1023-00001 · Ironside Capital Management LP · Regulatory

cfius-voluntary-notice-memo.docx DOCUMENT Funds

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

MEMORANDUM

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

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

DATE: September 5, 2022

RE: CFIUS Voluntary Notice — Assessment and Recommendation Regarding the Proposed Acquisition of Cascadia Renewables Holdings, Inc.

MATTER NO.: 1023-00001

I. Executive Summary

Calderwood & Harkness LLP has been engaged by Ironside Capital Management LP ("Ironside" or "ICM") to assess whether a voluntary filing with the Committee on Foreign Investment in the United States ("CFIUS") is advisable in connection with the proposed acquisition of one hundred percent (100%) of the outstanding equity interests of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") by Cascadia Acquisition Corp. ("AcquisitionCo"), a newly formed Delaware corporation. AcquisitionCo is owned, directly and indirectly, by Meridian Infrastructure Partners Fund IV, LP ("Fund IV") and ICM Cascadia Co-Invest, LP ("ICM Co-Invest" or the "Vehicle"). This memorandum sets forth our analysis of the applicable legal framework, our assessment of the risks and benefits associated with a voluntary filing, and our recommendation regarding the most appropriate course of action.

The proposed transaction has an aggregate enterprise value of approximately $1,950,000,000. Total equity to be contributed to AcquisitionCo is $1,050,000,000, funded by Fund IV ($750 million, representing approximately 71.43% of the equity capitalization) and ICM Co-Invest ($300 million, representing approximately 28.57% of the equity capitalization). The balance of the capital structure will consist of $975 million in senior secured term loan financing arranged by Atlas National Bank, N.A., as lead arranger and administrative agent, and Pinnacle Credit Partners LLC, as co-lender, together with a $150 million revolving credit facility that is expected to remain undrawn at closing.

Cascadia is an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. It owns and operates a diversified portfolio of renewable energy and water infrastructure assets across the Pacific Northwest, including fourteen (14) hydroelectric generation facilities, six (6) wind farms, and three (3) water-treatment concessions located in the states of Oregon, Washington, and Idaho. Cascadia's revenue base is underpinned by long-term power-purchase agreements and municipal water-service contracts with weighted-average remaining lives of approximately twenty-two (22) years, providing substantial cash flow visibility over an extended investment horizon.

Conclusion: After a thorough review of the relevant statutory and regulatory framework, the transaction structure, and the ownership and governance arrangements of all acquiring entities, we have concluded that the proposed acquisition does not involve any "foreign person," foreign government, or foreign entity as an acquirer, investor, or party exercising control or governance rights. Accordingly, the transaction does not constitute a "covered transaction" within the meaning of Section 721 of the Defense Production Act of 1950, as amended ("DPA"), and there is no mandatory filing obligation under the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA") or the implementing regulations at 31 C.F.R. Parts 800 and 802.

Notwithstanding this conclusion, we recommend that the parties file a voluntary notice in the form of a short-form declaration pursuant to 31 C.F.R. Part 800 for the following reasons:

(a) Cascadia's assets constitute critical infrastructure under the definitions employed by the Department of Homeland Security and CFIUS, encompassing both the energy sector (hydroelectric generation and wind power) and the water and wastewater systems sector (municipal water treatment);

(b) certain of Cascadia's facilities, particularly those located in Washington and Idaho, may be situated in proximity to sensitive government installations in the Pacific Northwest, a factor that independently heightens the strategic sensitivity of the asset base;

(c) a voluntary filing that is reviewed and cleared by CFIUS — or with respect to which CFIUS takes no action within the statutory review period — provides safe harbor protection under 31 C.F.R. § 800.601, effectively immunizing the transaction from any future unilateral review or retroactive divestiture order, a benefit of particular value given the long-duration nature of Cascadia's contracts and the indefinite hold period contemplated by the sponsors; and

(d) the cost and administrative burden of a short-form declaration filing are minimal relative to the protection afforded, involving a filing of approximately five pages and a review period of thirty (30) calendar days.

We note for the record that, consistent with this recommendation, the voluntary notice was subsequently prepared and filed, and was acknowledged by CFIUS on September 20, 2022. CFIUS did not request a full joint voluntary notice, did not initiate a unilateral review, and indicated that no further action was required. The outcome of this process is discussed further in Section VIII below.

II. Background

A. The Transaction

The proposed transaction is structured as a negotiated acquisition of one hundred percent (100%) of the outstanding equity interests of CRH by AcquisitionCo. AcquisitionCo is a newly formed Delaware corporation that was organized for the sole purpose of effectuating this acquisition and will serve as the direct holding company for Cascadia following the closing.

The selling parties in the transaction (collectively, the "Selling Shareholders") are as follows:

(i) Timberline Growth Equity Fund III, LP — holding approximately sixty-two percent (62%) of the outstanding equity of CRH. Timberline Growth Equity Fund III is a growth equity fund managed by Timberline Capital Partners, a Portland-based private equity firm;

(ii) The Weir Family Trust — holding approximately eighteen percent (18%) of the outstanding equity of CRH. The Weir Family Trust is a domestic irrevocable trust established for the benefit of the family of Jonathan M. Weir, the founder and Chief Executive Officer of Cascadia; and

(iii) The Management Rollover Pool — comprising various members of Cascadia's management team who collectively hold approximately twenty percent (20%) of the outstanding equity of CRH. Approximately fifty percent (50%) of the Management Rollover Pool equity is expected to be "rolled" into the post-closing equity structure of AcquisitionCo, with the balance being cashed out at closing.

The definitive transaction agreement — the Equity Purchase Agreement (the "EPA") — was executed on September 15, 2022, among the Selling Shareholders, Cascadia, and AcquisitionCo. The EPA is governed by the laws of the State of Delaware, without regard to conflicts-of-law principles.

The sources and uses of funds for the transaction are summarized in the table below:

The senior secured term loan in the amount of $975,000,000 has been arranged by Atlas National Bank, N.A. ("Atlas National"), serving as lead arranger and administrative agent, with Pinnacle Credit Partners LLC ("Pinnacle") serving as co-lender. In addition, a revolving credit facility in the amount of $150,000,000 has been committed by Atlas National, which is expected to remain undrawn at closing and is therefore not included in the sources and uses above. The revolving credit facility will be available for working capital and general corporate purposes of Cascadia following the closing.

The closing of the transaction is subject to satisfaction of customary conditions precedent, including the receipt of certain regulatory approvals. The following regulatory approvals are required or have been sought:

(a) FERC Section 203 Approval: An application pursuant to Section 203 of the Federal Power Act has been filed with the Federal Energy Regulatory Commission under Docket No. EC22-143-000. The application was filed on October 19, 2022, and seeks approval for the transfer of jurisdictional assets, including Cascadia's FERC-licensed hydroelectric facilities.

(b) Oregon Public Utility Commission Approval: An application has been filed with the Oregon Public Utility Commission ("OPUC") under Docket No. UM-2287, seeking approval for the change of control of Cascadia's Oregon-regulated operations. The OPUC application was filed on October 14, 2022.

(c) CFIUS (Voluntary): As discussed in this memorandum, we have recommended and the parties have filed a voluntary short-form declaration with CFIUS. This filing is precautionary and is not required by law.

No Hart-Scott-Rodino filing is required, as both acquiring entities have confirmed that the applicable filing thresholds and exemptions have been reviewed and a filing obligation does not arise under the current facts.

B. The Acquiring Parties

1. Ironside Capital Management LP

Ironside Capital Management LP ("Ironside" or "ICM") is a Delaware limited partnership headquartered at 590 Madison Avenue, 38th Floor, New York, New York 10022. Ironside was founded in 2009 by Marcus J. Calloway and is registered as an investment adviser with the U.S. Securities and Exchange Commission ("SEC") pursuant to the Investment Advisers Act of 1940, as amended. As of the most recent reporting period, Ironside manages total assets under management ("AUM") of approximately $14.8 billion across a range of strategies, including private equity, real assets, credit, and infrastructure.

Ironside's infrastructure strategy, which is led by Renata Obasi, Senior Managing Director, Infrastructure, currently encompasses approximately $3.2 billion in infrastructure-related assets deployed across three dedicated infrastructure investment vehicles. The Cascadia transaction represents Ironside's largest single infrastructure investment to date and will be co-invested alongside Meridian Infrastructure Partners through the ICM Co-Invest vehicle described below.

Ironside is wholly owned by its partners, all of whom are United States citizens or permanent residents. Ironside does not have any foreign government or foreign government-controlled entity among its ownership or governance structure. The firm's governing documents vest all material investment decisions, including the authority to approve, execute, and manage portfolio investments, in the Investment Committee, which is composed entirely of U.S. persons.

2. ICM Cascadia Co-Invest, LP

ICM Cascadia Co-Invest, LP ("ICM Co-Invest" or the "Vehicle") is a Delaware limited partnership formed on July 22, 2022 (Delaware Secretary of State File No. 7439218; Employer Identification Number 88-3921457). The registered agent for ICM Co-Invest is Cascade Systems, located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904.

ICM Co-Invest was formed for the sole purpose of making the co-investment in the Cascadia transaction alongside Fund IV. The ownership structure of ICM Co-Invest is as follows:

• General Partner: Meridian Infrastructure GP IV LLC — holding a 0.01% general partner interest with a total commitment of $30,000.

• Limited Partner: Ironside Capital Management LP — holding a 99.99% limited partner interest with a total commitment of $299,970,000.

The total committed capital of ICM Co-Invest is $300,000,000. As of the date of this memorandum, a single capital call in the amount of $22,500,000 was issued on August 15, 2022, and has been fully funded.

ICM Co-Invest does not have any foreign persons, foreign governments, or foreign government-controlled entities among its partners. Meridian Infrastructure GP IV LLC, in its capacity as general partner, has the authority to manage and direct the affairs of ICM Co-Invest, subject to certain reserved matters that require the consent of Ironside as the sole limited partner.

