1023-00001 · Ironside Capital Management LP · Regulatory

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CALDERWOOD & HARKNESS LLP Attorneys at Law 125 Broad Street, 44th Floor New York, NY 10004 Tel: (212) 558-4000

Fax: (212) 558-3588

www.calderwoodharkness.com

December 16, 2022

Matter No. 1023-00001

VIA EMAIL AND HAND DELIVERY

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

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

Re: FERC §203 Approval — Transfer of Jurisdictional Facilities of Cascadia Renewables Holdings, Inc.; FERC Docket No. EC22-143-000

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL

Dear Marcus and Renata:

I. Introduction and Purpose

We write to inform you that on December 15, 2022, the Federal Energy Regulatory Commission ("FERC" or the "Commission") issued its order (the "Order") approving the application filed under Section 203 of the Federal Power Act, 16 U.S.C. § 824b ("Section 203"), for the proposed transfer of the jurisdictional facilities of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Company"). A copy of the Order will be forwarded to you upon receipt from lead transaction counsel, as discussed further below.

As you will recall, the Section 203 application was filed on October 19, 2022, and was assigned FERC Docket No. EC22-143-000. The application was filed in connection with the proposed acquisition of 100% of the outstanding equity interests of Cascadia by Cascadia Acquisition Corp., a Delaware corporation (the "Acquisition Vehicle"), which is to be jointly owned by Meridian Infrastructure Partners Fund IV, LP ("Meridian Fund IV") (holding a 71.43% interest, reflecting a $750 million equity commitment) and ICM Cascadia Co-Invest, LP ("ICM Co-Invest") (holding a 28.57% interest, reflecting a $300 million equity commitment). As you know, ICM Co-Invest is the co-investment vehicle established by Ironside Capital Management LP ("Ironside") for purposes of this transaction.

The issuance of the Order represents a significant milestone in the transaction and constitutes the satisfaction of one of the principal regulatory conditions to closing under that certain Equity Purchase Agreement, dated as of September 15, 2022, by and among the Acquisition Vehicle, the Company, and the equity holders of the Company named therein (as amended by the First Amendment to the Equity Purchase Agreement, dated as of November 22, 2022, the "EPA"). We summarize below the key findings of the Order, the conditions attached to the approval, and certain timing considerations that are particularly relevant in light of the current status of the transaction.

II. Background of the FERC §203 Application

By way of brief background, Section 203 of the Federal Power Act requires prior authorization from FERC before any public utility may dispose of jurisdictional facilities, or before any entity may acquire or merge with a public utility, where such disposition, acquisition, or merger exceeds a specified monetary threshold. This authorization requirement extends to the transfer of control of FERC-licensed hydroelectric projects, which is directly relevant to the Cascadia transaction.

Cascadia currently owns and operates fourteen (14) hydroelectric generation facilities located across the states of Oregon, Washington, and Idaho. Each of these facilities operates under a separate FERC-issued license, and together they represent the core of Cascadia's regulated generation portfolio. The facilities range in nameplate capacity from approximately 12 megawatts (the Trapper Creek facility in Idaho) to approximately 187 megawatts (the Columbia Bend facility in Washington), with aggregate installed capacity of approximately 872 megawatts.

The Section 203 application sought FERC's approval for the indirect transfer of control of these fourteen licensed facilities from the current ownership structure — consisting of Timberline Growth Equity Fund III, LP ("Timberline"), which holds approximately 62% of the equity, the Weir Family Trust, which holds approximately 18%, and the Company's management team, which holds the remaining approximately 20% — to the Acquisition Vehicle and, through it, to Meridian Fund IV and ICM Co-Invest as the ultimate beneficial owners.

The application was prepared and filed by Breckenridge Sloane & Pratt LLP ("BSP"), acting as lead regulatory counsel on behalf of Meridian Infrastructure Partners LP ("Meridian") and the Acquisition Vehicle. Calderwood & Harkness LLP ("C&H") provided input on behalf of ICM Co-Invest with respect to the co-investment structure, Ironside's investment history, and the absence of any competing energy assets held by Ironside or its affiliates. Throughout the FERC review process, C&H coordinated closely with BSP — specifically, with Charles A. Delacroix, partner at BSP — on all issues relevant to Ironside's co-investment position, including responding to a staff data request dated November 3, 2022, regarding the organizational structure and affiliates of ICM Co-Invest.

We note for completeness that two other regulatory processes are relevant to the closing of the acquisition. First, a voluntary notice was filed with the Committee on Foreign Investment in the United States ("CFIUS") and was acknowledged on September 20, 2022. No foreign ownership, control, or influence concerns were identified, and CFIUS has indicated that no further action is required. Second, an application was filed with the Oregon Public Utility Commission ("OPUC") on October 14, 2022 (OPUC Docket No. UM-2287), which remains pending. The OPUC application is discussed further in Section VI below.

