1003-00005 · Veldran Industries Holdings · Engagement & Administrative

new-matter-opening-memorandum.docx DOCUMENT Bankruptcy & Restructuring

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CALDERWOOD & HARKNESS LLP

NEW MATTER OPENING MEMORANDUM

INTERNAL / CONFIDENTIAL — FOR ADMINISTRATIVE USE ONLY

1301 Avenue of the Americas, 40th Floor New York, New York 10019

Section 1: Matter Information

This memorandum documents the opening of a new client matter within the Tax Department of Calderwood & Harkness LLP. The engagement relates to the rendering of a tax opinion in connection with a proposed corporate spin-off transaction, as described in detail in Section 4 below. All information contained herein has been compiled for internal administrative and conflicts-management purposes and should be treated as confidential in accordance with the firm's information-governance policies.

Section 2: Responsible Attorneys

The following attorneys have been designated as the engagement team for Matter HRW-SPIN-001. Staffing may be adjusted during the course of the engagement at the discretion of the Responsible Partner.

Responsible Partner — Leonard Cross

Title: Partner, Tax Department (Partner since 2010)

Practice Focus: Corporate spin-offs, divisive reorganizations, and mergers and acquisitions tax. Mr. Cross has led the firm's tax opinion practice on more than forty spin-off transactions since joining the partnership, including several transactions involving private-equity-controlled distributing corporations. He will serve as the primary relationship partner and the signing partner for the tax opinion to be issued in connection with this engagement.

Billing Partner — Sylvia Hartwell

Title: Partner, Tax Department (Partner since 2014)

Practice Focus: Partnership taxation, fund formation, and fund-level tax structuring. Ms. Hartwell has advised Harrowgate Capital Advisors LLC and its affiliated fund entities on federal income tax matters since the formation of Harrowgate Private Equity Fund III, L.P. in 2014 and serves as the primary billing relationship partner for the Harrowgate platform. She will supervise coordination with Harrowgate's General Counsel on billing and engagement-scope matters and will provide substantive input on partnership-level tax considerations arising from the spin-off.

Lead Associate — Garrett Simmons

Title: Senior Associate, Tax Department (6th year)

Education: J.D., Georgetown University Law Center; LL.M. (Taxation), New York University School of Law

Mr. Simmons will serve as the day-to-day lead for the engagement and will be responsible for drafting the internal tax analysis memoranda, the representation letter, and the initial draft of the tax opinion. He has participated in eleven prior spin-off opinion engagements at the firm and has extensive experience analyzing the active-trade-or-business requirements under IRC § 355(b) and the anti-avoidance provisions of IRC §§ 355(d) and 355(e).

Working Associate — Leila Nazari

Title: Associate, Tax Department (3rd year)

Education: J.D., Columbia Law School; LL.M. (Taxation), New York University School of Law

Ms. Nazari will assist Mr. Simmons with factual diligence, research, and memorandum preparation. She will be primarily responsible for the initial research and analysis of the § 355(e) "plan" inquiry as well as the § 355(b)(2)(C)/(D) analysis in light of the Kestrel acquisition discussed below.

Section 3: Client Information

Client Name: Harrowgate Private Equity Fund IV, L.P.

Short Name / Billing Name: HPE Fund IV / Harrowgate

Entity Type: Delaware limited partnership, formed under the Delaware Revised Uniform Limited Partnership Act

EIN: 84-3291067

Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent)

Principal Office: 600 Lexington Avenue, 38th Floor, New York, New York 10022

General Partner: Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company (EIN 84-3291104). The General Partner manages the day-to-day affairs of HPE Fund IV and has authorized the engagement of Calderwood & Harkness LLP in connection with the matters described herein.

Investment Advisor / Manager: Harrowgate Capital Advisors LLC, a Delaware limited liability company (EIN 83-2756891). Harrowgate Capital Advisors LLC serves as the investment advisor and management-company entity for the Harrowgate fund platform, and its personnel, including the individuals identified below, oversee investment and portfolio-management activities on behalf of HPE Fund IV and its parallel and co-investment vehicles.

Primary Client Contact:

Christine Yeung General Counsel Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022

Ms. Yeung will serve as the primary point of contact for all legal, billing, and engagement-scope communications. All invoices and billing correspondence should be directed to her attention.

Additional Client Contacts:

Diana Fenn Managing Partner & Chief Investment Officer Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022

Ms. Fenn is the co-founder and Managing Partner of the Harrowgate platform and oversees all investment decisions. She also serves as Chair of the Board of Directors of Veldran Industries Holdings, Inc. (the distributing corporation in the proposed transaction). Communications with Ms. Fenn should be coordinated through Ms. Yeung.

Tobias Rourke Partner, Head of Portfolio Operations Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022

Mr. Rourke leads the Harrowgate portfolio-operations team and serves as the primary Harrowgate representative interfacing with Veldran management on operational and strategic matters, including the planning and execution of the proposed spin-off. He will be a principal source of factual information regarding the business rationale for the transaction.

Fund Size: Approximately $6.8 billion in aggregate committed capital (vintage year 2018). HPE Fund IV is the largest fund in the Harrowgate platform to date and invests primarily in North American industrial and business-services companies.

Section 4: Matter Description

4.1 Overview of Engagement

Calderwood & Harkness LLP has been engaged by Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV" or the "Client") to render a tax opinion at the "should" level of comfort (the second-highest level of confidence in the hierarchy of tax opinion standards) addressing the federal income tax consequences of the proposed pro rata spin-off of the Precision Flow Solutions Division of Veldran Industries Holdings, Inc. ("Veldran" or the "Distributing Corporation") into a newly formed entity, Meridian Flow Technologies, Inc. ("Meridian," "SpinCo," or the "Controlled Corporation").

Specifically, the opinion will address whether: (i) the proposed distribution of all of the outstanding shares of Meridian common stock by Veldran to its shareholders on a pro rata basis should qualify as a tax-free distribution under Section 355(a) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), and (ii) the immediately preceding contribution of assets and liabilities of the Precision Flow Solutions Division by Veldran to Meridian in exchange for Meridian common stock and the assumption of allocated liabilities should qualify as a reorganization under IRC § 368(a)(1)(D).

The Client has informed us that no private letter ruling will be sought from the Internal Revenue Service ("IRS") in connection with the proposed transaction. Accordingly, the tax opinion to be rendered by Calderwood & Harkness LLP will serve as the sole tax assurance for the spin-off for purposes of the Veldran Board of Directors' approval process, the satisfaction of conditions under Veldran's debt instruments, and the disclosure obligations under applicable securities laws.

4.2 Transaction Summary

Proposed Transaction. The proposed transaction (the "Spin-Off") contemplates a pro rata distribution by Veldran Industries Holdings, Inc. of one hundred percent (100%) of the issued and outstanding shares of common stock of Meridian Flow Technologies, Inc. to all holders of Veldran common stock (the "Distribution"). The Distribution will be preceded by a series of internal restructuring steps (collectively with the Distribution, the "Spin-Off"), the principal element of which is the contribution of assets and liabilities described below.

Pre-Spin Internal Restructuring — The Contribution. Prior to and in connection with the Distribution, Veldran will contribute all of the assets (including the equity interests in subsidiaries) and liabilities comprising the Precision Flow Solutions Division to Meridian, a newly formed, wholly owned subsidiary of Veldran, in exchange for (a) all of the issued and outstanding shares of Meridian common stock and (b) Meridian's assumption of all allocated liabilities associated with the Precision Flow Solutions Division (the "Contribution"). The Contribution is intended to qualify as a transfer described in IRC § 368(a)(1)(D) and IRC § 351, with the associated nonrecognition treatment for the transferor (Veldran) under IRC § 361.

Immediately following the Contribution, Veldran will distribute all of the Meridian common stock received in the Contribution to the holders of Veldran common stock on a pro rata basis (the "Distribution"). Together, the Contribution and the Distribution are referred to herein as the "Spin-Off."

Distribution Ratio. The Distribution will be effected on a 1:1 basis, meaning that each holder of Veldran common stock will receive one (1) share of Meridian common stock for each share of Veldran common stock held by such holder as of the close of business on the record date to be established by the Veldran Board of Directors.

Anticipated Timing. The transaction is currently targeted for completion during the fourth quarter of calendar year 2022 (Q4 2022), subject to the satisfaction of customary conditions, including receipt of the tax opinion, completion of required SEC filings and registrations, and satisfaction of conditions and consents under Veldran's outstanding debt instruments.

No IRS Private Letter Ruling. As noted above, no private letter ruling will be sought from the IRS in connection with the Spin-Off. The Calderwood & Harkness tax opinion will serve as the sole tax assurance for the transaction. This decision reflects both the current extended processing times for private letter ruling requests at the IRS National Office and the Client's preference to maintain flexibility with respect to the transaction timeline.

4.3 Distributing Corporation — Veldran Industries Holdings, Inc.

The Distributing Corporation in the proposed Spin-Off is Veldran Industries Holdings, Inc. Set forth below is a summary of key identifying and business information for Veldran.

Full Legal Name: Veldran Industries Holdings, Inc.

Entity Type: Corporation, organized under the laws of the State of Delaware

EIN: 86-1920347

Date of Incorporation: March 14, 2019

Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent)

Principal Office: 2400 Commerce Park Drive, Suite 500, Charlotte, North Carolina 28217

Industry: Diversified industrial products and engineered materials

Fiscal Year 2021 Revenue: Approximately $2.34 billion

Fiscal Year 2021 EBITDA: Approximately $418 million

Total Employees: Approximately 8,200

Senior Management:

• Chief Executive Officer: Jonathan Caldecott

• Chief Financial Officer: Rita Subramanian

• General Counsel: Philip Crundell

Board Chair: Diana Fenn (Harrowgate Capital Advisors LLC designee)

Business Segments. Veldran operates through two principal business segments:

Engineered Coatings Division — This division designs, manufactures, and distributes advanced surface-coating and material-protection products for the aerospace, automotive, and energy end markets. The Engineered Coatings Division will remain with Veldran following the completion of the Spin-Off and is expected to be Veldran's sole operating business post-Distribution. For fiscal year 2021, the Engineered Coatings Division generated approximately $1.52 billion in revenue and approximately $285 million in EBITDA.