3. Meridian Infrastructure Partners LP

Meridian Infrastructure Partners LP ("Meridian") is a Delaware limited partnership headquartered at 200 Clarendon Street, Suite 4200, Boston, Massachusetts 02116. Meridian was co-founded by David R. Hargreaves, who serves as Managing Partner. As of the most recent reporting period, Meridian manages total AUM of approximately $22.5 billion across a series of infrastructure-focused funds and related co-investment vehicles. Meridian's investment strategy is focused on core and core-plus infrastructure assets in North America, with particular emphasis on the energy, water, transportation, and digital infrastructure sectors.

Meridian is represented in connection with the Cascadia transaction by Breckenridge Sloane & Pratt LLP ("BSP"), with Charles A. Delacroix serving as lead partner. We have coordinated with BSP on all matters relating to the CFIUS analysis, including the look-through analysis of Fund IV's limited partner composition discussed in Section III.C below.

4. Meridian Infrastructure Partners Fund IV, LP ("Fund IV")

Meridian Infrastructure Partners Fund IV, LP ("Fund IV") is a Delaware limited partnership with total committed capital of approximately $6.2 billion. Fund IV is a 2021 vintage infrastructure fund targeting investments in North American energy, water, transport, and digital infrastructure assets. Fund IV has committed $750,000,000 to the Cascadia transaction, representing its single largest platform investment.

The general partner of Fund IV is Meridian Infrastructure GP IV LLC, a Delaware limited liability company. The managers of Meridian Infrastructure GP IV LLC are David R. Hargreaves, Lillian Fong, and Graham Whitfield, each of whom is a United States citizen.

5. Meridian Infrastructure GP IV LLC

Meridian Infrastructure GP IV LLC is a Delaware limited liability company that serves as the general partner of both Fund IV and ICM Co-Invest. As noted above, its managers are David R. Hargreaves, Lillian Fong, and Graham Whitfield. The LLC does not have any foreign persons among its members or managers.

C. The Target

Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") is a corporation organized under the laws of the State of Oregon. Cascadia's principal office is located at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. The company was founded in 2006 by Jonathan M. Weir, who continues to serve as Chief Executive Officer. Sandra K. Llewellyn serves as Chief Financial Officer.

For the fiscal year ended December 31, 2021, Cascadia reported total revenue of approximately $487 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $138 million, as audited by Halstead & Greer LLP, Cascadia's independent auditor. At the agreed enterprise value of $1,950,000,000, the implied EV/EBITDA multiple is approximately 14.1x, which is consistent with recent transaction multiples observed in the Pacific Northwest renewable energy and water infrastructure sectors.

Cascadia's asset portfolio comprises the following principal categories:

(i) Hydroelectric Facilities (14): Cascadia owns and operates fourteen FERC-licensed hydroelectric generation facilities located across Oregon, Washington, and Idaho. These facilities range in size from approximately 8 MW to 120 MW and have a combined installed capacity of approximately 640 MW. Cascadia's hydroelectric assets are the company's largest revenue contributor and benefit from long-term power-purchase agreements with investment-grade utility counterparties.

(ii) Wind Farms (6): Cascadia owns and operates six onshore wind generation facilities located in Oregon and Washington. These facilities have a combined installed capacity of approximately 480 MW and are supported by long-term power-purchase agreements with remaining terms ranging from approximately 12 to 25 years.

(iii) Water-Treatment Concessions (3): Cascadia holds three long-term concession agreements with municipal water authorities in Oregon, pursuant to which it designs, builds, operates, and maintains water-treatment facilities. The most significant of these concessions is the Bull Run Filtration Project, a major municipal water-treatment facility serving the Portland Metropolitan Water District. The Bull Run concession was originally executed in approximately 2018, has a total term of forty (40) years, and generates annual revenue of approximately $64 million.

Cascadia holds various federal and state regulatory licenses and permits in connection with its operations, including FERC licenses for its hydroelectric facilities, state-issued utility permits, and water rights issued under the applicable state water codes. These licenses and permits are integral to Cascadia's operations and will transfer to AcquisitionCo (or remain with Cascadia, as the case may be) upon closing, subject to receipt of the required regulatory approvals described in Section II.A above.

III. CFIUS Legal Framework

A. Statutory and Regulatory Authority

The Committee on Foreign Investment in the United States ("CFIUS") is an interagency committee of the United States Government established pursuant to Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565) (the "DPA"). CFIUS is chaired by the Secretary of the Treasury and includes representatives from the Departments of State, Defense, Commerce, Homeland Security, Energy, and Justice, as well as representatives from the Office of the U.S. Trade Representative, the Office of Science and Technology Policy, and, as appropriate, other executive departments and agencies.

The scope and procedures of CFIUS review were substantially expanded by the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA"), which was enacted as part of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Pub. L. No. 115-232). FIRRMA broadened CFIUS's jurisdiction to encompass certain non-controlling investments and real estate transactions, established a mandatory declaration requirement for certain transactions, and introduced the short-form declaration process as an alternative to the traditional full joint voluntary notice.

The implementing regulations promulgated by the Treasury Department pursuant to FIRRMA are codified at 31 C.F.R. Parts 800 and 802. Part 800 governs "covered control transactions" (mergers, acquisitions, or takeovers resulting in foreign control of a U.S. business) and "covered investments" (certain non-controlling investments in U.S. businesses involved in critical technologies, critical infrastructure, or sensitive personal data). Part 802 governs "covered real estate transactions" involving the purchase or lease of certain real estate at or in proximity to specified military installations and other sensitive government facilities.

CFIUS is authorized to review "covered transactions" — defined broadly as any transaction by or with any "foreign person" that could result in foreign control of any U.S. business, or any non-controlling investment by a foreign person in a U.S. business that is involved in critical technology, critical infrastructure, or sensitive personal data (collectively, "TID U.S. businesses"). Upon review, CFIUS may negotiate mitigation agreements, refer the transaction to the President for action (including blocking or ordering divestiture), or clear the transaction with no conditions.

B. "Covered Transaction" Analysis

The threshold inquiry in any CFIUS analysis is whether the transaction at issue constitutes a "covered transaction" within the meaning of the DPA and the implementing regulations. A covered transaction — whether a covered control transaction under 31 C.F.R. § 800.210 or a covered investment under 31 C.F.R. § 800.211 — requires the involvement of a "foreign person" as a party to the transaction.

The term "foreign person" is defined at 31 C.F.R. § 800.224 to mean:

(a) any foreign national (i.e., any individual who is not a United States citizen or national);

(b) any foreign government; or

In the present case, every entity in the acquisition chain is organized under the laws of a state of the United States:

• AcquisitionCo — a Delaware corporation;

• Fund IV — a Delaware limited partnership;

• ICM Co-Invest — a Delaware limited partnership;

• Meridian Infrastructure GP IV LLC — a Delaware limited liability company;

• Ironside Capital Management LP — a Delaware limited partnership; and

• Meridian Infrastructure Partners LP — a Delaware limited partnership.

No foreign government holds any ownership interest, directly or indirectly, in any of the entities listed above. No foreign national serves as a manager, director, officer, or general partner of any acquiring entity with authority to make investment or governance decisions.

On the basis of this analysis, the proposed acquisition of Cascadia does not involve any "foreign person" and therefore does not constitute a "covered transaction" under Section 721 of the DPA.

C. Look-Through Analysis — Investor Base Considerations

Although the acquiring entities are all U.S.-organized entities, CFIUS may, in appropriate circumstances, look through a fund structure to assess whether foreign persons exercise de facto control or hold board seats, observer seats, information rights, veto rights, or other governance rights that could confer influence over investment decisions. This "look-through" analysis is grounded in 31 C.F.R. § 800.256, which addresses indirect control and the concept of control exercised through a chain of entities.

Accordingly, we have undertaken a review of the investor bases of both Ironside and Meridian to assess whether any foreign person may be considered to exercise control or hold governance rights in any acquiring entity.

Ironside's Investor Base. Ironside is an SEC-registered investment adviser with a diversified institutional investor base that includes domestic pension funds, endowments, foundations, insurance companies, and high-net-worth individuals. While the specific LP composition of Ironside's funds is not detailed in this memorandum for confidentiality reasons, Ironside has confirmed through its internal compliance review that no foreign government or foreign government-controlled entity holds, directly or indirectly, an interest in any Ironside-managed vehicle that is sufficient to confer control or governance rights over Ironside or over any investment decision made by Ironside or its managed vehicles. Similarly, no single foreign limited partner holds a board seat, advisory committee seat with veto authority, or observer right that could confer influence over investment decisions related to the Cascadia transaction. To the extent that foreign limited partners participate in Ironside's funds, such participation is passive in nature and does not confer any governance or control rights.

Meridian's Investor Base. Breckenridge Sloane & Pratt LLP ("BSP"), serving as counsel to Meridian in connection with the Cascadia transaction, has represented to us — through Charles A. Delacroix, lead partner — that Meridian Fund IV's limited partners do not include any foreign government or foreign government-controlled entity that holds governance or control rights over Fund IV or over Meridian Infrastructure GP IV LLC. BSP has further confirmed that no limited partner of Fund IV, whether domestic or foreign, holds veto rights, board seats, or other governance rights that would confer upon such limited partner the ability to direct, control, or materially influence investment decisions made by Meridian GP IV LLC in its capacity as general partner of Fund IV.

We have relied on these representations in reaching our conclusion. Should any of these representations prove inaccurate or should circumstances change — for example, if a foreign government or foreign government-controlled entity were to acquire governance or control rights in any acquiring entity prior to closing — the analysis set forth herein would need to be revisited, and a mandatory filing obligation could arise.

Conclusion. Based on the information available to us as of the date of this memorandum, no "foreign person" controls or exercises governance rights in any entity in the acquisition chain. The proposed transaction does not appear to constitute a "covered transaction" under Section 721 of the DPA.