III. Summary of FERC Order — Key Findings

The Order finds that the proposed transaction is consistent with the public interest. In reaching this conclusion, FERC applied its standard analytical framework for evaluating Section 203 applications, which examines three factors: (a) the effect of the proposed transaction on competition, (b) the effect on rates, and (c) the effect on regulation. We summarize the Commission's findings on each factor below.

A. Effect on Competition. FERC concluded that the proposed transfer of ownership would not result in any adverse effect on competition in the relevant markets. The Commission noted that the acquiring entities — Meridian Fund IV and ICM Co-Invest — are financial sponsors and investment vehicles that do not currently own, operate, or control any competing generation, transmission, or distribution assets in the Pacific Northwest or any other relevant market. The Commission further noted that neither Meridian Infrastructure Partners LP nor Ironside Capital Management LP holds interests in any other FERC-jurisdictional entities or market participants in the regions where Cascadia operates. Accordingly, the Commission determined that the transaction would not result in any increase in horizontal or vertical market concentration and would not create the potential for the exercise of market power.

B. Effect on Rates. FERC found that the proposed transaction would not adversely affect wholesale or transmission rates. The Commission noted that all existing FERC-jurisdictional rates and tariffs applicable to Cascadia's facilities would continue to apply following the change in ownership, and that the applicants committed in the application to maintaining the existing rate structures. The Commission further observed that no changes to existing tariff filings or rate schedules were proposed in connection with the transaction, and that any future rate changes would remain subject to the Commission's standard review and approval processes under Sections 205 and 206 of the Federal Power Act.

C. Effect on Regulation. FERC determined that the proposed transaction would not impair the effectiveness of federal or state regulation. All acquired entities would remain subject to FERC jurisdiction, including the Commission's oversight of licensed hydroelectric projects under Part I of the Federal Power Act and applicable FERC regulations. Additionally, the Commission acknowledged that Cascadia's operations in Oregon remain subject to the jurisdiction of the OPUC, and that the pending OPUC proceeding (Docket No. UM-2287) would provide an independent layer of regulatory review at the state level.

D. Cross-Subsidization. FERC also examined the potential for cross-subsidization and concluded that adequate protections exist to guard against any improper cross-subsidization between Cascadia's regulated operations and the affiliates of the acquiring entities. The Commission noted the ring-fenced nature of Cascadia's operating subsidiaries, including separate books and records, independent management, and structural protections designed to prevent the commingling of assets or the allocation of non-utility costs to the regulated entities. The Commission found these protections sufficient to mitigate any risk of cross-subsidization.

IV. Conditions Attached to the Approval

The Order grants the Section 203 authorization subject to certain conditions, each of which must be satisfied at or prior to the consummation of the transaction, or within specified timeframes following closing. We describe each condition below, along with our preliminary assessment of the steps required for compliance.

A. License-Transfer Filings

Cascadia and the acquiring entities must file license-transfer applications with FERC for each of the fourteen (14) FERC-licensed hydroelectric projects within sixty (60) days following the closing of the acquisition. These filings are necessary to update the licensee records maintained by the Commission to reflect the new ownership and control structure resulting from the acquisition. It is important to note that these license-transfer applications are administrative in nature; they do not require a separate substantive merits review by the Commission and are expected to be processed on a ministerial basis. However, the filings must be completed within the prescribed timeframe to conform the license records to the new ownership structure and to maintain compliance with the terms of each license.

We recommend that BSP prepare drafts of these fourteen license-transfer applications in advance of the anticipated closing date so that they are substantially complete and ready for submission promptly after closing occurs. C&H will coordinate with BSP on this matter and will ensure that the organizational charts and ownership information for ICM Co-Invest are current and available for inclusion in these filings.

B. Informational Filing

The applicants are required to file an informational report with FERC within thirty (30) days of the closing of the acquisition. This report must confirm the consummation of the transaction and provide updated organizational charts reflecting the new ownership structure, including all intermediate holding entities between the ultimate beneficial owners (Meridian Fund IV and ICM Co-Invest) and Cascadia's licensed subsidiaries. The informational filing is a standard post-closing requirement in Section 203 proceedings and should not present any substantive difficulty, provided that the organizational charts are prepared in advance.

C. Compliance with Existing License Terms

All existing FERC license terms, conditions, and annual charges applicable to the fourteen hydroelectric projects must continue to be observed and complied with following the change in control. This condition reaffirms the ongoing obligations of the licensee entities and ensures that the change in ownership does not serve as a basis for any modification, relaxation, or non-compliance with existing license requirements. No modification to existing license conditions was sought in the application, and none was granted by the Commission. Cascadia's management team, which is expected to remain in place following the closing, will continue to be responsible for day-to-day license compliance.