Precision Flow Solutions Division — This division designs, manufactures, and sells precision fluid-control systems, including valves, actuators, regulators, and measurement instruments, for industrial, petrochemical, and water-infrastructure end markets. The Precision Flow Solutions Division is the business to be transferred to Meridian and spun off in the proposed transaction. For fiscal year 2021, the Precision Flow Solutions Division generated approximately $820 million in revenue and approximately $133 million in EBITDA.

Ownership by Client. HPE Fund IV holds approximately 62.4% of the outstanding shares of Veldran common stock, representing 46,488,000 of the 74,500,000 shares of Veldran common stock currently outstanding. HPE Fund IV's interest in Veldran is held through its wholly owned subsidiary, Harrowgate Veldran Holdings LLC, a Delaware limited liability company (EIN 86-1483920). Harrowgate Veldran Holdings LLC was organized as a single-purpose holding vehicle for the purpose of acquiring and holding the Veldran equity position and is treated as a disregarded entity for federal income tax purposes.

The remaining approximately 37.6% of Veldran common stock is held by a combination of minority institutional investors (including Prescott Capital Management LP, which holds approximately 14.8% of Veldran common stock, or 11,026,000 shares) and management equity holders.

4.4 Controlled Corporation — Meridian Flow Technologies, Inc.

The Controlled Corporation (or "SpinCo") in the proposed Spin-Off will be Meridian Flow Technologies, Inc. Meridian has not yet been incorporated; it will be formed as a new Delaware corporation in connection with the pre-Spin internal restructuring steps. Set forth below is a summary of planned identifying and business information for Meridian.

Full Legal Name (planned): Meridian Flow Technologies, Inc.

Entity Type: Delaware corporation (to be formed)

Planned Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent)

Planned Principal Office: 7100 Northlake Parkway, Suite 300, Tucker, Georgia 30084

Business: Design, manufacture, and sale of precision fluid-control systems for industrial, petrochemical, and water-infrastructure end markets. Meridian's business will comprise all of the operations, assets, and liabilities currently constituting Veldran's Precision Flow Solutions Division.

Pro Forma Fiscal Year 2021 Revenue: Approximately $820 million

Pro Forma Fiscal Year 2021 EBITDA: Approximately $133 million

Planned Senior Management:

• Planned Chief Executive Officer: Sandra Waverly (currently President, Precision Flow Solutions Division, Veldran Industries Holdings, Inc.)

• Planned Chief Financial Officer: Derek Okonkwo (currently Vice President of Finance, Precision Flow Solutions Division, Veldran Industries Holdings, Inc.)

It is anticipated that Meridian will be incorporated shortly before the Contribution and Distribution and will have no operations, assets, or liabilities prior to the consummation of the Contribution. The board of directors and management team of Meridian will be determined by the Veldran Board of Directors in connection with the Spin-Off, subject to applicable governance arrangements.

4.5 Scope of Tax Opinion

The engagement calls for Calderwood & Harkness LLP to render a tax opinion letter (the "Opinion") at the "should" level of confidence, which is the second-highest level of comfort in the hierarchy of tax opinion standards (below "will" but above "more likely than not"). A "should" opinion represents the opinion of counsel that the stated tax consequences "should" follow from the described facts and applicable law, reflecting a high level of confidence that is not quite as absolute as a "will" opinion.

Specifically, the Opinion will address the following conclusions:

(a) The Distribution of Meridian common stock by Veldran to Veldran shareholders on a pro rata basis should qualify as a tax-free distribution under IRC § 355(a), such that (i) no gain or loss should be recognized by Veldran shareholders upon receipt of Meridian common stock in the Distribution, and (ii) each Veldran shareholder's aggregate tax basis in the Veldran and Meridian common stock held immediately after the Distribution should equal the shareholder's tax basis in the Veldran common stock held immediately before the Distribution, allocated between the Veldran and Meridian common stock based on their relative fair market values immediately after the Distribution.

(b) The Contribution of the Precision Flow Solutions Division assets and liabilities by Veldran to Meridian in exchange for Meridian common stock and the assumption of allocated liabilities should qualify as a reorganization under IRC § 368(a)(1)(D), and the associated transfers by Veldran to Meridian should qualify for nonrecognition treatment under IRC § 361.

Key Code Provisions to Be Analyzed. The Opinion will require a comprehensive analysis of the following provisions of the Code and the Treasury Regulations promulgated thereunder:

• IRC § 355(a) — General requirements for tax-free distributions (control, distribution of all stock, non-device, active trade or business, no disqualified stock, business purpose, continuity of interest)

• IRC § 355(b) — Active trade or business requirement (five-year history; no acquisition in taxable transaction within the five-year look-back period)

• IRC § 355(d) — Disqualified distributions (purchased stock limitations)

• IRC § 355(e) — Recognition of gain on certain distributions (anti-Morris Trust provision; "plan or series of related transactions" involving a 50% change in ownership)

• IRC § 355(g) — Disqualified investment corporations

• IRC § 368(a)(1)(D) — Divisive D reorganization requirements (transfer of assets, control, and distribution pursuant to § 355)

Factual Basis for Opinion. The Opinion will be based upon and subject to factual representations to be made by Veldran and Harrowgate in a Representation Letter (the "Representation Letter"). Calderwood & Harkness LLP will prepare the initial draft of the Representation Letter, which will be reviewed by Veldran management and counsel (Thornapple McCord LLP) and Harrowgate counsel (Whitfield & Gage LLP) and executed by authorized officers of Veldran and Harrowgate prior to the issuance of the Opinion.

No Private Letter Ruling. As stated above, no private letter ruling will be sought from the IRS with respect to the Spin-Off. The Opinion will serve as the sole tax assurance for the transaction.

4.6 Key Tax Issues Identified at Engagement Opening

The engagement team has identified the following issues as warranting particular attention during the course of the engagement. Each issue will be the subject of a detailed internal analysis memorandum to be prepared during the June–August 2022 time frame.

§ 355(b) Active Trade or Business — The Kestrel Acquisition

On June 7, 2019, Veldran acquired Kestrel Precision Controls, Inc. ("Kestrel"), a Georgia corporation (EIN 58-2847193; founded February 12, 2003), from Rennick Industrial Partners Fund II LP (EIN 82-3017564) in a fully taxable stock acquisition for a purchase price of $295 million. Kestrel is engaged in the design and manufacture of high-precision flow-control valves and instrumentation for the petrochemical and water-infrastructure sectors. Following the acquisition, Kestrel was integrated into Veldran's Precision Flow Solutions Division and currently comprises approximately 35% of the Division's total revenue.

Because the Kestrel acquisition was a taxable stock acquisition (rather than a tax-free reorganization), the acquisition of the Kestrel business by Veldran is subject to the five-year look-back rules of IRC § 355(b)(2)(C) and (D). Under these provisions, a trade or business that was acquired in a transaction in which gain or loss was recognized during the five-year period ending on the date of the Distribution generally cannot be relied upon to satisfy the active-trade-or-business requirement of § 355(b)(1). The Kestrel acquisition occurred on June 7, 2019, and the anticipated Distribution date is in Q4 2022, approximately three years and four to six months after the acquisition. Accordingly, the acquisition falls within the five-year look-back period, and the Kestrel business standing alone would not satisfy § 355(b)(1).

The analysis will need to determine whether the "remainder" of the Precision Flow Solutions Division business (excluding Kestrel) constitutes a qualifying active trade or business with at least a five-year history, and whether the contribution of the Kestrel subsidiary to Meridian along with the remainder of the Division can be structured in a manner that satisfies the statutory requirements. In addition, the analysis will address the application of the "expansion of existing business" doctrine under the Treasury Regulations and relevant case law, and whether the Kestrel acquisition can be characterized as an expansion of Veldran's pre-existing Precision Flow Solutions business rather than the acquisition of a separate trade or business.

§ 355(e) Anti-Morris Trust — Plan Analysis

IRC § 355(e) provides that if a distribution otherwise qualifying under § 355(a) is part of a "plan (or series of related transactions)" pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50-percent or greater interest in the distributing corporation or any controlled corporation, the distributing corporation must recognize gain on the distribution as if it had sold the controlled corporation's stock for its fair market value. Section 355(e) is commonly referred to as the "anti-Morris Trust" provision.

HPE Fund IV acquired its approximately 62.4% controlling stake in Veldran on September 20, 2019, through a combination tender offer and merger transaction that displaced the prior controlling shareholder, Greystone Partners Fund III LP (EIN 81-2683910). The acquisition price was $1,859,520,000 for 46,488,000 shares of Veldran common stock at $40.00 per share. This acquisition constituted a change of control of Veldran (and, by extension, of the Precision Flow Solutions Division and the future Meridian) that occurred approximately three years prior to the anticipated Q4 2022 Distribution date.

Under the safe-harbor provisions of Treasury Regulations § 1.355-7, acquisitions that occur more than two years before the Distribution benefit from a presumption that the acquisition is not part of a "plan" that includes the Distribution. However, this presumption is rebuttable, and the analysis must examine all facts and circumstances to determine whether the HPE Fund IV acquisition and the Distribution are part of a "plan or series of related transactions" within the meaning of § 355(e). Key factual inquiries will include: (i) whether the Spin-Off was discussed or contemplated at the time of the September 2019 acquisition; (ii) the evolution of the strategic rationale for the Spin-Off since the acquisition; (iii) the timing and substance of internal discussions within Harrowgate and within the Veldran Board regarding a potential separation of the Precision Flow Solutions Division; and (iv) communications with third parties (including potential acquirers of either business) that may bear on the "plan" analysis.