D. Mandatory Declaration Requirements

FIRRMA introduced a mandatory declaration requirement under 31 C.F.R. § 800.401, which applies to certain transactions involving foreign government interests and TID U.S. businesses. Specifically, a mandatory declaration is required where:

(i) the transaction would result in the acquisition of a "substantial interest" (defined as a voting interest of twenty-five percent (25%) or more) in a TID U.S. business; and

(ii) a foreign government holds, directly or indirectly, a "substantial interest" (defined as a voting interest of forty-nine percent (49%) or more) in the foreign person that is acquiring the substantial interest in the TID U.S. business.

This mandatory declaration requirement is plainly inapplicable to the present transaction because no foreign person — let alone a foreign government — holds a substantial interest in any of the acquiring entities. There is no foreign person acquiring any interest, controlling or otherwise, in Cascadia or in any entity in the acquisition chain.

Accordingly, no mandatory filing obligation exists under FIRRMA or the implementing regulations.

IV. Risk Assessment: Why a Voluntary Filing Is Nonetheless Advisable

Although we have concluded that the proposed transaction does not constitute a "covered transaction" and that no mandatory filing obligation exists, we nonetheless recommend that the parties file a voluntary short-form declaration with CFIUS. This recommendation is based on a careful assessment of the risks and benefits associated with a voluntary filing in the context of this particular transaction, as set forth below.

A. Critical Infrastructure Profile

Cascadia's assets fall squarely within categories that have been identified by the Department of Homeland Security ("DHS") and by CFIUS as critical infrastructure sectors of particular concern to national security. The DHS Cybersecurity and Infrastructure Security Agency ("CISA") has designated sixteen critical infrastructure sectors, among which the following are directly relevant to Cascadia's operations:

Energy Sector. Cascadia owns and operates fourteen hydroelectric generation facilities and six wind farms providing electric power to the Pacific Northwest grid. Hydroelectric assets are subject to specific federal oversight under the Federal Power Act and are licensed by the Federal Energy Regulatory Commission. The energy sector is one of the most scrutinized sectors in the CFIUS context, given the potential national security implications of disruptions to the electric grid. Cascadia's hydroelectric facilities, in particular, provide baseload and peaking power that is integral to grid reliability in the Pacific Northwest.

Water and Wastewater Systems Sector. Cascadia holds three long-term concession agreements for the design, construction, operation, and maintenance of water-treatment facilities. The most significant of these is the Bull Run Filtration Project, a major municipal water-treatment facility serving the Portland Metropolitan Water District. The water and wastewater systems sector has been the subject of increasing attention from CFIUS and from Congress in recent years, reflecting growing concerns about the vulnerability of water infrastructure to both physical and cyber threats.

While the critical infrastructure nature of Cascadia's assets does not, standing alone, trigger CFIUS jurisdiction in the absence of a foreign person, the sensitivity of these assets materially heightens the risk that CFIUS could in the future exercise its authority to initiate a "non-notified" or "unilateral" review of the transaction under 31 C.F.R. § 800.501. This authority permits CFIUS to review any transaction that it has reason to believe may constitute a covered transaction, even if no voluntary notice has been filed. Should circumstances change after closing — for example, if new information were to emerge regarding indirect foreign interests in any acquiring entity, or if regulatory developments were to broaden the definition of "foreign person" or "covered transaction" — the absence of a prior CFIUS filing could leave the parties exposed to a retroactive review, with potentially severe consequences including the possibility of a divestiture order.

B. Proximity to Sensitive Government Installations

We have identified a secondary risk factor relating to the geographic location of certain Cascadia facilities. Specifically, certain of Cascadia's hydroelectric installations in the states of Washington and Idaho may be situated in proximity to United States military installations, defense facilities, or other sensitive government properties. While we have not conducted a definitive geospatial analysis as part of this engagement, publicly available information suggests that at least some of Cascadia's Washington-based facilities are located within the general vicinity of military and defense-related installations in the Pacific Northwest.

Under 31 C.F.R. Part 802, CFIUS has expanded jurisdiction over certain real estate transactions involving the purchase or lease of real property that is located within specified geographic boundaries near designated military installations. While the Cascadia transaction is structured as a control transaction (an acquisition of equity) rather than a real estate transaction, and therefore Part 802 does not directly apply, the proximity factor underscores the overall strategic sensitivity of the asset base and provides an additional basis for seeking CFIUS clearance.

In our experience, CFIUS staff are attuned to proximity issues even in the context of control transactions that do not independently trigger Part 802, particularly where the assets in question involve critical infrastructure. A voluntary filing allows the parties to affirmatively address any proximity concerns and to provide CFIUS with the information necessary to satisfy itself that no national security risk exists.

C. Safe Harbor Benefits

Perhaps the most compelling reason to file a voluntary declaration is the safe harbor protection that a completed CFIUS review affords. Under 31 C.F.R. § 800.601, once CFIUS has completed its review of a transaction — whether by concluding that the transaction is not a covered transaction, by clearing the transaction, or by taking no action within the applicable statutory review period — CFIUS generally will not re-initiate review of the same transaction. The safe harbor is subject to narrow exceptions, principally relating to the submission of materially false or misleading information or the omission of material information in the filing.

The safe harbor benefit is of particular significance in the Cascadia transaction for the following reasons:

(i) Long-Duration Assets. Cascadia's concession contracts and power-purchase agreements have a weighted-average remaining life of approximately twenty-two (22) years. Over this extended time horizon, the political, regulatory, and geopolitical landscape may evolve in ways that are difficult to predict. Changes in CFIUS policy, expansions of the statutory framework, or new concerns about foreign influence in critical infrastructure sectors could, in the absence of safe harbor protection, expose the transaction to a retroactive review years after closing.

(ii) Indefinite Hold Period. Fund IV and ICM Co-Invest contemplate an indefinite hold period for the Cascadia investment, reflecting the long-lived, contracted nature of the underlying assets. Unlike a typical private equity investment with a defined exit horizon, the Cascadia investment may be held for a period significantly exceeding the typical fund life. The safe harbor provides certainty and stability throughout this extended hold period.

(iii) Protection Against Divestiture Risk. In the absence of safe harbor protection, CFIUS retains the authority to initiate a unilateral review at any time and, following such review, to recommend that the President order divestiture. While the likelihood of such an outcome in a transaction involving entirely domestic parties may be low, the consequences of a forced divestiture — particularly with respect to regulated, long-lived infrastructure assets — would be severe. The safe harbor effectively eliminates this risk.

D. Precedent in Infrastructure Transactions

In recent years, CFIUS has demonstrated a pattern of increased scrutiny of transactions in the energy and water infrastructure sectors, even where foreign ownership issues are not immediately apparent. Several transactions involving domestic private equity funds and infrastructure funds with diversified investor bases that include foreign limited partners have been the subject of CFIUS inquiries, both formal and informal. While these inquiries have not, to our knowledge, resulted in adverse action in cases where the foreign LP participation was passive and non-controlling, the mere fact of a CFIUS inquiry — particularly if it occurs after closing — can be disruptive to operations and costly to manage.

Filing a voluntary declaration signals good faith and transparency on the part of the acquiring parties. In the context of a transaction that is simultaneously subject to review by the Federal Energy Regulatory Commission (pursuant to Section 203 of the Federal Power Act) and the Oregon Public Utility Commission, a prior CFIUS clearance — even one that is precautionary in nature — strengthens the overall regulatory narrative and may be referenced in other proceedings as confirmatory of the domestic character of the acquisition. Regulators reviewing parallel applications are likely to view favorably the fact that the parties proactively sought and obtained CFIUS review.

E. Cost-Benefit Analysis

The cost-benefit calculus strongly favors a voluntary filing:

Cost and Burden. A short-form declaration under 31 C.F.R. § 800.401(f) is significantly less burdensome than a full joint voluntary notice. The declaration is a concise filing, typically limited to approximately five (5) pages, and includes basic information about the transaction parties, the transaction structure, the target business, and a representation regarding the absence of foreign ownership or control. The preparation time for a declaration, based on our experience with similar filings, is estimated at approximately 15-25 attorney hours. Filing fees for a declaration are minimal to none; the standard filing fee for a full joint voluntary notice, which is assessed on a sliding scale based on transaction value and which could be substantial for a transaction of this size, does not apply to a declaration.

Timeline. CFIUS has thirty (30) calendar days from the date of acceptance of a declaration to take one of the following actions: (i) request that the parties file a full joint voluntary notice; (ii) inform the parties that CFIUS is not able to conclude action on the basis of the declaration and that the parties may, if they choose, file a full joint voluntary notice; (iii) initiate a unilateral review; or (iv) notify the parties that the Committee has concluded all action with respect to the declaration. In a case such as this, where the domestic ownership structure is straightforward and well-documented, we expect CFIUS to conclude its assessment promptly and to take no adverse action. Based on current processing times, we anticipate that the Committee will respond within the thirty-day period without requesting a full notice.

Benefit. As discussed above, the benefits include safe harbor protection, risk mitigation against future unilateral review, and enhancement of the parties' overall regulatory posture in connection with parallel FERC and OPUC proceedings.

In light of this analysis, the expected benefits of a voluntary declaration filing substantially outweigh the costs and burdens involved.

V. Recommended Filing Approach

A. Declaration vs. Full Joint Voluntary Notice

Based on the analysis set forth in Sections III and IV above, we recommend filing a short-form declaration pursuant to 31 C.F.R. § 800.401(f) rather than a full joint voluntary notice under 31 C.F.R. § 800.501. This recommendation is grounded in the following considerations:

(a) No foreign person is involved in the transaction, and the transaction does not constitute a "covered transaction." A full joint voluntary notice is neither required nor warranted under these circumstances.

(b) The filing is precautionary in nature and is intended to obtain practical safe harbor protection. A short-form declaration is the appropriate vehicle for a precautionary filing where the jurisdictional basis for CFIUS review is absent or uncertain.

(c) A declaration will be sufficient to obtain CFIUS acknowledgment and the practical equivalent of safe harbor protection. CFIUS has consistently treated declarations resulting in a "no action" response as providing the same safe harbor benefits as a completed review of a full joint voluntary notice.

We note that, in the event CFIUS were to request a full joint voluntary notice after reviewing the declaration — a possibility that we consider remote in light of the domestic ownership structure — the parties would have the option to comply with such a request at that time. The submission of a declaration does not preclude the subsequent filing of a full notice, and we would be prepared to assist the parties in preparing a full notice on an expedited basis if necessary.