D. Hold-Harmless Commitment

The applicants committed in the Section 203 application that the proposed transaction would be held harmless to ratepayers. Specifically, the Order requires that no transaction-related costs — including acquisition premiums, financing costs, advisory fees, or other expenses incurred in connection with the change in ownership — may be passed through to ratepayers in any FERC-jurisdictional rate, tariff, or other filing. This commitment is binding on the acquiring entities and Cascadia and will remain in effect for the duration of the FERC licenses held by Cascadia's subsidiaries.

V. 18-Month Lapse Provision

We wish to draw your particular attention to a critical timing provision contained in the Order. Consistent with standard Commission practice, the FERC authorization includes a lapse clause providing that the approval will expire automatically if the transaction is not consummated within eighteen (18) months of the date of the Order.

The Order was issued on December 15, 2022. Accordingly, the eighteen-month period expires on June 15, 2024. If the acquisition is not consummated on or before that date, the Section 203 authorization will lapse, and the applicants would need to file a new Section 203 application and obtain a fresh approval from the Commission before the closing could occur. Based on the timeline of the initial filing — the application was filed on October 19, 2022, and the Order was issued on December 15, 2022, a period of approximately fifty-seven (57) days — we estimate that a re-filing could take sixty (60) to ninety (90) days to process, although the actual timeline could be longer depending on the circumstances at the time of re-filing, including whether the Commission requires additional information or whether intervening changes in market conditions or the applicants' organizational structure necessitate a more detailed review.

This timing consideration is particularly significant in light of the current status of the transaction. As you are aware, the outside date for closing under the EPA was originally set at December 31, 2022, but was extended to March 31, 2023 pursuant to the First Amendment to the EPA, dated November 22, 2022. That extension was necessitated by the notification received from the Portland Metropolitan Water District ("PMWD") on October 28, 2022, advising Cascadia of PMWD's intent to renegotiate certain terms of the Bull Run Filtration Project concession agreement. The concession renegotiation remains unresolved as of the date of this letter, and the outcome of those discussions introduces meaningful uncertainty as to the ultimate closing timeline for the acquisition.

In light of this uncertainty, we strongly recommend that the June 15, 2024 FERC lapse date be actively monitored and incorporated into all transaction timeline analyses. While the current eighteen-month window provides substantial runway, we note that if additional extensions to the EPA outside date are required — or if the transaction enters a period of extended dormancy while the concession renegotiation is resolved — the lapse date could become a binding constraint. If it appears likely that the transaction will not close before the lapse date, C&H recommends that Ironside and Meridian proactively consider whether to seek an extension of the FERC authorization (which would require a motion to the Commission) or, alternatively, plan for a re-filing of the Section 203 application at the appropriate time.

VI. Interaction with Other Regulatory Approvals and Transaction Timeline

A. Oregon Public Utility Commission (OPUC)

The OPUC application (Docket No. UM-2287) was filed on October 14, 2022 and remains pending before the Commission. OPUC approval constitutes a separate and independent closing condition under the EPA, and the transaction cannot be consummated without it.

We note that the ongoing concession renegotiation with PMWD regarding the Bull Run Filtration Project may bear on the OPUC proceedings. Cascadia's water-treatment concessions — including the Bull Run concession — have attracted regulatory attention in Oregon in connection with the enactment of Oregon Senate Bill 1567 (2022), which imposed enhanced disclosure and oversight requirements on utility-affiliated entities holding water infrastructure concessions. The OPUC staff has informally indicated that it may seek additional information regarding the status of the PMWD renegotiation as part of its review of the change-in-control application. C&H is monitoring these developments closely and will provide a separate, more detailed update as the OPUC proceedings develop.

B. CFIUS. As noted in Section II above, a voluntary notice was filed with CFIUS and was acknowledged on September 20, 2022. No foreign ownership, control, or influence concerns were identified in connection with the proposed acquisition. CFIUS has indicated that no further review or action is required, and this matter is effectively resolved. No additional steps are needed from Ironside or any other party with respect to CFIUS clearance.

C. Debt Financing

The debt commitment letter executed on August 30, 2022 remains in effect. Under that commitment, Atlas National Bank, N.A. ("Atlas"), acting as lead arranger and administrative agent, has committed to provide $650 million of the $975 million senior secured term loan facility, and Pinnacle Credit Partners LLC ("Pinnacle") has committed to provide the remaining $325 million of the term loan. Additionally, Atlas has committed to provide a $150 million senior secured revolving credit facility. We note that the debt commitment letter contains its own expiration and termination mechanics, including a commitment expiration date and certain conditions precedent that must be satisfied prior to funding. These dates must be carefully tracked alongside the FERC lapse date discussed in Section V above, as a lapse of either the FERC authorization or the debt commitment could require a re-filing or renegotiation that would further extend the transaction timeline. C&H will coordinate with the financing workstream, as appropriate, to ensure alignment across all relevant deadlines.