Tax Exposure if § 355(e) Applies. If § 355(e) were determined to apply to the Distribution, Veldran would be required to recognize gain on the distribution of Meridian stock as if it had sold such stock at fair market value. Based on the preliminary valuation range provided by Brackenridge & Co. (estimated fair market value of Meridian of $1.4 billion to $1.7 billion) and Veldran's estimated adjusted tax basis in the Precision Flow Solutions Division assets of approximately $800 million, the estimated built-in gain in the Meridian stock would be approximately $600 million to $900 million. At the current federal corporate tax rate of 21%, the resulting tax liability would be in the range of approximately $125.3 million to $189.5 million, exclusive of applicable state and local income taxes.

Business Purpose

Section 355(a)(1) requires, as interpreted by the Treasury Regulations and the case law (principally Gregory v. Helvering, 293 U.S. 465 (1935)), that a distribution be motivated by one or more substantial corporate-level business purposes. Harrowgate and Veldran have articulated the following corporate-level business purposes for the Spin-Off: (i) enabling each of Veldran (post-Spin) and Meridian to pursue independent capital-allocation strategies tailored to the distinct growth profiles and capital needs of their respective businesses; and (ii) enhancing management focus and operational efficiency by allowing dedicated management teams to concentrate exclusively on the strategic priorities of their respective businesses. The sufficiency and substantiality of these articulated business purposes will need to be evaluated in light of the relevant regulatory guidance and case law, with particular attention to whether non-tax business objectives (as opposed to shareholder-level or tax-motivated objectives) are the primary motivating factors for the transaction.

Device Test

Under IRC § 355(a)(1)(B), a distribution does not qualify for tax-free treatment under § 355(a) if the transaction was used principally as a "device" for the distribution of earnings and profits. The pro rata nature of the Distribution and the fact that Veldran's controlling shareholder is a private equity fund holding a 62.4% equity stake may raise device considerations, particularly if there is an expectation or plan for a post-spin sale of either Veldran or Meridian (or the equity interests therein) in a manner that would effectively convert what would otherwise have been dividend income into capital gains. The analysis will consider the device and non-device factors set forth in Treasury Regulations § 1.355-2(d), including the pro rata nature of the Distribution, the nature and use of the assets of Veldran and Meridian, post-distribution sales or negotiations, and the strong business purpose for the transaction.

Section 5: Related Parties and Affiliated Entities

The following entities were identified and screened during the matter-opening process. All entities listed below were included in the conflicts check described in Section 7 of this memorandum.

All of the foregoing entities have been entered into the firm's new-matter and conflicts-management system as parties associated with Matter HRW-SPIN-001. Any additional entities identified during the course of the engagement (including, without limitation, any Veldran or Meridian subsidiaries, co-investment vehicles, or additional shareholders) will be screened and added to the matter record in accordance with the firm's standard conflicts-clearance procedures.

Section 6: Other Counsel and Advisors

The following law firms, financial advisors, and other professional service providers have been identified as participants in the proposed transaction. The engagement team will coordinate with these parties as described below.

Whitfield & Gage LLP will serve as the primary coordinating counsel for the Spin-Off and will be responsible for drafting the principal transaction documents, including the Separation and Distribution Agreement, the Transition Services Agreement, the Employee Matters Agreement, and the related ancillary agreements. Calderwood & Harkness LLP will coordinate with Whitfield & Gage on the Tax Matters provisions to be included in the Separation and Distribution Agreement and will prepare a draft outline of the Tax Sharing Agreement (also referred to as the Tax Matters Agreement) to be entered into between Veldran and Meridian in connection with the Spin-Off.

Thornapple McCord LLP represents Veldran in its capacity as a controlled portfolio company and serves as Veldran's separate corporate counsel to address the inherent controlled-company dynamic arising from Harrowgate's majority ownership position. Calderwood & Harkness LLP will work with both Whitfield & Gage and Thornapple McCord on the factual representations to be included in the Representation Letter, which will require execution by authorized officers of both Veldran and Harrowgate.

Brackenridge & Co. is providing financial advisory services and will furnish valuation analyses relevant to the tax opinion, including the estimated fair market value of Meridian and the relative fair market values of Veldran (post-Spin) and Meridian for purposes of the basis-allocation analysis.

Pemberton Rathbone LLP, as Veldran's independent auditor and tax-return preparer, will be a key source of historical tax and financial information required for the engagement team's analysis, including historical tax returns, E&P computations, and asset-basis information.

Section 7: Conflict Check

A comprehensive conflict check has been completed and cleared in advance of the opening of this engagement. The conflict check was conducted in accordance with the firm's standard conflicts-clearance procedures and encompassed all parties identified in Sections 5 and 6 of this memorandum, including the Client, the Distributing Corporation, the planned Controlled Corporation, all affiliated entities, minority shareholders, other counsel and advisors, and the sellers and prior owners involved in the relevant historical transactions.

All identified parties were screened through the firm's electronic conflicts-management system (Greaves Services Inc.). No conflicts of interest were identified that would preclude or limit the firm's representation of the Client in connection with this engagement.

The conflict check has been reviewed and approved by the following partners:

• Leonard Cross, Responsible Partner

• Sylvia Hartwell, Billing Partner

A separate Conflict Check Memorandum documenting the search results, the parties screened, and the approval by the responsible and billing partners has been prepared and is maintained on file in the firm's conflicts-management records. The Conflict Check Memorandum reference is on file with the Office of the General Counsel.

The engagement team is reminded that any new parties or entities identified during the course of the engagement must be promptly submitted for supplemental conflicts screening in accordance with firm policy.

Section 8: Billing Arrangements

Fee Structure: This engagement will be billed on an hourly basis at the firm's standard rates for 2022, as set forth below, subject to any alternative fee arrangements or rate accommodations agreed upon in the executed engagement letter.

Estimated Total Fees: The total professional fees for this engagement are estimated to be in the range of $850,000 to $1,200,000, reflecting the anticipated scope of work required for the delivery of the final tax opinion, including the preparation of internal analysis memoranda, the Representation Letter, the tax opinion letter, and the Tax Matters / Tax Sharing Agreement provisions. This estimate assumes a transaction timeline consistent with the anticipated work plan set forth in Section 9 below and is subject to adjustment based on the complexity of the issues encountered, the volume of factual diligence required, and the number and extent of revisions to the opinion letter and ancillary documents.

Billing Rates (2022):

Out-of-pocket expenses (including travel, document reproduction, research-database charges, and similar disbursements) will be billed separately at cost, in accordance with the firm's standard expense-reimbursement policies and the terms of the engagement letter.

Billing Contact: All invoices and billing correspondence should be directed to:

Christine Yeung General Counsel Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022

Billing Frequency: Interim invoices will be submitted on a monthly basis, or on such other periodic basis as may be agreed upon with the billing contact. Invoices will include reasonably detailed descriptions of the services rendered and the time expended by each timekeeper, in accordance with the Client's outside-counsel billing guidelines.

Engagement Letter: The engagement letter for this matter was executed by the Client on April 11, 2022. A fully executed copy of the engagement letter is maintained in the firm's records and has been uploaded to the engagement-management system.

Section 9: Anticipated Work Plan and Timeline

The following work plan sets forth the anticipated milestones and deliverables for the engagement, organized by month. The work plan is subject to adjustment based on the pace of the transaction, the availability of information from the Client, Veldran management, and third-party advisors, and any changes to the anticipated transaction timeline.

April 2022

• Engagement opening and administrative setup (Matter Code HRW-SPIN-001 established; conflict check completed and cleared; engagement letter executed).

• Kick-off call with Client, Whitfield & Gage LLP (coordinating counsel), and Thornapple McCord LLP (Veldran corporate counsel) scheduled for April 18, 2022. The kick-off call will cover the transaction overview, current status of corporate and structuring workstreams, identification of key tax issues, and coordination protocols among counsel.

• Preparation and circulation of an initial information request list (the "Tax Diligence Request List") to Veldran management and Pemberton Rathbone LLP (independent auditor / tax-return preparer) by no later than April 25, 2022. The request list will cover historical tax returns, E&P computations, asset-basis schedules, organizational charts, intercompany agreements, historical acquisition documents (including the Kestrel acquisition and the HPE Fund IV acquisition of Veldran), and other items necessary for the substantive tax analysis.

May 2022

• Receipt and review of diligence materials responsive to the Tax Diligence Request List.

• Preparation and circulation of the initial draft of the Representation Letter (target: early May 2022). The Representation Letter will set forth the factual representations of Veldran and Harrowgate upon which the tax opinion will be based and will be coordinated with Whitfield & Gage and Thornapple McCord for review by the Client and Veldran management.

• Commencement of internal analysis memoranda on the key tax issues identified in Section 4.6, beginning with preliminary research on the § 355(b)(2)(C)/(D) analysis relating to the Kestrel acquisition.

June–July 2022

• Preparation and circulation of substantive internal tax analysis memoranda addressing the following topics:

• IRC § 355(b) active-trade-or-business analysis, with particular focus on the treatment of the Kestrel acquisition under § 355(b)(2)(C) and (D) and the "expansion of existing business" doctrine.

• IRC § 355(d) disqualified-distribution analysis.

• IRC § 355(e) anti-Morris Trust / "plan" analysis, with particular focus on the September 2019 HPE Fund IV acquisition and the applicability of the safe-harbor provisions of Treasury Regulations § 1.355-7.