B. Filing Party

The declaration should be filed by or on behalf of AcquisitionCo, as the entity directly acquiring the equity of Cascadia. AcquisitionCo will be identified as the "acquiring party" in the declaration, with supporting information regarding the upstream ownership and governance structure to be provided by both Meridian (through BSP) and Ironside (through Calderwood & Harkness).

Effective coordination with Meridian's counsel, Charles A. Delacroix at BSP, will be essential to ensure that the representations made in the declaration regarding Fund IV's limited partner composition and governance arrangements are consistent with BSP's representations to us and with the facts as known to Meridian. We have already initiated preliminary discussions with Mr. Delacroix on this point and have received his cooperation and concurrence with the proposed filing approach.

C. Timing

We recommend filing the declaration as soon as practicable following execution of the Equity Purchase Agreement on September 15, 2022. Our target is to prepare and submit the declaration during the week of September 12-16, 2022, which would allow the thirty-day CFIUS review period to run concurrently with the preparation and filing of the FERC and OPUC applications.

This timeline is consistent with the broader regulatory filing schedule:

• OPUC application: to be filed on or about October 14, 2022;

• FERC Section 203 application: to be filed on or about October 19, 2022.

By filing the CFIUS declaration in advance of the FERC and OPUC applications, the parties will maximize the likelihood that CFIUS review will be concluded — or at least substantially advanced — before the FERC and OPUC proceedings require substantive engagement. Early resolution of any potential CFIUS concerns will support the overall transaction timetable and the satisfaction of closing conditions. In the event that CFIUS clearance is obtained prior to the filing of the FERC and OPUC applications, the clearance can be affirmatively referenced in those applications.

D. Content of the Declaration

The declaration will include the following information, consistent with the requirements of 31 C.F.R. § 800.403:

(i) Standard identifying information for each party to the transaction, including the acquiring parties (AcquisitionCo, Fund IV, ICM Co-Invest, Meridian GP IV LLC, Ironside, and Meridian) and the target (Cascadia), with full legal names, jurisdictions of organization, principal office addresses, and contact information for responsible persons;

(ii) a description of the transaction structure, including the formation and capitalization of AcquisitionCo, the sources and uses of funds, the equity and debt financing arrangements, and the acquisition chain from Fund IV and ICM Co-Invest through Meridian GP IV LLC to AcquisitionCo;

(iii) a confirmation that no foreign person, foreign government, or foreign government-controlled entity has control or governance rights in any acquiring entity, supported by the representations of Ironside and BSP (on behalf of Meridian) described in Section III.C above;

(iv) a summary of Cascadia's business, including a description of its critical infrastructure assets (hydroelectric facilities, wind farms, and water-treatment concessions), its revenue profile, and the jurisdictions in which it operates;

(v) a representation that the filing is voluntary and precautionary, and that the parties do not believe the transaction constitutes a "covered transaction" under Section 721 of the DPA; and

(vi) such other information as may be required or appropriate under the applicable regulations and CFIUS guidance, including a statement regarding the national security considerations that motivated the voluntary filing.

We will prepare a draft of the declaration for review by Ironside and Meridian (through BSP) prior to submission.

VI. Coordination with Other Regulatory Approvals

The CFIUS filing is independent of, but complementary to, the FERC and OPUC regulatory proceedings. While CFIUS operates under a separate statutory framework and review process, the substantive themes addressed in the CFIUS declaration — including the domestic ownership structure, the nature of the acquiring parties, and the absence of foreign government influence — are directly relevant to the regulatory analyses conducted by FERC and the OPUC. We intend to coordinate closely with BSP to ensure that the representations and factual disclosures made across all regulatory filings are consistent and mutually reinforcing.

FERC Section 203 (Docket No. EC22-143-000). The FERC application seeks approval for the transfer of jurisdictional assets, including Cascadia's FERC-licensed hydroelectric facilities, in connection with the change of control. FERC's review under Section 203 involves an assessment of, among other factors, the effect of the proposed transaction on competition, rates, and regulation, as well as the potential impact on the public interest, which may include consideration of national security implications. CFIUS clearance — even in the form of a "no action" response to a voluntary declaration — will be directly relevant to FERC's public interest analysis and will provide confirmatory evidence that the transaction does not raise national security concerns. We anticipate that Ironside and Meridian will wish to reference the CFIUS outcome in their FERC filings.

OPUC (Docket No. UM-2287). The Oregon Public Utility Commission reviews changes of control of Oregon-regulated utilities and utility-related entities. While the OPUC's review criteria differ from those of CFIUS and FERC, the overall regulatory clearance package benefits from the inclusion of CFIUS review as a demonstration of the parties' commitment to transparency and good governance. The OPUC is not directly involved in the CFIUS review process, but OPUC staff and commissioners may take note of the CFIUS filing as part of their overall assessment of the transaction.

We will coordinate with BSP on the sequencing and content of all regulatory filings to ensure consistency and to identify any potential issues that may arise from overlapping disclosure obligations. In particular, we will ensure that any representations regarding the absence of foreign ownership or control are presented in a manner that is consistent across the CFIUS declaration, the FERC application, and the OPUC application.

VII. Conclusion and Recommendation

Based on the analysis set forth in this memorandum, we reach the following conclusions and recommendation:

1. The proposed acquisition of Cascadia Renewables Holdings, Inc. by Cascadia Acquisition Corp. does not constitute a "covered transaction" under Section 721 of the Defense Production Act of 1950, as amended, because no "foreign person" (as defined at 31 C.F.R. § 800.224) is involved as an acquirer, investor, or party exercising control or governance rights in any entity in the acquisition chain.

2. There is no mandatory filing obligation under FIRRMA or the implementing regulations at 31 C.F.R. Parts 800 or 802.

3. Notwithstanding the foregoing, we strongly recommend that the parties file a voluntary short-form declaration with CFIUS to obtain safe harbor protection. This recommendation is based on:

(a) the critical infrastructure nature of Cascadia's assets, including fourteen FERC-licensed hydroelectric generation facilities, six wind farms, and three water-treatment concessions (including the Bull Run Filtration Project serving the Portland metropolitan area);

(b) the potential proximity of certain Cascadia facilities to sensitive government installations in the Pacific Northwest;

(c) the long-term hold period contemplated by Fund IV and ICM Co-Invest, which increases the value of safe harbor protection against potential future changes in the regulatory or geopolitical landscape; and

(d) the minimal cost and administrative burden of the declaration filing process, which is significantly less onerous than a full joint voluntary notice and is expected to be resolved within thirty calendar days.

4. We are prepared to draft the declaration and to coordinate with Breckenridge Sloane & Pratt LLP upon Ironside's authorization to proceed. We anticipate that the declaration can be finalized and submitted within the week of September 12-16, 2022, consistent with the target timeline discussed in Section V.C above.

We respectfully request that Ironside confirm its authorization to proceed with the filing at its earliest convenience so that we may begin preparation of the declaration and coordination with BSP.

VIII. Post-Filing Update

This section was added upon receipt of CFIUS acknowledgment and response, and supplements the original memorandum dated September 5, 2022.

Consistent with the recommendation set forth in this memorandum, a voluntary short-form declaration was prepared by Calderwood & Harkness LLP, in coordination with Breckenridge Sloane & Pratt LLP, and was submitted to CFIUS on behalf of AcquisitionCo. The declaration was accepted and acknowledged by CFIUS on September 20, 2022.

Following its review of the declaration, CFIUS took the following actions (or, more precisely, declined to take any adverse action):

(a) CFIUS did not request that the parties file a full joint voluntary notice;

(b) CFIUS did not initiate a unilateral review of the transaction under 31 C.F.R. § 800.501;

(c) CFIUS did not identify any foreign ownership issues or any other concerns relating to the national security implications of the transaction; and

(d) CFIUS indicated that no further action was required with respect to the declaration.

While the CFIUS response does not constitute a formal "clearance" in the traditional sense — inasmuch as the transaction was not a covered transaction subject to CFIUS jurisdiction — the outcome provides the practical equivalent of safe harbor protection. The parties may reference the CFIUS filing and the absence of any adverse action in their pending FERC and OPUC proceedings as confirmatory evidence of the domestic character of the acquisition and the absence of any national security concern.

We consider the CFIUS filing process to be complete. No further action is required from Ironside or Meridian with respect to CFIUS at this time. Should circumstances change in the future — for example, in connection with a subsequent change of control, recapitalization, or change in the investor base of any acquiring entity — a new CFIUS analysis would be warranted at that time.

Contact Information

Any questions regarding this memorandum should be directed to:

Pamela Cross Responsible Partner, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, New York 10004 Telephone: (212) 555-4100

Email: pcross@calderwoodharkness.com

Theresa Kim Lead Associate, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, New York 10004 Telephone: (212) 555-4127

Email: tkim@calderwoodharkness.com

CONFIDENTIALITY NOTICE: This memorandum constitutes confidential attorney-client privileged communication and attorney work product prepared by Calderwood & Harkness LLP at the request of and for the exclusive benefit of Ironside Capital Management LP. This memorandum contains legal analysis, assessments, and recommendations that are protected by the attorney-client privilege and the work product doctrine. This memorandum is not to be disclosed to, shared with, or distributed to any third party without the prior written consent of Calderwood & Harkness LLP. Any unauthorized disclosure may result in a waiver of applicable privileges. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.