D. Co-Investment Vehicle Status

ICM Cascadia Co-Invest, LP remains an active vehicle. To date, a single capital call has been issued (dated August 15, 2022) in the amount of $22,500,000, representing 7.5% of the total $300 million commitment. The unfunded commitment of ICM Co-Invest stands at $277,500,000. The capital called to date has been used to fund organizational expenses, transaction costs, and the deposit required under the EPA. No additional capital calls are anticipated at this time until greater clarity is achieved on the outcome of the PMWD concession renegotiation and the resulting closing timeline.

VII. Implications for Ironside

In summary, the issuance of the FERC Order approving the Section 203 application is a positive and meaningful development in the progression of the Cascadia acquisition. It satisfies one of the three principal regulatory closing conditions under the EPA (the others being OPUC approval, which remains pending, and CFIUS clearance, which has been effectively obtained). The approval was issued without any contested proceedings, without the need for a hearing, and without any conditions that would materially affect the anticipated economics or structure of the transaction.

However, two considerations warrant ongoing attention. First, the eighteen-month lapse provision described in Section V introduces a time constraint that must be carefully weighed against the current uncertainty surrounding the Bull Run Filtration Project concession renegotiation. The Bull Run concession generates annual revenue of approximately $64 million, representing approximately 13% of Cascadia's fiscal year 2021 revenue of $487 million. The resolution of the PMWD renegotiation has direct implications not only for the valuation and economics of the transaction but also for the regulatory timeline, as discussed above.

Second, if and when the transaction is reactivated and moves toward closing, the fourteen post-closing license-transfer filings required by the Order will necessitate advance coordination and preparation. We recommend that these filings be treated as part of the pre-closing readiness workstream so that they can be submitted within the sixty-day post-closing window prescribed by the Order.

C&H will continue to coordinate with BSP on all FERC compliance matters and will keep Ironside promptly apprised of any developments bearing on the FERC authorization, including any indications from FERC staff regarding the lapse provision or the license-transfer filing process.

VIII. Recommended Next Steps

Based on the foregoing, we recommend the following next steps:

1. Calendar the FERC Lapse Date. C&H will calendar the June 15, 2024 FERC lapse date and incorporate it into the master transaction timeline tracking maintained by the deal team, with appropriate advance reminders at the twelve-month, six-month, and ninety-day marks.

2. Obtain Copies of the FERC Order. C&H will request from BSP certified copies of the FERC Order and any related correspondence or staff communications for Ironside's records. We will forward these materials to you promptly upon receipt.

3. Update the EPA Closing Conditions Checklist. C&H will update the EPA Closing Conditions Checklist to reflect the satisfaction of the FERC Section 203 closing condition, noting that such satisfaction is subject to (i) the eighteen-month lapse provision described in Section V and (ii) the post-closing license-transfer filing requirements described in Section IV.A.

4. Monitor the Bull Run Concession Renegotiation. C&H will continue to monitor the status of the Bull Run Filtration Project concession renegotiation with PMWD and its potential impact on the overall closing timeline, including any implications for the FERC authorization and the OPUC proceedings.

5. No Immediate Action Required from Ironside. No immediate action is required from Ironside at this time. We will keep you informed of any developments that necessitate further decisions or actions on your part.

IX. Closing

We remain available at your convenience to discuss the FERC Order and its implications for Ironside and the Cascadia transaction in greater detail. We would suggest scheduling a call in the near term with Marcus, Renata, and the C&H team working on this matter — Pamela Cross, Nicholas Stern, and Theresa Kim — to discuss the current status of the various regulatory workstreams and the next steps for the transaction as we approach the March 31, 2023 EPA outside date.

Please do not hesitate to contact Pamela Cross (212-558-4127; pcross@calderwoodharkness.com) or Theresa Kim (212-558-4293; tkim@calderwoodharkness.com) with any questions regarding this letter or the FERC approval.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Pamela Cross Partner Direct: (212) 558-4127

Email: pcross@calderwoodharkness.com

cc: (via email)

Nicholas Stern, Calderwood & Harkness LLP Theresa Kim, Calderwood & Harkness LLP Owen Fischer, Calderwood & Harkness LLP

Enclosures:

Note: A copy of the FERC Order (Docket No. EC22-143-000, dated December 15, 2022) will be forwarded under separate cover upon receipt from Breckenridge Sloane & Pratt LLP.

