was originally prepared in connection with the formation of the Vehicle. We recommend commissioning this updated analysis in due course, regardless of whether Ironside ultimately elects to pursue a wind-down, as the tax analysis will also be relevant if the transaction is reactivated or if Ironside continues to hold its position during an extended dormancy period.
Reputational Considerations. We note that the exercise of the wind-down election right would effectively terminate Ironside's participation in the Acquisition and would constitute a decisive departure from the Ironside–Meridian relationship in the context of this transaction. While Ironside's exercise of its contractual rights would be fully within its entitlement under the LP Agreement and the Side Letter, Ironside should consider the potential impact on its broader relationship with Meridian, which may be a relevant counterparty for future co-investment opportunities. We defer to Ironside's business judgment on this consideration, but we flag it as a factor that merits careful evaluation.
Assessment. Wind-down is the path of least risk and greatest certainty, but it forecloses any participation in the upside of the Acquisition if the transaction is ultimately reactivated. It also results in a realized loss on the majority of the $22,500,000 in called capital. We recommend that Ironside begin preliminary planning for this contingency even if it does not presently intend to exercise the wind-down right, so that the necessary procedural steps and notice requirements are well understood in advance.
VI. Recommendations
Based on our analysis of the foregoing, we respectfully recommend that Ironside consider the following actions:
1. Near-Term Engagement with Meridian (November–December 2023). Ironside should engage promptly with Meridian, through BSP and specifically through Charles A. Delacroix, the BSP partner responsible for the Meridian relationship, regarding the approaching EPA outside date of December 31, 2023. The engagement should seek to ascertain Meridian's intentions regarding (a) the pursuit of replacement financing, including any discussions with potential lenders, the expected timeline, and the anticipated terms; and (b) whether Meridian intends to seek a further amendment to the EPA or to propose a standstill arrangement with the Selling Shareholders. We are prepared to initiate this communication on Ironside's behalf upon your instruction.
2. EPA Outside Date — Support for Mutual Standstill. We recommend that Ironside support the negotiation of a mutual standstill and preservation agreement among the EPA parties, rather than permitting any party to exercise unilateral termination rights after December 31, 2023. A standstill agreement would preserve the contractual framework for the Acquisition and maintain optionality for both reactivation and orderly wind-down, while imposing minimal incremental cost on Ironside. We can prepare a term sheet or proposed framework for such an agreement for Ironside's review and discussion with Meridian.
3. GP Reporting — Q4 2023 Quarterly Report. Ironside should request that the GP's Q4 2023 quarterly report, which will be due in January 2024, specifically and comprehensively address: (a) the circumstances of the Commitment Letter expiration, including any communications with Atlas and Pinnacle; (b) any replacement financing efforts, including the identity of potential lenders, the status of discussions, and the expected timeline and terms; and (c) the status of discussions with Cascadia's Selling Shareholders, including Timberline Growth Equity Fund III, LP (Hugh Callister) and the Weir Family Trust (Jonathan M. Weir), regarding the EPA outside date and any potential amendments or standstill arrangements. We can draft this request for Ironside's review.
4. R&W Insurance — Confirmation of Tolling. Ironside should request confirmation from Northgate Specialty Insurance Co., either directly or through the GP, regarding the continued effectiveness of the Northgate Side Letter's tolling provisions and any conditions or limitations on the reactivation of the R&W Policy in the event of a transaction reactivation. This confirmation is important both for preserving Ironside's position in a reactivation scenario and for assessing the recoverability of the $4,875,000 premium deposit in a wind-down scenario.
5. Tax Planning — Updated Analysis. We recommend that Ironside commission an updated tax analysis from our tax partner, Sylvia Hartwell, addressing the tax implications of each of the three potential paths forward: continued dormancy, transaction reactivation, and wind-down. The original tax structuring analysis was prepared in connection with the formation of the Vehicle and the execution of the EPA and may not fully reflect subsequent developments, including the dormancy, the deployment of called capital, and the potential loss of certain tax attributes or positions. Ms. Hartwell is available to begin this work promptly upon your authorization.