Sources	Amount ($M)	Uses	Amount ($M)
Fund IV Equity Contribution	$750.0	Enterprise Value	$1,950.0
ICM Co-Invest Equity Contribution	$300.0	Estimated Transaction Costs	$50.0
Senior Secured Term Loan (Atlas National / Pinnacle)	$975.0	Working-Capital Adjustment Escrow	$25.0
Total Sources	$2,025.0	Total Uses	$2,025.0

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP
FROM: Pamela Cross, Responsible Partner, Funds & Asset Management, Calderwood & Harkness LLP Theresa Kim, Lead Associate, Funds & Asset Management, Calderwood & Harkness LLP
DATE: September 5, 2022
RE: CFIUS Voluntary Notice — Assessment and Recommendation Regarding the Proposed Acquisition of Cascadia Renewables Holdings, Inc.
MATTER NO.: 1023-00001
I. Executive Summary
Calderwood & Harkness LLP has been engaged by Ironside Capital Management LP ("Ironside" or "ICM") to assess whether a voluntary filing with the Committee on Foreign Investment in the United States ("CFIUS") is advisable in connection with the proposed acquisition of one hundred percent (100%) of the outstanding equity interests of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") by Cascadia Acquisition Corp. ("AcquisitionCo"), a newly formed Delaware corporation. AcquisitionCo is owned, directly and indirectly, by Meridian Infrastructure Partners Fund IV, LP ("Fund IV") and ICM Cascadia Co-Invest, LP ("ICM Co-Invest" or the "Vehicle"). This memorandum sets forth our analysis of the applicable legal framework, our assessment of the risks and benefits associated with a voluntary filing, and our recommendation regarding the most appropriate course of action.
The proposed transaction has an aggregate enterprise value of approximately $1,950,000,000. Total equity to be contributed to AcquisitionCo is $1,050,000,000, funded by Fund IV ($750 million, representing approximately 71.43% of the equity capitalization) and ICM Co-Invest ($300 million, representing approximately 28.57% of the equity capitalization). The balance of the capital structure will consist of $975 million in senior secured term loan financing arranged by Atlas National Bank, N.A., as lead arranger and administrative agent, and Pinnacle Credit Partners LLC, as co-lender, together with a $150 million revolving credit facility that is expected to remain undrawn at closing.
Cascadia is an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. It owns and operates a diversified portfolio of renewable energy and water infrastructure assets across the Pacific Northwest, including fourteen (14) hydroelectric generation facilities, six (6) wind farms, and three (3) water-treatment concessions located in the states of Oregon, Washington, and Idaho. Cascadia's revenue base is underpinned by long-term power-purchase agreements and municipal water-service contracts with weighted-average remaining lives of approximately twenty-two (22) years, providing substantial cash flow visibility over an extended investment horizon.
Conclusion: After a thorough review of the relevant statutory and regulatory framework, the transaction structure, and the ownership and governance arrangements of all acquiring entities, we have concluded that the proposed acquisition does not involve any "foreign person," foreign government, or foreign entity as an acquirer, investor, or party exercising control or governance rights. Accordingly, the transaction does not constitute a "covered transaction" within the meaning of Section 721 of the Defense Production Act of 1950, as amended ("DPA"), and there is no mandatory filing obligation under the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA") or the implementing regulations at 31 C.F.R. Parts 800 and 802.
Notwithstanding this conclusion, we recommend that the parties file a voluntary notice in the form of a short-form declaration pursuant to 31 C.F.R. Part 800 for the following reasons:
(a) Cascadia's assets constitute critical infrastructure under the definitions employed by the Department of Homeland Security and CFIUS, encompassing both the energy sector (hydroelectric generation and wind power) and the water and wastewater systems sector (municipal water treatment);
(b) certain of Cascadia's facilities, particularly those located in Washington and Idaho, may be situated in proximity to sensitive government installations in the Pacific Northwest, a factor that independently heightens the strategic sensitivity of the asset base;
(c) a voluntary filing that is reviewed and cleared by CFIUS — or with respect to which CFIUS takes no action within the statutory review period — provides safe harbor protection under 31 C.F.R. § 800.601, effectively immunizing the transaction from any future unilateral review or retroactive divestiture order, a benefit of particular value given the long-duration nature of Cascadia's contracts and the indefinite hold period contemplated by the sponsors; and
(d) the cost and administrative burden of a short-form declaration filing are minimal relative to the protection afforded, involving a filing of approximately five pages and a review period of thirty (30) calendar days.
We note for the record that, consistent with this recommendation, the voluntary notice was subsequently prepared and filed, and was acknowledged by CFIUS on September 20, 2022. CFIUS did not request a full joint voluntary notice, did not initiate a unilateral review, and indicated that no further action was required. The outcome of this process is discussed further in Section VIII below.
II. Background
A. The Transaction
The proposed transaction is structured as a negotiated acquisition of one hundred percent (100%) of the outstanding equity interests of CRH by AcquisitionCo. AcquisitionCo is a newly formed Delaware corporation that was organized for the sole purpose of effectuating this acquisition and will serve as the direct holding company for Cascadia following the closing.
The selling parties in the transaction (collectively, the "Selling Shareholders") are as follows:
(i) Timberline Growth Equity Fund III, LP — holding approximately sixty-two percent (62%) of the outstanding equity of CRH. Timberline Growth Equity Fund III is a growth equity fund managed by Timberline Capital Partners, a Portland-based private equity firm;
(ii) The Weir Family Trust — holding approximately eighteen percent (18%) of the outstanding equity of CRH. The Weir Family Trust is a domestic irrevocable trust established for the benefit of the family of Jonathan M. Weir, the founder and Chief Executive Officer of Cascadia; and
(iii) The Management Rollover Pool — comprising various members of Cascadia's management team who collectively hold approximately twenty percent (20%) of the outstanding equity of CRH. Approximately fifty percent (50%) of the Management Rollover Pool equity is expected to be "rolled" into the post-closing equity structure of AcquisitionCo, with the balance being cashed out at closing.
The definitive transaction agreement — the Equity Purchase Agreement (the "EPA") — was executed on September 15, 2022, among the Selling Shareholders, Cascadia, and AcquisitionCo. The EPA is governed by the laws of the State of Delaware, without regard to conflicts-of-law principles.
The sources and uses of funds for the transaction are summarized in the table below:
The senior secured term loan in the amount of $975,000,000 has been arranged by Atlas National Bank, N.A. ("Atlas National"), serving as lead arranger and administrative agent, with Pinnacle Credit Partners LLC ("Pinnacle") serving as co-lender. In addition, a revolving credit facility in the amount of $150,000,000 has been committed by Atlas National, which is expected to remain undrawn at closing and is therefore not included in the sources and uses above. The revolving credit facility will be available for working capital and general corporate purposes of Cascadia following the closing.
The closing of the transaction is subject to satisfaction of customary conditions precedent, including the receipt of certain regulatory approvals. The following regulatory approvals are required or have been sought:
(a) FERC Section 203 Approval: An application pursuant to Section 203 of the Federal Power Act has been filed with the Federal Energy Regulatory Commission under Docket No. EC22-143-000. The application was filed on October 19, 2022, and seeks approval for the transfer of jurisdictional assets, including Cascadia's FERC-licensed hydroelectric facilities.
(b) Oregon Public Utility Commission Approval: An application has been filed with the Oregon Public Utility Commission ("OPUC") under Docket No. UM-2287, seeking approval for the change of control of Cascadia's Oregon-regulated operations. The OPUC application was filed on October 14, 2022.
(c) CFIUS (Voluntary): As discussed in this memorandum, we have recommended and the parties have filed a voluntary short-form declaration with CFIUS. This filing is precautionary and is not required by law.
No Hart-Scott-Rodino filing is required, as both acquiring entities have confirmed that the applicable filing thresholds and exemptions have been reviewed and a filing obligation does not arise under the current facts.
B. The Acquiring Parties
1. Ironside Capital Management LP
Ironside Capital Management LP ("Ironside" or "ICM") is a Delaware limited partnership headquartered at 590 Madison Avenue, 38th Floor, New York, New York 10022. Ironside was founded in 2009 by Marcus J. Calloway and is registered as an investment adviser with the U.S. Securities and Exchange Commission ("SEC") pursuant to the Investment Advisers Act of 1940, as amended. As of the most recent reporting period, Ironside manages total assets under management ("AUM") of approximately $14.8 billion across a range of strategies, including private equity, real assets, credit, and infrastructure.
Ironside's infrastructure strategy, which is led by Renata Obasi, Senior Managing Director, Infrastructure, currently encompasses approximately $3.2 billion in infrastructure-related assets deployed across three dedicated infrastructure investment vehicles. The Cascadia transaction represents Ironside's largest single infrastructure investment to date and will be co-invested alongside Meridian Infrastructure Partners through the ICM Co-Invest vehicle described below.
Ironside is wholly owned by its partners, all of whom are United States citizens or permanent residents. Ironside does not have any foreign government or foreign government-controlled entity among its ownership or governance structure. The firm's governing documents vest all material investment decisions, including the authority to approve, execute, and manage portfolio investments, in the Investment Committee, which is composed entirely of U.S. persons.
2. ICM Cascadia Co-Invest, LP
ICM Cascadia Co-Invest, LP ("ICM Co-Invest" or the "Vehicle") is a Delaware limited partnership formed on July 22, 2022 (Delaware Secretary of State File No. 7439218; Employer Identification Number 88-3921457). The registered agent for ICM Co-Invest is Cascade Systems, located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
ICM Co-Invest was formed for the sole purpose of making the co-investment in the Cascadia transaction alongside Fund IV. The ownership structure of ICM Co-Invest is as follows:
• General Partner: Meridian Infrastructure GP IV LLC — holding a 0.01% general partner interest with a total commitment of $30,000.
• Limited Partner: Ironside Capital Management LP — holding a 99.99% limited partner interest with a total commitment of $299,970,000.
The total committed capital of ICM Co-Invest is $300,000,000. As of the date of this memorandum, a single capital call in the amount of $22,500,000 was issued on August 15, 2022, and has been fully funded.
ICM Co-Invest does not have any foreign persons, foreign governments, or foreign government-controlled entities among its partners. Meridian Infrastructure GP IV LLC, in its capacity as general partner, has the authority to manage and direct the affairs of ICM Co-Invest, subject to certain reserved matters that require the consent of Ironside as the sole limited partner.
3. Meridian Infrastructure Partners LP
Meridian Infrastructure Partners LP ("Meridian") is a Delaware limited partnership headquartered at 200 Clarendon Street, Suite 4200, Boston, Massachusetts 02116. Meridian was co-founded by David R. Hargreaves, who serves as Managing Partner. As of the most recent reporting period, Meridian manages total AUM of approximately $22.5 billion across a series of infrastructure-focused funds and related co-investment vehicles. Meridian's investment strategy is focused on core and core-plus infrastructure assets in North America, with particular emphasis on the energy, water, transportation, and digital infrastructure sectors.