• Device test analysis under IRC § 355(a)(1)(B) and Treasury Regulations § 1.355-2(d).

• Business purpose analysis under Treasury Regulations § 1.355-2(b).

• Continuity of interest and IRC § 368(a)(1)(D) reorganization analysis.

• State and local tax considerations (identification of material state-tax issues arising from the Spin-Off, including state-level conformity with federal § 355 treatment and any state-specific gain-recognition rules).

• Circulation and negotiation of a second draft of the Representation Letter, incorporating comments from the Client, Veldran management, Whitfield & Gage, and Thornapple McCord.

• Coordination with Brackenridge & Co. on valuation inputs, including the estimated fair market value of Meridian, the relative fair market values of Veldran (post-Spin) and Meridian, and the computation of estimated built-in gain for purposes of the § 355(e) exposure analysis.

August–September 2022

• Preparation and circulation of the initial draft of the tax opinion letter to the Client, Whitfield & Gage, and Thornapple McCord for review and comment.

• Finalization of the Representation Letter, incorporating final factual representations confirmed by Veldran management and the Client.

• Preparation of the Tax Matters provisions to be included in the Separation and Distribution Agreement (in coordination with Whitfield & Gage and Thornapple McCord).

• Preparation of a draft outline of the Tax Sharing Agreement (Tax Matters Agreement) between Veldran and Meridian, covering allocation of pre-spin tax liabilities, indemnification obligations, cooperation and information-sharing covenants, and restrictions on post-spin actions that could jeopardize the tax-free status of the Spin-Off.

• Iterative review and revision of the tax opinion letter based on comments from the Client, Veldran management, and coordinating counsel.

Target Opinion Delivery: Late Q3 2022 (September 2022), in advance of the anticipated Q4 2022 Distribution date. Final delivery of the opinion is contingent upon receipt of the executed Representation Letter and the satisfaction of all conditions to the issuance of the opinion.

Section 10: Special Considerations / Notes

The following special considerations have been identified in connection with this engagement and are noted here for the reference of the engagement team and firm administration.

Dual Representation. Calderwood & Harkness LLP will serve as tax counsel to both Harrowgate Private Equity Fund IV, L.P. (as the PE sponsor and controlling shareholder of Veldran) and Veldran Industries Holdings, Inc. (as the distributing corporation) in connection with the Spin-Off. This dual-representation arrangement has been disclosed to and consented to by both parties. To address the controlled-company dynamic inherent in this structure, Veldran is separately represented by Thornapple McCord LLP for all corporate and non-tax legal matters relating to the Spin-Off. The engagement team should be mindful of the dual-representation arrangement and should consult with the Responsible Partner in the event that any issue arises where the interests of Harrowgate and Veldran may diverge.

Sole Tax Assurance — No Private Letter Ruling. As noted throughout this memorandum, no private letter ruling will be sought from the IRS in connection with the Spin-Off. The tax opinion to be issued by Calderwood & Harkness LLP will serve as the sole tax assurance for the transaction. This heightens the importance of a thorough and well-documented factual record and a rigorous analysis of all material tax issues. The engagement team should ensure that the Representation Letter is comprehensive and that all material factual assumptions underlying the opinion are documented and confirmed.

Veldran Capital Structure — Covenant Analysis. The Veldran capital structure includes two significant debt instruments that will require attention in connection with the Spin-Off:

(i) A $1.1 billion First Lien Term Loan B, with Ashfield National Bank, N.A. as administrative agent. The credit agreement governing the Term Loan B is expected to contain covenants restricting restricted payments, asset dispositions, and fundamental changes (including spin-offs and distributions of subsidiary equity), and the consummation of the Spin-Off may require the consent of the requisite lenders or the satisfaction of specified conditions under the credit agreement. The engagement team should coordinate with Whitfield & Gage (and, as necessary, with Thornapple McCord) to ensure that the tax opinion addresses any tax-related conditions or representations required under the credit agreement.

(ii) $450 million aggregate principal amount of 6.250% Senior Unsecured Notes due 2027, with Colton Trust Company as indenture trustee. The indenture governing the Notes may contain similar restrictive covenants, and the engagement team should coordinate with corporate counsel to confirm the applicability and satisfaction of any tax-related conditions under the indenture.

Preliminary Valuation — Meridian (SpinCo). Brackenridge & Co. has provided a preliminary indicative valuation range for Meridian (SpinCo) of $1.4 billion to $1.7 billion, based on an enterprise value / EBITDA multiple range of 10.5× to 12.8× applied to Meridian's pro forma fiscal year 2021 EBITDA of approximately $133 million. This preliminary valuation range will be refined during the course of the engagement and will inform the computation of estimated built-in gain for purposes of the § 355(e) exposure analysis and the basis-allocation analysis for Veldran shareholders.

Estimated Built-In Gain on Meridian Stock. Based on the preliminary Brackenridge & Co. valuation range and Veldran's estimated adjusted tax basis in the assets comprising the Precision Flow Solutions Division of approximately $800 million, the estimated built-in gain in the Meridian stock is approximately $600 million to $900 million. This estimate is preliminary and will be refined as additional financial and tax information is received from Veldran and Pemberton Rathbone LLP.

Tax Exposure if § 355(e) Triggered. If IRC § 355(e) were determined to apply to the Distribution, Veldran would be required to recognize gain on the distribution of Meridian stock equal to the excess of the fair market value of the Meridian stock over Veldran's adjusted tax basis in such stock. Based on the preliminary estimates described above, the resulting federal income tax liability at the current 21% corporate rate would be in the range of approximately $125.3 million to $189.5 million, exclusive of state and local income taxes. This represents a material tax exposure that underscores the critical importance of the § 355(e) "plan" analysis to the overall engagement.

Section 11: Approvals and Signatures

This New Matter Opening Memorandum has been prepared by the Lead Associate identified below and has been reviewed and approved by the Responsible Partner and Billing Partner for Matter HRW-SPIN-001.

Prepared By:

Garrett Simmons Senior Associate, Tax Department Calderwood & Harkness LLP

Reviewed and Approved By:

LEONARD CROSS Partner, Tax Department Calderwood & Harkness LLP Responsible Partner — Matter HRW-SPIN-001

Signature: ________

Date: April 11, 2022

SYLVIA HARTWELL Partner, Tax Department Calderwood & Harkness LLP Billing Partner — Matter HRW-SPIN-001

Signature: ________

Date: April 11, 2022

Administrative Confirmation:

New Matter System Entry Confirmed: April 11, 2022

Matter Code Assigned: HRW-SPIN-001

Engagement Number Assigned: 1003-00005

This memorandum is prepared for internal administrative purposes of Calderwood & Harkness LLP and is subject to the attorney-client privilege and the work-product doctrine. It is not intended for distribution outside the firm and should not be disclosed to any third party without the prior written approval of the Responsible Partner.

Field	Detail
Matter Code	HRW-SPIN-001
Engagement Number	1003-00005
Date Opened	April 11, 2022
Opened By	Leonard Cross, Partner, Tax Department
Department	Tax
Practice Area	Corporate Tax — Spin-Offs / Reorganizations
Entity	Role	Jurisdiction	EIN
Harrowgate Private Equity Fund IV, L.P.	Client	Delaware LP	84-3291067
Harrowgate Capital Partners IV GP LLC	General Partner of Client	Delaware LLC	84-3291104
Harrowgate Capital Advisors LLC	Investment Advisor / Manager	Delaware LLC	83-2756891
Harrowgate Veldran Holdings LLC	Holding vehicle for Veldran equity stake	Delaware LLC	86-1483920
Veldran Industries Holdings, Inc.	Distributing Corporation	Delaware Corp.	86-1920347
Meridian Flow Technologies, Inc.	Controlled Corporation (SpinCo)	Delaware Corp. (planned)	Not yet assigned
Kestrel Precision Controls, Inc.	Veldran subsidiary (acquired June 7, 2019)	Georgia Corp.	58-2847193
Prescott Capital Management LP	Minority shareholder of Veldran (~14.8% / 11,026,000 shares)	New York LP	13-4928371
Rennick Industrial Partners Fund II LP	Former owner of Kestrel (seller in June 2019 acquisition)	Delaware LP	82-3017564
Greystone Partners Fund III LP	Prior controlling shareholder of Veldran (displaced in Sept. 2019 acquisition)	Delaware LP	81-2683910
Firm / Entity	Role	Key Contact(s)
Whitfield & Gage LLP	Corporate / M&A counsel to Harrowgate; coordinating counsel for the Spin-Off	Priya Chandrasekar, Partner; Nathan Whitfield, Senior Partner; Ross Halverson, Counsel