CALDERWOOD & HARKNESS LLP Attorneys at Law 125 Broad Street, 44th Floor New York, NY 10004 Tel: (212) 558-4000
Fax: (212) 558-3588
www.calderwoodharkness.com
December 16, 2022
Matter No. 1023-00001
VIA EMAIL AND HAND DELIVERY
Marcus J. Calloway Founder & Chief Investment Officer Ironside Capital Management LP 590 Madison Avenue, 38th Floor New York, NY 10022
Renata Obasi Senior Managing Director, Infrastructure Ironside Capital Management LP 590 Madison Avenue, 38th Floor New York, NY 10022
Re: FERC §203 Approval — Transfer of Jurisdictional Facilities of Cascadia Renewables Holdings, Inc.; FERC Docket No. EC22-143-000
ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL
Dear Marcus and Renata:
I. Introduction and Purpose
We write to inform you that on December 15, 2022, the Federal Energy Regulatory Commission ("FERC" or the "Commission") issued its order (the "Order") approving the application filed under Section 203 of the Federal Power Act, 16 U.S.C. § 824b ("Section 203"), for the proposed transfer of the jurisdictional facilities of Cascadia Renewables Holdings, Inc. ("Cascadia" or the "Company"). A copy of the Order will be forwarded to you upon receipt from lead transaction counsel, as discussed further below.
As you will recall, the Section 203 application was filed on October 19, 2022, and was assigned FERC Docket No. EC22-143-000. The application was filed in connection with the proposed acquisition of 100% of the outstanding equity interests of Cascadia by Cascadia Acquisition Corp., a Delaware corporation (the "Acquisition Vehicle"), which is to be jointly owned by Meridian Infrastructure Partners Fund IV, LP ("Meridian Fund IV") (holding a 71.43% interest, reflecting a $750 million equity commitment) and ICM Cascadia Co-Invest, LP ("ICM Co-Invest") (holding a 28.57% interest, reflecting a $300 million equity commitment). As you know, ICM Co-Invest is the co-investment vehicle established by Ironside Capital Management LP ("Ironside") for purposes of this transaction.
The issuance of the Order represents a significant milestone in the transaction and constitutes the satisfaction of one of the principal regulatory conditions to closing under that certain Equity Purchase Agreement, dated as of September 15, 2022, by and among the Acquisition Vehicle, the Company, and the equity holders of the Company named therein (as amended by the First Amendment to the Equity Purchase Agreement, dated as of November 22, 2022, the "EPA"). We summarize below the key findings of the Order, the conditions attached to the approval, and certain timing considerations that are particularly relevant in light of the current status of the transaction.
II. Background of the FERC §203 Application
By way of brief background, Section 203 of the Federal Power Act requires prior authorization from FERC before any public utility may dispose of jurisdictional facilities, or before any entity may acquire or merge with a public utility, where such disposition, acquisition, or merger exceeds a specified monetary threshold. This authorization requirement extends to the transfer of control of FERC-licensed hydroelectric projects, which is directly relevant to the Cascadia transaction.
Cascadia currently owns and operates fourteen (14) hydroelectric generation facilities located across the states of Oregon, Washington, and Idaho. Each of these facilities operates under a separate FERC-issued license, and together they represent the core of Cascadia's regulated generation portfolio. The facilities range in nameplate capacity from approximately 12 megawatts (the Trapper Creek facility in Idaho) to approximately 187 megawatts (the Columbia Bend facility in Washington), with aggregate installed capacity of approximately 872 megawatts.
The Section 203 application sought FERC's approval for the indirect transfer of control of these fourteen licensed facilities from the current ownership structure — consisting of Timberline Growth Equity Fund III, LP ("Timberline"), which holds approximately 62% of the equity, the Weir Family Trust, which holds approximately 18%, and the Company's management team, which holds the remaining approximately 20% — to the Acquisition Vehicle and, through it, to Meridian Fund IV and ICM Co-Invest as the ultimate beneficial owners.
The application was prepared and filed by Breckenridge Sloane & Pratt LLP ("BSP"), acting as lead regulatory counsel on behalf of Meridian Infrastructure Partners LP ("Meridian") and the Acquisition Vehicle. Calderwood & Harkness LLP ("C&H") provided input on behalf of ICM Co-Invest with respect to the co-investment structure, Ironside's investment history, and the absence of any competing energy assets held by Ironside or its affiliates. Throughout the FERC review process, C&H coordinated closely with BSP — specifically, with Charles A. Delacroix, partner at BSP — on all issues relevant to Ironside's co-investment position, including responding to a staff data request dated November 3, 2022, regarding the organizational structure and affiliates of ICM Co-Invest.
We note for completeness that two other regulatory processes are relevant to the closing of the acquisition. First, a voluntary notice was filed with the Committee on Foreign Investment in the United States ("CFIUS") and was acknowledged on September 20, 2022. No foreign ownership, control, or influence concerns were identified, and CFIUS has indicated that no further action is required. Second, an application was filed with the Oregon Public Utility Commission ("OPUC") on October 14, 2022 (OPUC Docket No. UM-2287), which remains pending. The OPUC application is discussed further in Section VI below.
III. Summary of FERC Order — Key Findings