Meridian is represented in connection with the Cascadia transaction by Breckenridge Sloane & Pratt LLP ("BSP"), with Charles A. Delacroix serving as lead partner. We have coordinated with BSP on all matters relating to the CFIUS analysis, including the look-through analysis of Fund IV's limited partner composition discussed in Section III.C below.
4. Meridian Infrastructure Partners Fund IV, LP ("Fund IV")
Meridian Infrastructure Partners Fund IV, LP ("Fund IV") is a Delaware limited partnership with total committed capital of approximately $6.2 billion. Fund IV is a 2021 vintage infrastructure fund targeting investments in North American energy, water, transport, and digital infrastructure assets. Fund IV has committed $750,000,000 to the Cascadia transaction, representing its single largest platform investment.
The general partner of Fund IV is Meridian Infrastructure GP IV LLC, a Delaware limited liability company. The managers of Meridian Infrastructure GP IV LLC are David R. Hargreaves, Lillian Fong, and Graham Whitfield, each of whom is a United States citizen.
5. Meridian Infrastructure GP IV LLC
Meridian Infrastructure GP IV LLC is a Delaware limited liability company that serves as the general partner of both Fund IV and ICM Co-Invest. As noted above, its managers are David R. Hargreaves, Lillian Fong, and Graham Whitfield. The LLC does not have any foreign persons among its members or managers.
C. The Target
Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH") is a corporation organized under the laws of the State of Oregon. Cascadia's principal office is located at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. The company was founded in 2006 by Jonathan M. Weir, who continues to serve as Chief Executive Officer. Sandra K. Llewellyn serves as Chief Financial Officer.
For the fiscal year ended December 31, 2021, Cascadia reported total revenue of approximately $487 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $138 million, as audited by Halstead & Greer LLP, Cascadia's independent auditor. At the agreed enterprise value of $1,950,000,000, the implied EV/EBITDA multiple is approximately 14.1x, which is consistent with recent transaction multiples observed in the Pacific Northwest renewable energy and water infrastructure sectors.
Cascadia's asset portfolio comprises the following principal categories:
(i) Hydroelectric Facilities (14): Cascadia owns and operates fourteen FERC-licensed hydroelectric generation facilities located across Oregon, Washington, and Idaho. These facilities range in size from approximately 8 MW to 120 MW and have a combined installed capacity of approximately 640 MW. Cascadia's hydroelectric assets are the company's largest revenue contributor and benefit from long-term power-purchase agreements with investment-grade utility counterparties.
(ii) Wind Farms (6): Cascadia owns and operates six onshore wind generation facilities located in Oregon and Washington. These facilities have a combined installed capacity of approximately 480 MW and are supported by long-term power-purchase agreements with remaining terms ranging from approximately 12 to 25 years.
(iii) Water-Treatment Concessions (3): Cascadia holds three long-term concession agreements with municipal water authorities in Oregon, pursuant to which it designs, builds, operates, and maintains water-treatment facilities. The most significant of these concessions is the Bull Run Filtration Project, a major municipal water-treatment facility serving the Portland Metropolitan Water District. The Bull Run concession was originally executed in approximately 2018, has a total term of forty (40) years, and generates annual revenue of approximately $64 million.
Cascadia holds various federal and state regulatory licenses and permits in connection with its operations, including FERC licenses for its hydroelectric facilities, state-issued utility permits, and water rights issued under the applicable state water codes. These licenses and permits are integral to Cascadia's operations and will transfer to AcquisitionCo (or remain with Cascadia, as the case may be) upon closing, subject to receipt of the required regulatory approvals described in Section II.A above.
III. CFIUS Legal Framework
A. Statutory and Regulatory Authority
The Committee on Foreign Investment in the United States ("CFIUS") is an interagency committee of the United States Government established pursuant to Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565) (the "DPA"). CFIUS is chaired by the Secretary of the Treasury and includes representatives from the Departments of State, Defense, Commerce, Homeland Security, Energy, and Justice, as well as representatives from the Office of the U.S. Trade Representative, the Office of Science and Technology Policy, and, as appropriate, other executive departments and agencies.
The scope and procedures of CFIUS review were substantially expanded by the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA"), which was enacted as part of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Pub. L. No. 115-232). FIRRMA broadened CFIUS's jurisdiction to encompass certain non-controlling investments and real estate transactions, established a mandatory declaration requirement for certain transactions, and introduced the short-form declaration process as an alternative to the traditional full joint voluntary notice.
The implementing regulations promulgated by the Treasury Department pursuant to FIRRMA are codified at 31 C.F.R. Parts 800 and 802. Part 800 governs "covered control transactions" (mergers, acquisitions, or takeovers resulting in foreign control of a U.S. business) and "covered investments" (certain non-controlling investments in U.S. businesses involved in critical technologies, critical infrastructure, or sensitive personal data). Part 802 governs "covered real estate transactions" involving the purchase or lease of certain real estate at or in proximity to specified military installations and other sensitive government facilities.
CFIUS is authorized to review "covered transactions" — defined broadly as any transaction by or with any "foreign person" that could result in foreign control of any U.S. business, or any non-controlling investment by a foreign person in a U.S. business that is involved in critical technology, critical infrastructure, or sensitive personal data (collectively, "TID U.S. businesses"). Upon review, CFIUS may negotiate mitigation agreements, refer the transaction to the President for action (including blocking or ordering divestiture), or clear the transaction with no conditions.
B. "Covered Transaction" Analysis
The threshold inquiry in any CFIUS analysis is whether the transaction at issue constitutes a "covered transaction" within the meaning of the DPA and the implementing regulations. A covered transaction — whether a covered control transaction under 31 C.F.R. § 800.210 or a covered investment under 31 C.F.R. § 800.211 — requires the involvement of a "foreign person" as a party to the transaction.
The term "foreign person" is defined at 31 C.F.R. § 800.224 to mean:
(a) any foreign national (i.e., any individual who is not a United States citizen or national);
(b) any foreign government; or
(c) any entity organized under the laws of a foreign state or having its principal place of business in a foreign state.
In the present case, every entity in the acquisition chain is organized under the laws of a state of the United States:
• AcquisitionCo — a Delaware corporation;
• Fund IV — a Delaware limited partnership;
• ICM Co-Invest — a Delaware limited partnership;
• Meridian Infrastructure GP IV LLC — a Delaware limited liability company;
• Ironside Capital Management LP — a Delaware limited partnership; and
• Meridian Infrastructure Partners LP — a Delaware limited partnership.
No foreign government holds any ownership interest, directly or indirectly, in any of the entities listed above. No foreign national serves as a manager, director, officer, or general partner of any acquiring entity with authority to make investment or governance decisions.
On the basis of this analysis, the proposed acquisition of Cascadia does not involve any "foreign person" and therefore does not constitute a "covered transaction" under Section 721 of the DPA.
C. Look-Through Analysis — Investor Base Considerations
Although the acquiring entities are all U.S.-organized entities, CFIUS may, in appropriate circumstances, look through a fund structure to assess whether foreign persons exercise de facto control or hold board seats, observer seats, information rights, veto rights, or other governance rights that could confer influence over investment decisions. This "look-through" analysis is grounded in 31 C.F.R. § 800.256, which addresses indirect control and the concept of control exercised through a chain of entities.
Accordingly, we have undertaken a review of the investor bases of both Ironside and Meridian to assess whether any foreign person may be considered to exercise control or hold governance rights in any acquiring entity.
Ironside's Investor Base. Ironside is an SEC-registered investment adviser with a diversified institutional investor base that includes domestic pension funds, endowments, foundations, insurance companies, and high-net-worth individuals. While the specific LP composition of Ironside's funds is not detailed in this memorandum for confidentiality reasons, Ironside has confirmed through its internal compliance review that no foreign government or foreign government-controlled entity holds, directly or indirectly, an interest in any Ironside-managed vehicle that is sufficient to confer control or governance rights over Ironside or over any investment decision made by Ironside or its managed vehicles. Similarly, no single foreign limited partner holds a board seat, advisory committee seat with veto authority, or observer right that could confer influence over investment decisions related to the Cascadia transaction. To the extent that foreign limited partners participate in Ironside's funds, such participation is passive in nature and does not confer any governance or control rights.
Meridian's Investor Base. Breckenridge Sloane & Pratt LLP ("BSP"), serving as counsel to Meridian in connection with the Cascadia transaction, has represented to us — through Charles A. Delacroix, lead partner — that Meridian Fund IV's limited partners do not include any foreign government or foreign government-controlled entity that holds governance or control rights over Fund IV or over Meridian Infrastructure GP IV LLC. BSP has further confirmed that no limited partner of Fund IV, whether domestic or foreign, holds veto rights, board seats, or other governance rights that would confer upon such limited partner the ability to direct, control, or materially influence investment decisions made by Meridian GP IV LLC in its capacity as general partner of Fund IV.
We have relied on these representations in reaching our conclusion. Should any of these representations prove inaccurate or should circumstances change — for example, if a foreign government or foreign government-controlled entity were to acquire governance or control rights in any acquiring entity prior to closing — the analysis set forth herein would need to be revisited, and a mandatory filing obligation could arise.
Conclusion. Based on the information available to us as of the date of this memorandum, no "foreign person" controls or exercises governance rights in any entity in the acquisition chain. The proposed transaction does not appear to constitute a "covered transaction" under Section 721 of the DPA.
D. Mandatory Declaration Requirements
FIRRMA introduced a mandatory declaration requirement under 31 C.F.R. § 800.401, which applies to certain transactions involving foreign government interests and TID U.S. businesses. Specifically, a mandatory declaration is required where:
(i) the transaction would result in the acquisition of a "substantial interest" (defined as a voting interest of twenty-five percent (25%) or more) in a TID U.S. business; and