51 West 52nd Street, New York, NY 10019

Thornapple McCord LLP

227 West Trade Street, Suite 2000, Charlotte, NC 28202

CALDERWOOD & HARKNESS LLP
NEW MATTER OPENING MEMORANDUM
INTERNAL / CONFIDENTIAL — FOR ADMINISTRATIVE USE ONLY
1301 Avenue of the Americas, 40th Floor New York, New York 10019
Section 1: Matter Information
This memorandum documents the opening of a new client matter within the Tax Department of Calderwood & Harkness LLP. The engagement relates to the rendering of a tax opinion in connection with a proposed corporate spin-off transaction, as described in detail in Section 4 below. All information contained herein has been compiled for internal administrative and conflicts-management purposes and should be treated as confidential in accordance with the firm's information-governance policies.
Section 2: Responsible Attorneys
The following attorneys have been designated as the engagement team for Matter HRW-SPIN-001. Staffing may be adjusted during the course of the engagement at the discretion of the Responsible Partner.
Responsible Partner — Leonard Cross
Title: Partner, Tax Department (Partner since 2010)
Practice Focus: Corporate spin-offs, divisive reorganizations, and mergers and acquisitions tax. Mr. Cross has led the firm's tax opinion practice on more than forty spin-off transactions since joining the partnership, including several transactions involving private-equity-controlled distributing corporations. He will serve as the primary relationship partner and the signing partner for the tax opinion to be issued in connection with this engagement.
Billing Partner — Sylvia Hartwell
Title: Partner, Tax Department (Partner since 2014)
Practice Focus: Partnership taxation, fund formation, and fund-level tax structuring. Ms. Hartwell has advised Harrowgate Capital Advisors LLC and its affiliated fund entities on federal income tax matters since the formation of Harrowgate Private Equity Fund III, L.P. in 2014 and serves as the primary billing relationship partner for the Harrowgate platform. She will supervise coordination with Harrowgate's General Counsel on billing and engagement-scope matters and will provide substantive input on partnership-level tax considerations arising from the spin-off.
Lead Associate — Garrett Simmons
Title: Senior Associate, Tax Department (6th year)
Education: J.D., Georgetown University Law Center; LL.M. (Taxation), New York University School of Law
Mr. Simmons will serve as the day-to-day lead for the engagement and will be responsible for drafting the internal tax analysis memoranda, the representation letter, and the initial draft of the tax opinion. He has participated in eleven prior spin-off opinion engagements at the firm and has extensive experience analyzing the active-trade-or-business requirements under IRC § 355(b) and the anti-avoidance provisions of IRC §§ 355(d) and 355(e).
Working Associate — Leila Nazari
Title: Associate, Tax Department (3rd year)
Education: J.D., Columbia Law School; LL.M. (Taxation), New York University School of Law
Ms. Nazari will assist Mr. Simmons with factual diligence, research, and memorandum preparation. She will be primarily responsible for the initial research and analysis of the § 355(e) "plan" inquiry as well as the § 355(b)(2)(C)/(D) analysis in light of the Kestrel acquisition discussed below.
Section 3: Client Information
Client Name: Harrowgate Private Equity Fund IV, L.P.
Short Name / Billing Name: HPE Fund IV / Harrowgate
Entity Type: Delaware limited partnership, formed under the Delaware Revised Uniform Limited Partnership Act
EIN: 84-3291067
Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent)
Principal Office: 600 Lexington Avenue, 38th Floor, New York, New York 10022
General Partner: Harrowgate Capital Partners IV GP LLC, a Delaware limited liability company (EIN 84-3291104). The General Partner manages the day-to-day affairs of HPE Fund IV and has authorized the engagement of Calderwood & Harkness LLP in connection with the matters described herein.
Investment Advisor / Manager: Harrowgate Capital Advisors LLC, a Delaware limited liability company (EIN 83-2756891). Harrowgate Capital Advisors LLC serves as the investment advisor and management-company entity for the Harrowgate fund platform, and its personnel, including the individuals identified below, oversee investment and portfolio-management activities on behalf of HPE Fund IV and its parallel and co-investment vehicles.
Primary Client Contact:
Christine Yeung General Counsel Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022
Ms. Yeung will serve as the primary point of contact for all legal, billing, and engagement-scope communications. All invoices and billing correspondence should be directed to her attention.
Additional Client Contacts:
Diana Fenn Managing Partner & Chief Investment Officer Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022
Ms. Fenn is the co-founder and Managing Partner of the Harrowgate platform and oversees all investment decisions. She also serves as Chair of the Board of Directors of Veldran Industries Holdings, Inc. (the distributing corporation in the proposed transaction). Communications with Ms. Fenn should be coordinated through Ms. Yeung.
Tobias Rourke Partner, Head of Portfolio Operations Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022
Mr. Rourke leads the Harrowgate portfolio-operations team and serves as the primary Harrowgate representative interfacing with Veldran management on operational and strategic matters, including the planning and execution of the proposed spin-off. He will be a principal source of factual information regarding the business rationale for the transaction.
Fund Size: Approximately $6.8 billion in aggregate committed capital (vintage year 2018). HPE Fund IV is the largest fund in the Harrowgate platform to date and invests primarily in North American industrial and business-services companies.
Section 4: Matter Description
4.1 Overview of Engagement
Calderwood & Harkness LLP has been engaged by Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV" or the "Client") to render a tax opinion at the "should" level of comfort (the second-highest level of confidence in the hierarchy of tax opinion standards) addressing the federal income tax consequences of the proposed pro rata spin-off of the Precision Flow Solutions Division of Veldran Industries Holdings, Inc. ("Veldran" or the "Distributing Corporation") into a newly formed entity, Meridian Flow Technologies, Inc. ("Meridian," "SpinCo," or the "Controlled Corporation").
Specifically, the opinion will address whether: (i) the proposed distribution of all of the outstanding shares of Meridian common stock by Veldran to its shareholders on a pro rata basis should qualify as a tax-free distribution under Section 355(a) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), and (ii) the immediately preceding contribution of assets and liabilities of the Precision Flow Solutions Division by Veldran to Meridian in exchange for Meridian common stock and the assumption of allocated liabilities should qualify as a reorganization under IRC § 368(a)(1)(D).
The Client has informed us that no private letter ruling will be sought from the Internal Revenue Service ("IRS") in connection with the proposed transaction. Accordingly, the tax opinion to be rendered by Calderwood & Harkness LLP will serve as the sole tax assurance for the spin-off for purposes of the Veldran Board of Directors' approval process, the satisfaction of conditions under Veldran's debt instruments, and the disclosure obligations under applicable securities laws.
4.2 Transaction Summary
Proposed Transaction. The proposed transaction (the "Spin-Off") contemplates a pro rata distribution by Veldran Industries Holdings, Inc. of one hundred percent (100%) of the issued and outstanding shares of common stock of Meridian Flow Technologies, Inc. to all holders of Veldran common stock (the "Distribution"). The Distribution will be preceded by a series of internal restructuring steps (collectively with the Distribution, the "Spin-Off"), the principal element of which is the contribution of assets and liabilities described below.
Pre-Spin Internal Restructuring — The Contribution. Prior to and in connection with the Distribution, Veldran will contribute all of the assets (including the equity interests in subsidiaries) and liabilities comprising the Precision Flow Solutions Division to Meridian, a newly formed, wholly owned subsidiary of Veldran, in exchange for (a) all of the issued and outstanding shares of Meridian common stock and (b) Meridian's assumption of all allocated liabilities associated with the Precision Flow Solutions Division (the "Contribution"). The Contribution is intended to qualify as a transfer described in IRC § 368(a)(1)(D) and IRC § 351, with the associated nonrecognition treatment for the transferor (Veldran) under IRC § 361.
Immediately following the Contribution, Veldran will distribute all of the Meridian common stock received in the Contribution to the holders of Veldran common stock on a pro rata basis (the "Distribution"). Together, the Contribution and the Distribution are referred to herein as the "Spin-Off."
Distribution Ratio. The Distribution will be effected on a 1:1 basis, meaning that each holder of Veldran common stock will receive one (1) share of Meridian common stock for each share of Veldran common stock held by such holder as of the close of business on the record date to be established by the Veldran Board of Directors.
Anticipated Timing. The transaction is currently targeted for completion during the fourth quarter of calendar year 2022 (Q4 2022), subject to the satisfaction of customary conditions, including receipt of the tax opinion, completion of required SEC filings and registrations, and satisfaction of conditions and consents under Veldran's outstanding debt instruments.
No IRS Private Letter Ruling. As noted above, no private letter ruling will be sought from the IRS in connection with the Spin-Off. The Calderwood & Harkness tax opinion will serve as the sole tax assurance for the transaction. This decision reflects both the current extended processing times for private letter ruling requests at the IRS National Office and the Client's preference to maintain flexibility with respect to the transaction timeline.
4.3 Distributing Corporation — Veldran Industries Holdings, Inc.
The Distributing Corporation in the proposed Spin-Off is Veldran Industries Holdings, Inc. Set forth below is a summary of key identifying and business information for Veldran.
Full Legal Name: Veldran Industries Holdings, Inc.
Entity Type: Corporation, organized under the laws of the State of Delaware
EIN: 86-1920347
Date of Incorporation: March 14, 2019
Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent)
Principal Office: 2400 Commerce Park Drive, Suite 500, Charlotte, North Carolina 28217
Industry: Diversified industrial products and engineered materials
Fiscal Year 2021 Revenue: Approximately $2.34 billion
Fiscal Year 2021 EBITDA: Approximately $418 million
Total Employees: Approximately 8,200
Senior Management:
•  Chief Executive Officer: Jonathan Caldecott
•  Chief Financial Officer: Rita Subramanian
•  General Counsel: Philip Crundell
Board Chair: Diana Fenn (Harrowgate Capital Advisors LLC designee)
Business Segments. Veldran operates through two principal business segments:
Engineered Coatings Division — This division designs, manufactures, and distributes advanced surface-coating and material-protection products for the aerospace, automotive, and energy end markets. The Engineered Coatings Division will remain with Veldran following the completion of the Spin-Off and is expected to be Veldran's sole operating business post-Distribution. For fiscal year 2021, the Engineered Coatings Division generated approximately $1.52 billion in revenue and approximately $285 million in EBITDA.
Precision Flow Solutions Division — This division designs, manufactures, and sells precision fluid-control systems, including valves, actuators, regulators, and measurement instruments, for industrial, petrochemical, and water-infrastructure end markets. The Precision Flow Solutions Division is the business to be transferred to Meridian and spun off in the proposed transaction. For fiscal year 2021, the Precision Flow Solutions Division generated approximately $820 million in revenue and approximately $133 million in EBITDA.
Ownership by Client. HPE Fund IV holds approximately 62.4% of the outstanding shares of Veldran common stock, representing 46,488,000 of the 74,500,000 shares of Veldran common stock currently outstanding. HPE Fund IV's interest in Veldran is held through its wholly owned subsidiary, Harrowgate Veldran Holdings LLC, a Delaware limited liability company (EIN 86-1483920). Harrowgate Veldran Holdings LLC was organized as a single-purpose holding vehicle for the purpose of acquiring and holding the Veldran equity position and is treated as a disregarded entity for federal income tax purposes.
The remaining approximately 37.6% of Veldran common stock is held by a combination of minority institutional investors (including Prescott Capital Management LP, which holds approximately 14.8% of Veldran common stock, or 11,026,000 shares) and management equity holders.
4.4 Controlled Corporation — Meridian Flow Technologies, Inc.
The Controlled Corporation (or "SpinCo") in the proposed Spin-Off will be Meridian Flow Technologies, Inc. Meridian has not yet been incorporated; it will be formed as a new Delaware corporation in connection with the pre-Spin internal restructuring steps. Set forth below is a summary of planned identifying and business information for Meridian.
Full Legal Name (planned): Meridian Flow Technologies, Inc.
Entity Type: Delaware corporation (to be formed)
Planned Registered Address: 1209 Orange Street, Wilmington, Delaware 19801 (c/o Crowne Albany Corporation, registered agent)
Planned Principal Office: 7100 Northlake Parkway, Suite 300, Tucker, Georgia 30084
Business: Design, manufacture, and sale of precision fluid-control systems for industrial, petrochemical, and water-infrastructure end markets. Meridian's business will comprise all of the operations, assets, and liabilities currently constituting Veldran's Precision Flow Solutions Division.
Pro Forma Fiscal Year 2021 Revenue: Approximately $820 million
Pro Forma Fiscal Year 2021 EBITDA: Approximately $133 million
Planned Senior Management:
•  Planned Chief Executive Officer: Sandra Waverly (currently President, Precision Flow Solutions Division, Veldran Industries Holdings, Inc.)
•  Planned Chief Financial Officer: Derek Okonkwo (currently Vice President of Finance, Precision Flow Solutions Division, Veldran Industries Holdings, Inc.)
It is anticipated that Meridian will be incorporated shortly before the Contribution and Distribution and will have no operations, assets, or liabilities prior to the consummation of the Contribution. The board of directors and management team of Meridian will be determined by the Veldran Board of Directors in connection with the Spin-Off, subject to applicable governance arrangements.
4.5 Scope of Tax Opinion
The engagement calls for Calderwood & Harkness LLP to render a tax opinion letter (the "Opinion") at the "should" level of confidence, which is the second-highest level of comfort in the hierarchy of tax opinion standards (below "will" but above "more likely than not"). A "should" opinion represents the opinion of counsel that the stated tax consequences "should" follow from the described facts and applicable law, reflecting a high level of confidence that is not quite as absolute as a "will" opinion.
Specifically, the Opinion will address the following conclusions:
(a) The Distribution of Meridian common stock by Veldran to Veldran shareholders on a pro rata basis should qualify as a tax-free distribution under IRC § 355(a), such that (i) no gain or loss should be recognized by Veldran shareholders upon receipt of Meridian common stock in the Distribution, and (ii) each Veldran shareholder's aggregate tax basis in the Veldran and Meridian common stock held immediately after the Distribution should equal the shareholder's tax basis in the Veldran common stock held immediately before the Distribution, allocated between the Veldran and Meridian common stock based on their relative fair market values immediately after the Distribution.
(b) The Contribution of the Precision Flow Solutions Division assets and liabilities by Veldran to Meridian in exchange for Meridian common stock and the assumption of allocated liabilities should qualify as a reorganization under IRC § 368(a)(1)(D), and the associated transfers by Veldran to Meridian should qualify for nonrecognition treatment under IRC § 361.
Key Code Provisions to Be Analyzed. The Opinion will require a comprehensive analysis of the following provisions of the Code and the Treasury Regulations promulgated thereunder:
•  IRC § 355(a) — General requirements for tax-free distributions (control, distribution of all stock, non-device, active trade or business, no disqualified stock, business purpose, continuity of interest)
•  IRC § 355(b) — Active trade or business requirement (five-year history; no acquisition in taxable transaction within the five-year look-back period)
•  IRC § 355(d) — Disqualified distributions (purchased stock limitations)
•  IRC § 355(e) — Recognition of gain on certain distributions (anti-Morris Trust provision; "plan or series of related transactions" involving a 50% change in ownership)
•  IRC § 355(g) — Disqualified investment corporations
•  IRC § 368(a)(1)(D) — Divisive D reorganization requirements (transfer of assets, control, and distribution pursuant to § 355)
Factual Basis for Opinion. The Opinion will be based upon and subject to factual representations to be made by Veldran and Harrowgate in a Representation Letter (the "Representation Letter"). Calderwood & Harkness LLP will prepare the initial draft of the Representation Letter, which will be reviewed by Veldran management and counsel (Thornapple McCord LLP) and Harrowgate counsel (Whitfield & Gage LLP) and executed by authorized officers of Veldran and Harrowgate prior to the issuance of the Opinion.
No Private Letter Ruling. As stated above, no private letter ruling will be sought from the IRS with respect to the Spin-Off. The Opinion will serve as the sole tax assurance for the transaction.
4.6 Key Tax Issues Identified at Engagement Opening
The engagement team has identified the following issues as warranting particular attention during the course of the engagement. Each issue will be the subject of a detailed internal analysis memorandum to be prepared during the June–August 2022 time frame.
§ 355(b) Active Trade or Business — The Kestrel Acquisition
On June 7, 2019, Veldran acquired Kestrel Precision Controls, Inc. ("Kestrel"), a Georgia corporation (EIN 58-2847193; founded February 12, 2003), from Rennick Industrial Partners Fund II LP (EIN 82-3017564) in a fully taxable stock acquisition for a purchase price of $295 million. Kestrel is engaged in the design and manufacture of high-precision flow-control valves and instrumentation for the petrochemical and water-infrastructure sectors. Following the acquisition, Kestrel was integrated into Veldran's Precision Flow Solutions Division and currently comprises approximately 35% of the Division's total revenue.
Because the Kestrel acquisition was a taxable stock acquisition (rather than a tax-free reorganization), the acquisition of the Kestrel business by Veldran is subject to the five-year look-back rules of IRC § 355(b)(2)(C) and (D). Under these provisions, a trade or business that was acquired in a transaction in which gain or loss was recognized during the five-year period ending on the date of the Distribution generally cannot be relied upon to satisfy the active-trade-or-business requirement of § 355(b)(1). The Kestrel acquisition occurred on June 7, 2019, and the anticipated Distribution date is in Q4 2022, approximately three years and four to six months after the acquisition. Accordingly, the acquisition falls within the five-year look-back period, and the Kestrel business standing alone would not satisfy § 355(b)(1).
The analysis will need to determine whether the "remainder" of the Precision Flow Solutions Division business (excluding Kestrel) constitutes a qualifying active trade or business with at least a five-year history, and whether the contribution of the Kestrel subsidiary to Meridian along with the remainder of the Division can be structured in a manner that satisfies the statutory requirements. In addition, the analysis will address the application of the "expansion of existing business" doctrine under the Treasury Regulations and relevant case law, and whether the Kestrel acquisition can be characterized as an expansion of Veldran's pre-existing Precision Flow Solutions business rather than the acquisition of a separate trade or business.
§ 355(e) Anti-Morris Trust — Plan Analysis
IRC § 355(e) provides that if a distribution otherwise qualifying under § 355(a) is part of a "plan (or series of related transactions)" pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50-percent or greater interest in the distributing corporation or any controlled corporation, the distributing corporation must recognize gain on the distribution as if it had sold the controlled corporation's stock for its fair market value. Section 355(e) is commonly referred to as the "anti-Morris Trust" provision.
HPE Fund IV acquired its approximately 62.4% controlling stake in Veldran on September 20, 2019, through a combination tender offer and merger transaction that displaced the prior controlling shareholder, Greystone Partners Fund III LP (EIN 81-2683910). The acquisition price was $1,859,520,000 for 46,488,000 shares of Veldran common stock at $40.00 per share. This acquisition constituted a change of control of Veldran (and, by extension, of the Precision Flow Solutions Division and the future Meridian) that occurred approximately three years prior to the anticipated Q4 2022 Distribution date.
Under the safe-harbor provisions of Treasury Regulations § 1.355-7, acquisitions that occur more than two years before the Distribution benefit from a presumption that the acquisition is not part of a "plan" that includes the Distribution. However, this presumption is rebuttable, and the analysis must examine all facts and circumstances to determine whether the HPE Fund IV acquisition and the Distribution are part of a "plan or series of related transactions" within the meaning of § 355(e). Key factual inquiries will include: (i) whether the Spin-Off was discussed or contemplated at the time of the September 2019 acquisition; (ii) the evolution of the strategic rationale for the Spin-Off since the acquisition; (iii) the timing and substance of internal discussions within Harrowgate and within the Veldran Board regarding a potential separation of the Precision Flow Solutions Division; and (iv) communications with third parties (including potential acquirers of either business) that may bear on the "plan" analysis.