The Order finds that the proposed transaction is consistent with the public interest. In reaching this conclusion, FERC applied its standard analytical framework for evaluating Section 203 applications, which examines three factors: (a) the effect of the proposed transaction on competition, (b) the effect on rates, and (c) the effect on regulation. We summarize the Commission's findings on each factor below.
A. Effect on Competition. FERC concluded that the proposed transfer of ownership would not result in any adverse effect on competition in the relevant markets. The Commission noted that the acquiring entities — Meridian Fund IV and ICM Co-Invest — are financial sponsors and investment vehicles that do not currently own, operate, or control any competing generation, transmission, or distribution assets in the Pacific Northwest or any other relevant market. The Commission further noted that neither Meridian Infrastructure Partners LP nor Ironside Capital Management LP holds interests in any other FERC-jurisdictional entities or market participants in the regions where Cascadia operates. Accordingly, the Commission determined that the transaction would not result in any increase in horizontal or vertical market concentration and would not create the potential for the exercise of market power.
B. Effect on Rates. FERC found that the proposed transaction would not adversely affect wholesale or transmission rates. The Commission noted that all existing FERC-jurisdictional rates and tariffs applicable to Cascadia's facilities would continue to apply following the change in ownership, and that the applicants committed in the application to maintaining the existing rate structures. The Commission further observed that no changes to existing tariff filings or rate schedules were proposed in connection with the transaction, and that any future rate changes would remain subject to the Commission's standard review and approval processes under Sections 205 and 206 of the Federal Power Act.
C. Effect on Regulation. FERC determined that the proposed transaction would not impair the effectiveness of federal or state regulation. All acquired entities would remain subject to FERC jurisdiction, including the Commission's oversight of licensed hydroelectric projects under Part I of the Federal Power Act and applicable FERC regulations. Additionally, the Commission acknowledged that Cascadia's operations in Oregon remain subject to the jurisdiction of the OPUC, and that the pending OPUC proceeding (Docket No. UM-2287) would provide an independent layer of regulatory review at the state level.
D. Cross-Subsidization. FERC also examined the potential for cross-subsidization and concluded that adequate protections exist to guard against any improper cross-subsidization between Cascadia's regulated operations and the affiliates of the acquiring entities. The Commission noted the ring-fenced nature of Cascadia's operating subsidiaries, including separate books and records, independent management, and structural protections designed to prevent the commingling of assets or the allocation of non-utility costs to the regulated entities. The Commission found these protections sufficient to mitigate any risk of cross-subsidization.
IV. Conditions Attached to the Approval
The Order grants the Section 203 authorization subject to certain conditions, each of which must be satisfied at or prior to the consummation of the transaction, or within specified timeframes following closing. We describe each condition below, along with our preliminary assessment of the steps required for compliance.
A. License-Transfer Filings
Cascadia and the acquiring entities must file license-transfer applications with FERC for each of the fourteen (14) FERC-licensed hydroelectric projects within sixty (60) days following the closing of the acquisition. These filings are necessary to update the licensee records maintained by the Commission to reflect the new ownership and control structure resulting from the acquisition. It is important to note that these license-transfer applications are administrative in nature; they do not require a separate substantive merits review by the Commission and are expected to be processed on a ministerial basis. However, the filings must be completed within the prescribed timeframe to conform the license records to the new ownership structure and to maintain compliance with the terms of each license.
We recommend that BSP prepare drafts of these fourteen license-transfer applications in advance of the anticipated closing date so that they are substantially complete and ready for submission promptly after closing occurs. C&H will coordinate with BSP on this matter and will ensure that the organizational charts and ownership information for ICM Co-Invest are current and available for inclusion in these filings.
B. Informational Filing
The applicants are required to file an informational report with FERC within thirty (30) days of the closing of the acquisition. This report must confirm the consummation of the transaction and provide updated organizational charts reflecting the new ownership structure, including all intermediate holding entities between the ultimate beneficial owners (Meridian Fund IV and ICM Co-Invest) and Cascadia's licensed subsidiaries. The informational filing is a standard post-closing requirement in Section 203 proceedings and should not present any substantive difficulty, provided that the organizational charts are prepared in advance.
C. Compliance with Existing License Terms
All existing FERC license terms, conditions, and annual charges applicable to the fourteen hydroelectric projects must continue to be observed and complied with following the change in control. This condition reaffirms the ongoing obligations of the licensee entities and ensures that the change in ownership does not serve as a basis for any modification, relaxation, or non-compliance with existing license requirements. No modification to existing license conditions was sought in the application, and none was granted by the Commission. Cascadia's management team, which is expected to remain in place following the closing, will continue to be responsible for day-to-day license compliance.