(ii) a foreign government holds, directly or indirectly, a "substantial interest" (defined as a voting interest of forty-nine percent (49%) or more) in the foreign person that is acquiring the substantial interest in the TID U.S. business.
This mandatory declaration requirement is plainly inapplicable to the present transaction because no foreign person — let alone a foreign government — holds a substantial interest in any of the acquiring entities. There is no foreign person acquiring any interest, controlling or otherwise, in Cascadia or in any entity in the acquisition chain.
Accordingly, no mandatory filing obligation exists under FIRRMA or the implementing regulations.
IV. Risk Assessment: Why a Voluntary Filing Is Nonetheless Advisable
Although we have concluded that the proposed transaction does not constitute a "covered transaction" and that no mandatory filing obligation exists, we nonetheless recommend that the parties file a voluntary short-form declaration with CFIUS. This recommendation is based on a careful assessment of the risks and benefits associated with a voluntary filing in the context of this particular transaction, as set forth below.
A. Critical Infrastructure Profile
Cascadia's assets fall squarely within categories that have been identified by the Department of Homeland Security ("DHS") and by CFIUS as critical infrastructure sectors of particular concern to national security. The DHS Cybersecurity and Infrastructure Security Agency ("CISA") has designated sixteen critical infrastructure sectors, among which the following are directly relevant to Cascadia's operations:
Energy Sector. Cascadia owns and operates fourteen hydroelectric generation facilities and six wind farms providing electric power to the Pacific Northwest grid. Hydroelectric assets are subject to specific federal oversight under the Federal Power Act and are licensed by the Federal Energy Regulatory Commission. The energy sector is one of the most scrutinized sectors in the CFIUS context, given the potential national security implications of disruptions to the electric grid. Cascadia's hydroelectric facilities, in particular, provide baseload and peaking power that is integral to grid reliability in the Pacific Northwest.
Water and Wastewater Systems Sector. Cascadia holds three long-term concession agreements for the design, construction, operation, and maintenance of water-treatment facilities. The most significant of these is the Bull Run Filtration Project, a major municipal water-treatment facility serving the Portland Metropolitan Water District. The water and wastewater systems sector has been the subject of increasing attention from CFIUS and from Congress in recent years, reflecting growing concerns about the vulnerability of water infrastructure to both physical and cyber threats.
While the critical infrastructure nature of Cascadia's assets does not, standing alone, trigger CFIUS jurisdiction in the absence of a foreign person, the sensitivity of these assets materially heightens the risk that CFIUS could in the future exercise its authority to initiate a "non-notified" or "unilateral" review of the transaction under 31 C.F.R. § 800.501. This authority permits CFIUS to review any transaction that it has reason to believe may constitute a covered transaction, even if no voluntary notice has been filed. Should circumstances change after closing — for example, if new information were to emerge regarding indirect foreign interests in any acquiring entity, or if regulatory developments were to broaden the definition of "foreign person" or "covered transaction" — the absence of a prior CFIUS filing could leave the parties exposed to a retroactive review, with potentially severe consequences including the possibility of a divestiture order.
B. Proximity to Sensitive Government Installations
We have identified a secondary risk factor relating to the geographic location of certain Cascadia facilities. Specifically, certain of Cascadia's hydroelectric installations in the states of Washington and Idaho may be situated in proximity to United States military installations, defense facilities, or other sensitive government properties. While we have not conducted a definitive geospatial analysis as part of this engagement, publicly available information suggests that at least some of Cascadia's Washington-based facilities are located within the general vicinity of military and defense-related installations in the Pacific Northwest.
Under 31 C.F.R. Part 802, CFIUS has expanded jurisdiction over certain real estate transactions involving the purchase or lease of real property that is located within specified geographic boundaries near designated military installations. While the Cascadia transaction is structured as a control transaction (an acquisition of equity) rather than a real estate transaction, and therefore Part 802 does not directly apply, the proximity factor underscores the overall strategic sensitivity of the asset base and provides an additional basis for seeking CFIUS clearance.
In our experience, CFIUS staff are attuned to proximity issues even in the context of control transactions that do not independently trigger Part 802, particularly where the assets in question involve critical infrastructure. A voluntary filing allows the parties to affirmatively address any proximity concerns and to provide CFIUS with the information necessary to satisfy itself that no national security risk exists.
C. Safe Harbor Benefits
Perhaps the most compelling reason to file a voluntary declaration is the safe harbor protection that a completed CFIUS review affords. Under 31 C.F.R. § 800.601, once CFIUS has completed its review of a transaction — whether by concluding that the transaction is not a covered transaction, by clearing the transaction, or by taking no action within the applicable statutory review period — CFIUS generally will not re-initiate review of the same transaction. The safe harbor is subject to narrow exceptions, principally relating to the submission of materially false or misleading information or the omission of material information in the filing.
The safe harbor benefit is of particular significance in the Cascadia transaction for the following reasons:
(i) Long-Duration Assets. Cascadia's concession contracts and power-purchase agreements have a weighted-average remaining life of approximately twenty-two (22) years. Over this extended time horizon, the political, regulatory, and geopolitical landscape may evolve in ways that are difficult to predict. Changes in CFIUS policy, expansions of the statutory framework, or new concerns about foreign influence in critical infrastructure sectors could, in the absence of safe harbor protection, expose the transaction to a retroactive review years after closing.
(ii) Indefinite Hold Period. Fund IV and ICM Co-Invest contemplate an indefinite hold period for the Cascadia investment, reflecting the long-lived, contracted nature of the underlying assets. Unlike a typical private equity investment with a defined exit horizon, the Cascadia investment may be held for a period significantly exceeding the typical fund life. The safe harbor provides certainty and stability throughout this extended hold period.
(iii) Protection Against Divestiture Risk. In the absence of safe harbor protection, CFIUS retains the authority to initiate a unilateral review at any time and, following such review, to recommend that the President order divestiture. While the likelihood of such an outcome in a transaction involving entirely domestic parties may be low, the consequences of a forced divestiture — particularly with respect to regulated, long-lived infrastructure assets — would be severe. The safe harbor effectively eliminates this risk.
D. Precedent in Infrastructure Transactions
In recent years, CFIUS has demonstrated a pattern of increased scrutiny of transactions in the energy and water infrastructure sectors, even where foreign ownership issues are not immediately apparent. Several transactions involving domestic private equity funds and infrastructure funds with diversified investor bases that include foreign limited partners have been the subject of CFIUS inquiries, both formal and informal. While these inquiries have not, to our knowledge, resulted in adverse action in cases where the foreign LP participation was passive and non-controlling, the mere fact of a CFIUS inquiry — particularly if it occurs after closing — can be disruptive to operations and costly to manage.
Filing a voluntary declaration signals good faith and transparency on the part of the acquiring parties. In the context of a transaction that is simultaneously subject to review by the Federal Energy Regulatory Commission (pursuant to Section 203 of the Federal Power Act) and the Oregon Public Utility Commission, a prior CFIUS clearance — even one that is precautionary in nature — strengthens the overall regulatory narrative and may be referenced in other proceedings as confirmatory of the domestic character of the acquisition. Regulators reviewing parallel applications are likely to view favorably the fact that the parties proactively sought and obtained CFIUS review.
E. Cost-Benefit Analysis
The cost-benefit calculus strongly favors a voluntary filing:
Cost and Burden. A short-form declaration under 31 C.F.R. § 800.401(f) is significantly less burdensome than a full joint voluntary notice. The declaration is a concise filing, typically limited to approximately five (5) pages, and includes basic information about the transaction parties, the transaction structure, the target business, and a representation regarding the absence of foreign ownership or control. The preparation time for a declaration, based on our experience with similar filings, is estimated at approximately 15-25 attorney hours. Filing fees for a declaration are minimal to none; the standard filing fee for a full joint voluntary notice, which is assessed on a sliding scale based on transaction value and which could be substantial for a transaction of this size, does not apply to a declaration.
Timeline. CFIUS has thirty (30) calendar days from the date of acceptance of a declaration to take one of the following actions: (i) request that the parties file a full joint voluntary notice; (ii) inform the parties that CFIUS is not able to conclude action on the basis of the declaration and that the parties may, if they choose, file a full joint voluntary notice; (iii) initiate a unilateral review; or (iv) notify the parties that the Committee has concluded all action with respect to the declaration. In a case such as this, where the domestic ownership structure is straightforward and well-documented, we expect CFIUS to conclude its assessment promptly and to take no adverse action. Based on current processing times, we anticipate that the Committee will respond within the thirty-day period without requesting a full notice.
Benefit. As discussed above, the benefits include safe harbor protection, risk mitigation against future unilateral review, and enhancement of the parties' overall regulatory posture in connection with parallel FERC and OPUC proceedings.
In light of this analysis, the expected benefits of a voluntary declaration filing substantially outweigh the costs and burdens involved.
V. Recommended Filing Approach
A. Declaration vs. Full Joint Voluntary Notice
Based on the analysis set forth in Sections III and IV above, we recommend filing a short-form declaration pursuant to 31 C.F.R. § 800.401(f) rather than a full joint voluntary notice under 31 C.F.R. § 800.501. This recommendation is grounded in the following considerations:
(a) No foreign person is involved in the transaction, and the transaction does not constitute a "covered transaction." A full joint voluntary notice is neither required nor warranted under these circumstances.
(b) The filing is precautionary in nature and is intended to obtain practical safe harbor protection. A short-form declaration is the appropriate vehicle for a precautionary filing where the jurisdictional basis for CFIUS review is absent or uncertain.
(c) A declaration will be sufficient to obtain CFIUS acknowledgment and the practical equivalent of safe harbor protection. CFIUS has consistently treated declarations resulting in a "no action" response as providing the same safe harbor benefits as a completed review of a full joint voluntary notice.