Tax Exposure if § 355(e) Applies. If § 355(e) were determined to apply to the Distribution, Veldran would be required to recognize gain on the distribution of Meridian stock as if it had sold such stock at fair market value. Based on the preliminary valuation range provided by Brackenridge & Co. (estimated fair market value of Meridian of $1.4 billion to $1.7 billion) and Veldran's estimated adjusted tax basis in the Precision Flow Solutions Division assets of approximately $800 million, the estimated built-in gain in the Meridian stock would be approximately $600 million to $900 million. At the current federal corporate tax rate of 21%, the resulting tax liability would be in the range of approximately $125.3 million to $189.5 million, exclusive of applicable state and local income taxes.
Business Purpose
Section 355(a)(1) requires, as interpreted by the Treasury Regulations and the case law (principally Gregory v. Helvering, 293 U.S. 465 (1935)), that a distribution be motivated by one or more substantial corporate-level business purposes. Harrowgate and Veldran have articulated the following corporate-level business purposes for the Spin-Off: (i) enabling each of Veldran (post-Spin) and Meridian to pursue independent capital-allocation strategies tailored to the distinct growth profiles and capital needs of their respective businesses; and (ii) enhancing management focus and operational efficiency by allowing dedicated management teams to concentrate exclusively on the strategic priorities of their respective businesses. The sufficiency and substantiality of these articulated business purposes will need to be evaluated in light of the relevant regulatory guidance and case law, with particular attention to whether non-tax business objectives (as opposed to shareholder-level or tax-motivated objectives) are the primary motivating factors for the transaction.
Device Test
Under IRC § 355(a)(1)(B), a distribution does not qualify for tax-free treatment under § 355(a) if the transaction was used principally as a "device" for the distribution of earnings and profits. The pro rata nature of the Distribution and the fact that Veldran's controlling shareholder is a private equity fund holding a 62.4% equity stake may raise device considerations, particularly if there is an expectation or plan for a post-spin sale of either Veldran or Meridian (or the equity interests therein) in a manner that would effectively convert what would otherwise have been dividend income into capital gains. The analysis will consider the device and non-device factors set forth in Treasury Regulations § 1.355-2(d), including the pro rata nature of the Distribution, the nature and use of the assets of Veldran and Meridian, post-distribution sales or negotiations, and the strong business purpose for the transaction.
Section 5: Related Parties and Affiliated Entities
The following entities were identified and screened during the matter-opening process. All entities listed below were included in the conflicts check described in Section 7 of this memorandum.
All of the foregoing entities have been entered into the firm's new-matter and conflicts-management system as parties associated with Matter HRW-SPIN-001. Any additional entities identified during the course of the engagement (including, without limitation, any Veldran or Meridian subsidiaries, co-investment vehicles, or additional shareholders) will be screened and added to the matter record in accordance with the firm's standard conflicts-clearance procedures.
Section 6: Other Counsel and Advisors
The following law firms, financial advisors, and other professional service providers have been identified as participants in the proposed transaction. The engagement team will coordinate with these parties as described below.
Whitfield & Gage LLP will serve as the primary coordinating counsel for the Spin-Off and will be responsible for drafting the principal transaction documents, including the Separation and Distribution Agreement, the Transition Services Agreement, the Employee Matters Agreement, and the related ancillary agreements. Calderwood & Harkness LLP will coordinate with Whitfield & Gage on the Tax Matters provisions to be included in the Separation and Distribution Agreement and will prepare a draft outline of the Tax Sharing Agreement (also referred to as the Tax Matters Agreement) to be entered into between Veldran and Meridian in connection with the Spin-Off.
Thornapple McCord LLP represents Veldran in its capacity as a controlled portfolio company and serves as Veldran's separate corporate counsel to address the inherent controlled-company dynamic arising from Harrowgate's majority ownership position. Calderwood & Harkness LLP will work with both Whitfield & Gage and Thornapple McCord on the factual representations to be included in the Representation Letter, which will require execution by authorized officers of both Veldran and Harrowgate.
Brackenridge & Co. is providing financial advisory services and will furnish valuation analyses relevant to the tax opinion, including the estimated fair market value of Meridian and the relative fair market values of Veldran (post-Spin) and Meridian for purposes of the basis-allocation analysis.
Pemberton Rathbone LLP, as Veldran's independent auditor and tax-return preparer, will be a key source of historical tax and financial information required for the engagement team's analysis, including historical tax returns, E&P computations, and asset-basis information.
Section 7: Conflict Check
A comprehensive conflict check has been completed and cleared in advance of the opening of this engagement. The conflict check was conducted in accordance with the firm's standard conflicts-clearance procedures and encompassed all parties identified in Sections 5 and 6 of this memorandum, including the Client, the Distributing Corporation, the planned Controlled Corporation, all affiliated entities, minority shareholders, other counsel and advisors, and the sellers and prior owners involved in the relevant historical transactions.
All identified parties were screened through the firm's electronic conflicts-management system (Greaves Services Inc.). No conflicts of interest were identified that would preclude or limit the firm's representation of the Client in connection with this engagement.
The conflict check has been reviewed and approved by the following partners:
•  Leonard Cross, Responsible Partner
•  Sylvia Hartwell, Billing Partner
A separate Conflict Check Memorandum documenting the search results, the parties screened, and the approval by the responsible and billing partners has been prepared and is maintained on file in the firm's conflicts-management records. The Conflict Check Memorandum reference is on file with the Office of the General Counsel.
The engagement team is reminded that any new parties or entities identified during the course of the engagement must be promptly submitted for supplemental conflicts screening in accordance with firm policy.
Section 8: Billing Arrangements
Fee Structure: This engagement will be billed on an hourly basis at the firm's standard rates for 2022, as set forth below, subject to any alternative fee arrangements or rate accommodations agreed upon in the executed engagement letter.
Estimated Total Fees: The total professional fees for this engagement are estimated to be in the range of $850,000 to $1,200,000, reflecting the anticipated scope of work required for the delivery of the final tax opinion, including the preparation of internal analysis memoranda, the Representation Letter, the tax opinion letter, and the Tax Matters / Tax Sharing Agreement provisions. This estimate assumes a transaction timeline consistent with the anticipated work plan set forth in Section 9 below and is subject to adjustment based on the complexity of the issues encountered, the volume of factual diligence required, and the number and extent of revisions to the opinion letter and ancillary documents.
Billing Rates (2022):
Out-of-pocket expenses (including travel, document reproduction, research-database charges, and similar disbursements) will be billed separately at cost, in accordance with the firm's standard expense-reimbursement policies and the terms of the engagement letter.
Billing Contact: All invoices and billing correspondence should be directed to:
Christine Yeung General Counsel Harrowgate Capital Advisors LLC 600 Lexington Avenue, 38th Floor New York, New York 10022
Billing Frequency: Interim invoices will be submitted on a monthly basis, or on such other periodic basis as may be agreed upon with the billing contact. Invoices will include reasonably detailed descriptions of the services rendered and the time expended by each timekeeper, in accordance with the Client's outside-counsel billing guidelines.
Engagement Letter: The engagement letter for this matter was executed by the Client on April 11, 2022. A fully executed copy of the engagement letter is maintained in the firm's records and has been uploaded to the engagement-management system.
Section 9: Anticipated Work Plan and Timeline
The following work plan sets forth the anticipated milestones and deliverables for the engagement, organized by month. The work plan is subject to adjustment based on the pace of the transaction, the availability of information from the Client, Veldran management, and third-party advisors, and any changes to the anticipated transaction timeline.
April 2022
•  Engagement opening and administrative setup (Matter Code HRW-SPIN-001 established; conflict check completed and cleared; engagement letter executed).
•  Kick-off call with Client, Whitfield & Gage LLP (coordinating counsel), and Thornapple McCord LLP (Veldran corporate counsel) scheduled for April 18, 2022. The kick-off call will cover the transaction overview, current status of corporate and structuring workstreams, identification of key tax issues, and coordination protocols among counsel.
•  Preparation and circulation of an initial information request list (the "Tax Diligence Request List") to Veldran management and Pemberton Rathbone LLP (independent auditor / tax-return preparer) by no later than April 25, 2022. The request list will cover historical tax returns, E&P computations, asset-basis schedules, organizational charts, intercompany agreements, historical acquisition documents (including the Kestrel acquisition and the HPE Fund IV acquisition of Veldran), and other items necessary for the substantive tax analysis.
May 2022
•  Receipt and review of diligence materials responsive to the Tax Diligence Request List.
•  Preparation and circulation of the initial draft of the Representation Letter (target: early May 2022). The Representation Letter will set forth the factual representations of Veldran and Harrowgate upon which the tax opinion will be based and will be coordinated with Whitfield & Gage and Thornapple McCord for review by the Client and Veldran management.
•  Commencement of internal analysis memoranda on the key tax issues identified in Section 4.6, beginning with preliminary research on the § 355(b)(2)(C)/(D) analysis relating to the Kestrel acquisition.
June–July 2022