D. Hold-Harmless Commitment
The applicants committed in the Section 203 application that the proposed transaction would be held harmless to ratepayers. Specifically, the Order requires that no transaction-related costs — including acquisition premiums, financing costs, advisory fees, or other expenses incurred in connection with the change in ownership — may be passed through to ratepayers in any FERC-jurisdictional rate, tariff, or other filing. This commitment is binding on the acquiring entities and Cascadia and will remain in effect for the duration of the FERC licenses held by Cascadia's subsidiaries.
V. 18-Month Lapse Provision
We wish to draw your particular attention to a critical timing provision contained in the Order. Consistent with standard Commission practice, the FERC authorization includes a lapse clause providing that the approval will expire automatically if the transaction is not consummated within eighteen (18) months of the date of the Order.
The Order was issued on December 15, 2022. Accordingly, the eighteen-month period expires on June 15, 2024. If the acquisition is not consummated on or before that date, the Section 203 authorization will lapse, and the applicants would need to file a new Section 203 application and obtain a fresh approval from the Commission before the closing could occur. Based on the timeline of the initial filing — the application was filed on October 19, 2022, and the Order was issued on December 15, 2022, a period of approximately fifty-seven (57) days — we estimate that a re-filing could take sixty (60) to ninety (90) days to process, although the actual timeline could be longer depending on the circumstances at the time of re-filing, including whether the Commission requires additional information or whether intervening changes in market conditions or the applicants' organizational structure necessitate a more detailed review.
This timing consideration is particularly significant in light of the current status of the transaction. As you are aware, the outside date for closing under the EPA was originally set at December 31, 2022, but was extended to March 31, 2023 pursuant to the First Amendment to the EPA, dated November 22, 2022. That extension was necessitated by the notification received from the Portland Metropolitan Water District ("PMWD") on October 28, 2022, advising Cascadia of PMWD's intent to renegotiate certain terms of the Bull Run Filtration Project concession agreement. The concession renegotiation remains unresolved as of the date of this letter, and the outcome of those discussions introduces meaningful uncertainty as to the ultimate closing timeline for the acquisition.
In light of this uncertainty, we strongly recommend that the June 15, 2024 FERC lapse date be actively monitored and incorporated into all transaction timeline analyses. While the current eighteen-month window provides substantial runway, we note that if additional extensions to the EPA outside date are required — or if the transaction enters a period of extended dormancy while the concession renegotiation is resolved — the lapse date could become a binding constraint. If it appears likely that the transaction will not close before the lapse date, C&H recommends that Ironside and Meridian proactively consider whether to seek an extension of the FERC authorization (which would require a motion to the Commission) or, alternatively, plan for a re-filing of the Section 203 application at the appropriate time.
VI. Interaction with Other Regulatory Approvals and Transaction Timeline
A. Oregon Public Utility Commission (OPUC)
The OPUC application (Docket No. UM-2287) was filed on October 14, 2022 and remains pending before the Commission. OPUC approval constitutes a separate and independent closing condition under the EPA, and the transaction cannot be consummated without it.
We note that the ongoing concession renegotiation with PMWD regarding the Bull Run Filtration Project may bear on the OPUC proceedings. Cascadia's water-treatment concessions — including the Bull Run concession — have attracted regulatory attention in Oregon in connection with the enactment of Oregon Senate Bill 1567 (2022), which imposed enhanced disclosure and oversight requirements on utility-affiliated entities holding water infrastructure concessions. The OPUC staff has informally indicated that it may seek additional information regarding the status of the PMWD renegotiation as part of its review of the change-in-control application. C&H is monitoring these developments closely and will provide a separate, more detailed update as the OPUC proceedings develop.
B. CFIUS. As noted in Section II above, a voluntary notice was filed with CFIUS and was acknowledged on September 20, 2022. No foreign ownership, control, or influence concerns were identified in connection with the proposed acquisition. CFIUS has indicated that no further review or action is required, and this matter is effectively resolved. No additional steps are needed from Ironside or any other party with respect to CFIUS clearance.
C. Debt Financing