We note that, in the event CFIUS were to request a full joint voluntary notice after reviewing the declaration — a possibility that we consider remote in light of the domestic ownership structure — the parties would have the option to comply with such a request at that time. The submission of a declaration does not preclude the subsequent filing of a full notice, and we would be prepared to assist the parties in preparing a full notice on an expedited basis if necessary.
B. Filing Party
The declaration should be filed by or on behalf of AcquisitionCo, as the entity directly acquiring the equity of Cascadia. AcquisitionCo will be identified as the "acquiring party" in the declaration, with supporting information regarding the upstream ownership and governance structure to be provided by both Meridian (through BSP) and Ironside (through Calderwood & Harkness).
Effective coordination with Meridian's counsel, Charles A. Delacroix at BSP, will be essential to ensure that the representations made in the declaration regarding Fund IV's limited partner composition and governance arrangements are consistent with BSP's representations to us and with the facts as known to Meridian. We have already initiated preliminary discussions with Mr. Delacroix on this point and have received his cooperation and concurrence with the proposed filing approach.
C. Timing
We recommend filing the declaration as soon as practicable following execution of the Equity Purchase Agreement on September 15, 2022. Our target is to prepare and submit the declaration during the week of September 12-16, 2022, which would allow the thirty-day CFIUS review period to run concurrently with the preparation and filing of the FERC and OPUC applications.
This timeline is consistent with the broader regulatory filing schedule:
• OPUC application: to be filed on or about October 14, 2022;
• FERC Section 203 application: to be filed on or about October 19, 2022.
By filing the CFIUS declaration in advance of the FERC and OPUC applications, the parties will maximize the likelihood that CFIUS review will be concluded — or at least substantially advanced — before the FERC and OPUC proceedings require substantive engagement. Early resolution of any potential CFIUS concerns will support the overall transaction timetable and the satisfaction of closing conditions. In the event that CFIUS clearance is obtained prior to the filing of the FERC and OPUC applications, the clearance can be affirmatively referenced in those applications.
D. Content of the Declaration
The declaration will include the following information, consistent with the requirements of 31 C.F.R. § 800.403:
(i) Standard identifying information for each party to the transaction, including the acquiring parties (AcquisitionCo, Fund IV, ICM Co-Invest, Meridian GP IV LLC, Ironside, and Meridian) and the target (Cascadia), with full legal names, jurisdictions of organization, principal office addresses, and contact information for responsible persons;
(ii) a description of the transaction structure, including the formation and capitalization of AcquisitionCo, the sources and uses of funds, the equity and debt financing arrangements, and the acquisition chain from Fund IV and ICM Co-Invest through Meridian GP IV LLC to AcquisitionCo;
(iii) a confirmation that no foreign person, foreign government, or foreign government-controlled entity has control or governance rights in any acquiring entity, supported by the representations of Ironside and BSP (on behalf of Meridian) described in Section III.C above;
(iv) a summary of Cascadia's business, including a description of its critical infrastructure assets (hydroelectric facilities, wind farms, and water-treatment concessions), its revenue profile, and the jurisdictions in which it operates;
(v) a representation that the filing is voluntary and precautionary, and that the parties do not believe the transaction constitutes a "covered transaction" under Section 721 of the DPA; and
(vi) such other information as may be required or appropriate under the applicable regulations and CFIUS guidance, including a statement regarding the national security considerations that motivated the voluntary filing.
We will prepare a draft of the declaration for review by Ironside and Meridian (through BSP) prior to submission.
VI. Coordination with Other Regulatory Approvals
The CFIUS filing is independent of, but complementary to, the FERC and OPUC regulatory proceedings. While CFIUS operates under a separate statutory framework and review process, the substantive themes addressed in the CFIUS declaration — including the domestic ownership structure, the nature of the acquiring parties, and the absence of foreign government influence — are directly relevant to the regulatory analyses conducted by FERC and the OPUC. We intend to coordinate closely with BSP to ensure that the representations and factual disclosures made across all regulatory filings are consistent and mutually reinforcing.
FERC Section 203 (Docket No. EC22-143-000). The FERC application seeks approval for the transfer of jurisdictional assets, including Cascadia's FERC-licensed hydroelectric facilities, in connection with the change of control. FERC's review under Section 203 involves an assessment of, among other factors, the effect of the proposed transaction on competition, rates, and regulation, as well as the potential impact on the public interest, which may include consideration of national security implications. CFIUS clearance — even in the form of a "no action" response to a voluntary declaration — will be directly relevant to FERC's public interest analysis and will provide confirmatory evidence that the transaction does not raise national security concerns. We anticipate that Ironside and Meridian will wish to reference the CFIUS outcome in their FERC filings.
OPUC (Docket No. UM-2287). The Oregon Public Utility Commission reviews changes of control of Oregon-regulated utilities and utility-related entities. While the OPUC's review criteria differ from those of CFIUS and FERC, the overall regulatory clearance package benefits from the inclusion of CFIUS review as a demonstration of the parties' commitment to transparency and good governance. The OPUC is not directly involved in the CFIUS review process, but OPUC staff and commissioners may take note of the CFIUS filing as part of their overall assessment of the transaction.
We will coordinate with BSP on the sequencing and content of all regulatory filings to ensure consistency and to identify any potential issues that may arise from overlapping disclosure obligations. In particular, we will ensure that any representations regarding the absence of foreign ownership or control are presented in a manner that is consistent across the CFIUS declaration, the FERC application, and the OPUC application.
VII. Conclusion and Recommendation
Based on the analysis set forth in this memorandum, we reach the following conclusions and recommendation:
1. The proposed acquisition of Cascadia Renewables Holdings, Inc. by Cascadia Acquisition Corp. does not constitute a "covered transaction" under Section 721 of the Defense Production Act of 1950, as amended, because no "foreign person" (as defined at 31 C.F.R. § 800.224) is involved as an acquirer, investor, or party exercising control or governance rights in any entity in the acquisition chain.
2. There is no mandatory filing obligation under FIRRMA or the implementing regulations at 31 C.F.R. Parts 800 or 802.
3. Notwithstanding the foregoing, we strongly recommend that the parties file a voluntary short-form declaration with CFIUS to obtain safe harbor protection. This recommendation is based on:
(a) the critical infrastructure nature of Cascadia's assets, including fourteen FERC-licensed hydroelectric generation facilities, six wind farms, and three water-treatment concessions (including the Bull Run Filtration Project serving the Portland metropolitan area);
(b) the potential proximity of certain Cascadia facilities to sensitive government installations in the Pacific Northwest;
(c) the long-term hold period contemplated by Fund IV and ICM Co-Invest, which increases the value of safe harbor protection against potential future changes in the regulatory or geopolitical landscape; and
(d) the minimal cost and administrative burden of the declaration filing process, which is significantly less onerous than a full joint voluntary notice and is expected to be resolved within thirty calendar days.
4. We are prepared to draft the declaration and to coordinate with Breckenridge Sloane & Pratt LLP upon Ironside's authorization to proceed. We anticipate that the declaration can be finalized and submitted within the week of September 12-16, 2022, consistent with the target timeline discussed in Section V.C above.
We respectfully request that Ironside confirm its authorization to proceed with the filing at its earliest convenience so that we may begin preparation of the declaration and coordination with BSP.
VIII. Post-Filing Update
This section was added upon receipt of CFIUS acknowledgment and response, and supplements the original memorandum dated September 5, 2022.
Consistent with the recommendation set forth in this memorandum, a voluntary short-form declaration was prepared by Calderwood & Harkness LLP, in coordination with Breckenridge Sloane & Pratt LLP, and was submitted to CFIUS on behalf of AcquisitionCo. The declaration was accepted and acknowledged by CFIUS on September 20, 2022.
Following its review of the declaration, CFIUS took the following actions (or, more precisely, declined to take any adverse action):
(a) CFIUS did not request that the parties file a full joint voluntary notice;
(b) CFIUS did not initiate a unilateral review of the transaction under 31 C.F.R. § 800.501;
(c) CFIUS did not identify any foreign ownership issues or any other concerns relating to the national security implications of the transaction; and
(d) CFIUS indicated that no further action was required with respect to the declaration.
While the CFIUS response does not constitute a formal "clearance" in the traditional sense — inasmuch as the transaction was not a covered transaction subject to CFIUS jurisdiction — the outcome provides the practical equivalent of safe harbor protection. The parties may reference the CFIUS filing and the absence of any adverse action in their pending FERC and OPUC proceedings as confirmatory evidence of the domestic character of the acquisition and the absence of any national security concern.
We consider the CFIUS filing process to be complete. No further action is required from Ironside or Meridian with respect to CFIUS at this time. Should circumstances change in the future — for example, in connection with a subsequent change of control, recapitalization, or change in the investor base of any acquiring entity — a new CFIUS analysis would be warranted at that time.
Contact Information
Any questions regarding this memorandum should be directed to:
Pamela Cross Responsible Partner, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, New York 10004 Telephone: (212) 555-4100
Email: pcross@calderwoodharkness.com
Theresa Kim Lead Associate, Funds & Asset Management Calderwood & Harkness LLP 125 Broad Street, 44th Floor New York, New York 10004 Telephone: (212) 555-4127
Email: tkim@calderwoodharkness.com
CONFIDENTIALITY NOTICE: This memorandum constitutes confidential attorney-client privileged communication and attorney work product prepared by Calderwood & Harkness LLP at the request of and for the exclusive benefit of Ironside Capital Management LP. This memorandum contains legal analysis, assessments, and recommendations that are protected by the attorney-client privilege and the work product doctrine. This memorandum is not to be disclosed to, shared with, or distributed to any third party without the prior written consent of Calderwood & Harkness LLP. Any unauthorized disclosure may result in a waiver of applicable privileges. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.
Sources | Amount ($M) | Uses | Amount ($M)
Fund IV Equity Contribution | $750.0 | Enterprise Value | $1,950.0
ICM Co-Invest Equity Contribution | $300.0 | Estimated Transaction Costs | $50.0
Senior Secured Term Loan (Atlas National / Pinnacle) | $975.0 | Working-Capital Adjustment Escrow | $25.0
Total Sources | $2,025.0 | Total Uses | $2,025.0

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1023-00001

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