•  Preparation and circulation of substantive internal tax analysis memoranda addressing the following topics:
•  IRC § 355(b) active-trade-or-business analysis, with particular focus on the treatment of the Kestrel acquisition under § 355(b)(2)(C) and (D) and the "expansion of existing business" doctrine.
•  IRC § 355(d) disqualified-distribution analysis.
•  IRC § 355(e) anti-Morris Trust / "plan" analysis, with particular focus on the September 2019 HPE Fund IV acquisition and the applicability of the safe-harbor provisions of Treasury Regulations § 1.355-7.
•  Device test analysis under IRC § 355(a)(1)(B) and Treasury Regulations § 1.355-2(d).
•  Business purpose analysis under Treasury Regulations § 1.355-2(b).
•  Continuity of interest and IRC § 368(a)(1)(D) reorganization analysis.
•  State and local tax considerations (identification of material state-tax issues arising from the Spin-Off, including state-level conformity with federal § 355 treatment and any state-specific gain-recognition rules).
•  Circulation and negotiation of a second draft of the Representation Letter, incorporating comments from the Client, Veldran management, Whitfield & Gage, and Thornapple McCord.
•  Coordination with Brackenridge & Co. on valuation inputs, including the estimated fair market value of Meridian, the relative fair market values of Veldran (post-Spin) and Meridian, and the computation of estimated built-in gain for purposes of the § 355(e) exposure analysis.
August–September 2022
•  Preparation and circulation of the initial draft of the tax opinion letter to the Client, Whitfield & Gage, and Thornapple McCord for review and comment.
•  Finalization of the Representation Letter, incorporating final factual representations confirmed by Veldran management and the Client.
•  Preparation of the Tax Matters provisions to be included in the Separation and Distribution Agreement (in coordination with Whitfield & Gage and Thornapple McCord).
•  Preparation of a draft outline of the Tax Sharing Agreement (Tax Matters Agreement) between Veldran and Meridian, covering allocation of pre-spin tax liabilities, indemnification obligations, cooperation and information-sharing covenants, and restrictions on post-spin actions that could jeopardize the tax-free status of the Spin-Off.
•  Iterative review and revision of the tax opinion letter based on comments from the Client, Veldran management, and coordinating counsel.
Target Opinion Delivery: Late Q3 2022 (September 2022), in advance of the anticipated Q4 2022 Distribution date. Final delivery of the opinion is contingent upon receipt of the executed Representation Letter and the satisfaction of all conditions to the issuance of the opinion.
Section 10: Special Considerations / Notes
The following special considerations have been identified in connection with this engagement and are noted here for the reference of the engagement team and firm administration.
Dual Representation. Calderwood & Harkness LLP will serve as tax counsel to both Harrowgate Private Equity Fund IV, L.P. (as the PE sponsor and controlling shareholder of Veldran) and Veldran Industries Holdings, Inc. (as the distributing corporation) in connection with the Spin-Off. This dual-representation arrangement has been disclosed to and consented to by both parties. To address the controlled-company dynamic inherent in this structure, Veldran is separately represented by Thornapple McCord LLP for all corporate and non-tax legal matters relating to the Spin-Off. The engagement team should be mindful of the dual-representation arrangement and should consult with the Responsible Partner in the event that any issue arises where the interests of Harrowgate and Veldran may diverge.
Sole Tax Assurance — No Private Letter Ruling. As noted throughout this memorandum, no private letter ruling will be sought from the IRS in connection with the Spin-Off. The tax opinion to be issued by Calderwood & Harkness LLP will serve as the sole tax assurance for the transaction. This heightens the importance of a thorough and well-documented factual record and a rigorous analysis of all material tax issues. The engagement team should ensure that the Representation Letter is comprehensive and that all material factual assumptions underlying the opinion are documented and confirmed.
Veldran Capital Structure — Covenant Analysis. The Veldran capital structure includes two significant debt instruments that will require attention in connection with the Spin-Off:
(i) A $1.1 billion First Lien Term Loan B, with Ashfield National Bank, N.A. as administrative agent. The credit agreement governing the Term Loan B is expected to contain covenants restricting restricted payments, asset dispositions, and fundamental changes (including spin-offs and distributions of subsidiary equity), and the consummation of the Spin-Off may require the consent of the requisite lenders or the satisfaction of specified conditions under the credit agreement. The engagement team should coordinate with Whitfield & Gage (and, as necessary, with Thornapple McCord) to ensure that the tax opinion addresses any tax-related conditions or representations required under the credit agreement.
(ii) $450 million aggregate principal amount of 6.250% Senior Unsecured Notes due 2027, with Colton Trust Company as indenture trustee. The indenture governing the Notes may contain similar restrictive covenants, and the engagement team should coordinate with corporate counsel to confirm the applicability and satisfaction of any tax-related conditions under the indenture.
Preliminary Valuation — Meridian (SpinCo). Brackenridge & Co. has provided a preliminary indicative valuation range for Meridian (SpinCo) of $1.4 billion to $1.7 billion, based on an enterprise value / EBITDA multiple range of 10.5× to 12.8× applied to Meridian's pro forma fiscal year 2021 EBITDA of approximately $133 million. This preliminary valuation range will be refined during the course of the engagement and will inform the computation of estimated built-in gain for purposes of the § 355(e) exposure analysis and the basis-allocation analysis for Veldran shareholders.
Estimated Built-In Gain on Meridian Stock. Based on the preliminary Brackenridge & Co. valuation range and Veldran's estimated adjusted tax basis in the assets comprising the Precision Flow Solutions Division of approximately $800 million, the estimated built-in gain in the Meridian stock is approximately $600 million to $900 million. This estimate is preliminary and will be refined as additional financial and tax information is received from Veldran and Pemberton Rathbone LLP.
Tax Exposure if § 355(e) Triggered. If IRC § 355(e) were determined to apply to the Distribution, Veldran would be required to recognize gain on the distribution of Meridian stock equal to the excess of the fair market value of the Meridian stock over Veldran's adjusted tax basis in such stock. Based on the preliminary estimates described above, the resulting federal income tax liability at the current 21% corporate rate would be in the range of approximately $125.3 million to $189.5 million, exclusive of state and local income taxes. This represents a material tax exposure that underscores the critical importance of the § 355(e) "plan" analysis to the overall engagement.
Section 11: Approvals and Signatures
This New Matter Opening Memorandum has been prepared by the Lead Associate identified below and has been reviewed and approved by the Responsible Partner and Billing Partner for Matter HRW-SPIN-001.
Prepared By:
Garrett Simmons Senior Associate, Tax Department Calderwood & Harkness LLP
Reviewed and Approved By:
LEONARD CROSS Partner, Tax Department Calderwood & Harkness LLP Responsible Partner — Matter HRW-SPIN-001
Signature: ________
Date: April 11, 2022
SYLVIA HARTWELL Partner, Tax Department Calderwood & Harkness LLP Billing Partner — Matter HRW-SPIN-001
Signature: ________
Date: April 11, 2022
Administrative Confirmation:
New Matter System Entry Confirmed: April 11, 2022
Matter Code Assigned: HRW-SPIN-001
Engagement Number Assigned: 1003-00005
This memorandum is prepared for internal administrative purposes of Calderwood & Harkness LLP and is subject to the attorney-client privilege and the work-product doctrine. It is not intended for distribution outside the firm and should not be disclosed to any third party without the prior written approval of the Responsible Partner.
Field | Detail
Matter Code | HRW-SPIN-001
Engagement Number | 1003-00005
Date Opened | April 11, 2022
Opened By | Leonard Cross, Partner, Tax Department
Department | Tax
Practice Area | Corporate Tax — Spin-Offs / Reorganizations
Entity | Role | Jurisdiction | EIN
Harrowgate Private Equity Fund IV, L.P. | Client | Delaware LP | 84-3291067
Harrowgate Capital Partners IV GP LLC | General Partner of Client | Delaware LLC | 84-3291104
Harrowgate Capital Advisors LLC | Investment Advisor / Manager | Delaware LLC | 83-2756891
Harrowgate Veldran Holdings LLC | Holding vehicle for Veldran equity stake | Delaware LLC | 86-1483920
Veldran Industries Holdings, Inc. | Distributing Corporation | Delaware Corp. | 86-1920347
Meridian Flow Technologies, Inc. | Controlled Corporation (SpinCo) | Delaware Corp. (planned) | Not yet assigned
Kestrel Precision Controls, Inc. | Veldran subsidiary (acquired June 7, 2019) | Georgia Corp. | 58-2847193
Prescott Capital Management LP | Minority shareholder of Veldran (~14.8% / 11,026,000 shares) | New York LP | 13-4928371
Rennick Industrial Partners Fund II LP | Former owner of Kestrel (seller in June 2019 acquisition) | Delaware LP | 82-3017564
Greystone Partners Fund III LP | Prior controlling shareholder of Veldran (displaced in Sept. 2019 acquisition) | Delaware LP | 81-2683910
Firm / Entity | Role | Key Contact(s)
Whitfield & Gage LLP | Corporate / M&A counsel to Harrowgate; coordinating counsel for the Spin-Off | Priya Chandrasekar, Partner; Nathan Whitfield, Senior Partner; Ross Halverson, Counsel
51 West 52nd Street, New York, NY 10019
Thornapple McCord LLP | Corporate counsel to Veldran (separate counsel representing the controlled-company interest) | David Ochoa, Partner; Elaine Thornapple, Founding Partner
227 West Trade Street, Suite 2000, Charlotte, NC 28202
Brackenridge & Co. | Financial advisor / investment bank to Harrowgate and Veldran Board of Directors | Samuel Ng, Managing Director, Industrials Group
383 Madison Avenue, New York, NY 10179
Pemberton Rathbone LLP | Independent auditors and tax-return preparers for Veldran | Lisa Engstrom, Partner, Audit & Assurance; Harold Weiss, Partner, Tax
One PPG Place, Suite 1600, Pittsburgh, PA 15222
Ashfield National Bank, N.A. | Administrative agent, Veldran first lien credit facility ($1.1B Term Loan B) | Margaret Tsao, Managing Director, Leveraged Finance
100 Federal Street, Boston, MA 02110
Colton Trust Company | Indenture trustee, Veldran 6.250% Senior Unsecured Notes due 2027 ($450M) | N/A
10 South LaSalle Street, Chicago, IL 60603
Dunmore Havens & Associates LLC | Tax advisor to minority shareholder Prescott Capital Management LP | Irene Salcedo, Principal
590 Madison Avenue, 20th Floor, New York, NY 10022
Attorney | Role | Rate
Leonard Cross | Partner | $1,650/hr
Sylvia Hartwell | Partner | $1,550/hr
Garrett Simmons | Senior Associate | $1,050/hr
Leila Nazari | Associate | $850/hr

CALDERWOOD & HARKNESS LLP

NEW MATTER OPENING MEMORANDUM

EIN: 84-3291067

EIN: 86-1920347

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