The debt commitment letter executed on August 30, 2022 remains in effect. Under that commitment, Atlas National Bank, N.A. ("Atlas"), acting as lead arranger and administrative agent, has committed to provide $650 million of the $975 million senior secured term loan facility, and Pinnacle Credit Partners LLC ("Pinnacle") has committed to provide the remaining $325 million of the term loan. Additionally, Atlas has committed to provide a $150 million senior secured revolving credit facility. We note that the debt commitment letter contains its own expiration and termination mechanics, including a commitment expiration date and certain conditions precedent that must be satisfied prior to funding. These dates must be carefully tracked alongside the FERC lapse date discussed in Section V above, as a lapse of either the FERC authorization or the debt commitment could require a re-filing or renegotiation that would further extend the transaction timeline. C&H will coordinate with the financing workstream, as appropriate, to ensure alignment across all relevant deadlines.
D. Co-Investment Vehicle Status
ICM Cascadia Co-Invest, LP remains an active vehicle. To date, a single capital call has been issued (dated August 15, 2022) in the amount of $22,500,000, representing 7.5% of the total $300 million commitment. The unfunded commitment of ICM Co-Invest stands at $277,500,000. The capital called to date has been used to fund organizational expenses, transaction costs, and the deposit required under the EPA. No additional capital calls are anticipated at this time until greater clarity is achieved on the outcome of the PMWD concession renegotiation and the resulting closing timeline.
VII. Implications for Ironside
In summary, the issuance of the FERC Order approving the Section 203 application is a positive and meaningful development in the progression of the Cascadia acquisition. It satisfies one of the three principal regulatory closing conditions under the EPA (the others being OPUC approval, which remains pending, and CFIUS clearance, which has been effectively obtained). The approval was issued without any contested proceedings, without the need for a hearing, and without any conditions that would materially affect the anticipated economics or structure of the transaction.
However, two considerations warrant ongoing attention. First, the eighteen-month lapse provision described in Section V introduces a time constraint that must be carefully weighed against the current uncertainty surrounding the Bull Run Filtration Project concession renegotiation. The Bull Run concession generates annual revenue of approximately $64 million, representing approximately 13% of Cascadia's fiscal year 2021 revenue of $487 million. The resolution of the PMWD renegotiation has direct implications not only for the valuation and economics of the transaction but also for the regulatory timeline, as discussed above.
Second, if and when the transaction is reactivated and moves toward closing, the fourteen post-closing license-transfer filings required by the Order will necessitate advance coordination and preparation. We recommend that these filings be treated as part of the pre-closing readiness workstream so that they can be submitted within the sixty-day post-closing window prescribed by the Order.
C&H will continue to coordinate with BSP on all FERC compliance matters and will keep Ironside promptly apprised of any developments bearing on the FERC authorization, including any indications from FERC staff regarding the lapse provision or the license-transfer filing process.
VIII. Recommended Next Steps
Based on the foregoing, we recommend the following next steps:
1. Calendar the FERC Lapse Date. C&H will calendar the June 15, 2024 FERC lapse date and incorporate it into the master transaction timeline tracking maintained by the deal team, with appropriate advance reminders at the twelve-month, six-month, and ninety-day marks.
2. Obtain Copies of the FERC Order. C&H will request from BSP certified copies of the FERC Order and any related correspondence or staff communications for Ironside's records. We will forward these materials to you promptly upon receipt.
3. Update the EPA Closing Conditions Checklist. C&H will update the EPA Closing Conditions Checklist to reflect the satisfaction of the FERC Section 203 closing condition, noting that such satisfaction is subject to (i) the eighteen-month lapse provision described in Section V and (ii) the post-closing license-transfer filing requirements described in Section IV.A.
4. Monitor the Bull Run Concession Renegotiation. C&H will continue to monitor the status of the Bull Run Filtration Project concession renegotiation with PMWD and its potential impact on the overall closing timeline, including any implications for the FERC authorization and the OPUC proceedings.
5. No Immediate Action Required from Ironside. No immediate action is required from Ironside at this time. We will keep you informed of any developments that necessitate further decisions or actions on your part.
IX. Closing
We remain available at your convenience to discuss the FERC Order and its implications for Ironside and the Cascadia transaction in greater detail. We would suggest scheduling a call in the near term with Marcus, Renata, and the C&H team working on this matter — Pamela Cross, Nicholas Stern, and Theresa Kim — to discuss the current status of the various regulatory workstreams and the next steps for the transaction as we approach the March 31, 2023 EPA outside date.
Please do not hesitate to contact Pamela Cross (212-558-4127; pcross@calderwoodharkness.com) or Theresa Kim (212-558-4293; tkim@calderwoodharkness.com) with any questions regarding this letter or the FERC approval.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Pamela Cross Partner Direct: (212) 558-4127
Email: pcross@calderwoodharkness.com
cc: (via email)
Nicholas Stern, Calderwood & Harkness LLP Theresa Kim, Calderwood & Harkness LLP Owen Fischer, Calderwood & Harkness LLP
Enclosures:
Note: A copy of the FERC Order (Docket No. EC22-143-000, dated December 15, 2022) will be forwarded under separate cover upon receipt from Breckenridge Sloane & Pratt LLP.

CALDERWOOD & HARKNESS LLP Attorneys at Law 125 Broad Street, 44th Floor New York, NY 10004 Tel: (212) 558-4000

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