6. Wind-Down Right — Preliminary Planning. Notwithstanding that the wind-down election right does not mature until July 9, 2024, we recommend that Ironside begin preliminary planning for the potential exercise of that right. This planning should include: (a) identifying the procedural steps and notice requirements under LP Agreement Section 7.04(c), including the form and timing of the required written notice to the GP; (b) assessing the recoverability of the R&W insurance deposit and due-diligence deposits; (c) estimating the wind-down costs and distributable amounts; and (d) coordinating with Ms. Hartwell's updated tax analysis. Beginning this work now will ensure that Ironside is in a position to act promptly and decisively if and when it determines that a wind-down is the appropriate course of action.
VII. Closing
We remain available to discuss the matters addressed in this letter at your convenience, and to take any actions that Ironside directs in connection with the Commitment Letter expiration, the approaching EPA outside date, or any of the strategic alternatives analyzed herein.
We respectfully request that Ironside advise us of its preferred approach at its earliest convenience so that we may engage with BSP and other relevant parties in advance of the December 31, 2023 EPA outside date. Given the relatively short timeframe — approximately sixty days — we believe it would be prudent to initiate contact with BSP no later than the week of November 13, 2023, in order to allow sufficient time for substantive discussions and, if appropriate, the negotiation of a standstill agreement.
We also note that this letter and the analysis contained herein are based on the information available to us as of the date hereof. If additional information becomes available — including any communication from Meridian, BSP, the GP, or any other party regarding replacement financing, EPA amendments, or the status of the Acquisition — we will promptly update our analysis and recommendations accordingly.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Pamela Cross Responsible Partner, Funds & Asset Management Direct: (212) 558-4172
Email: pcross@calderwoodharkness.com
cc: Nicholas Stern, Esq., Calderwood & Harkness LLP (Billing Partner) Theresa Kim, Esq., Calderwood & Harkness LLP (Lead Associate)
Prior C&H Work Product Referenced Herein:
• C&H Memorandum: Review of Debt Commitment Letter — Key Terms and Flex Provisions (August 30, 2022)
• C&H Memorandum: Analysis of Debt Commitment Extension and Cost Allocation (April 28, 2023)
• C&H Letter to Breckenridge Sloane & Pratt LLP — Ironside's Reservation of Rights During Dormancy (January 15, 2023)
• C&H Memorandum: Dormancy Governance Framework (January 12, 2023)
• C&H Memorandum: Ironside's Rights and Remedies Under LP Agreement in Event of MAE / Failed Closing (November 18, 2022)
Source | Amount | Percentage
Fund IV — Equity Contribution | $750,000,000 | 71.43% of Equity
ICM Co-Invest — Equity Contribution | $300,000,000 | 28.57% of Equity
Total Equity | $1,050,000,000
Atlas / Pinnacle — Senior Secured Term Loan | $975,000,000
Total Sources | $2,025,000,000
Use | Amount
Enterprise Value — Cascadia Renewables Holdings, Inc. | $1,950,000,000
Estimated Transaction Costs | $50,000,000
Working-Capital Adjustment Escrow | $25,000,000
Total Uses | $2,025,000,000
Expense Category | Service Provider | Approximate Annual Cost
Fund Administration | Kendrick Thorne & Associates LLP | $72,000
Delaware Franchise Tax | State of Delaware | $45,500
Registered Agent Fees | Cascade Systems | $3,500
Annual Audit | To be determined | $42,000
K-1 Preparation and Distribution | Kendrick Thorne & Associates LLP | $22,000
Total | $185,000
Application | Amount
Organizational Expenses | $285,000
Placement-Agent Fee (Rivermark Capital Markets Inc.) | $1,050,000
R&W Insurance Deposit (Northgate Specialty Insurance Co.) | $4,875,000
Due-Diligence Costs and Deposits | $12,790,000
Working-Capital Reserve | $3,500,000
Total | $22,500,000
Item | Estimated Amount
Working-Capital Reserve (estimated balance at July 2024) | $3,315,000
R&W Insurance Premium Deposit (recovery uncertain) | $0 – $4,875,000
Refundable Due-Diligence Deposits (to be determined) | TBD
Less: Estimated Wind-Down Costs | ($150,000 – $250,000)
Estimated Net Distribution | $3,065,000 – $7,940,000+

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