CALDERWOOD & HARKNESS LLP
INTERNAL MEMORANDUM — CONFIDENTIAL
To: File — Matter No. 1005-00001
From: Claudia Merritt, Responsible Partner, Banking & Finance
Date: February 3, 2025
Re: New Matter Opening — Nexford Industrial Holdings Inc. — $1,400,000,000 Senior Secured Term Loan B Refinancing and Dividend Recapitalization
This memorandum is prepared for the internal files of Calderwood & Harkness LLP in connection with the opening of Matter No. 1005-00001 and is intended to serve as the definitive reference document for all attorneys and professional staff assigned to this engagement. The information set forth herein is based on materials provided by the client, the private equity sponsor, and the lead arranger, as well as publicly available information and internal firm records. This memorandum is privileged and confidential, prepared in the course of and in furtherance of the attorney-client relationship with Nexford Industrial Holdings Inc., and is intended solely for internal Calderwood & Harkness LLP use. It should not be distributed to any person or entity outside the firm without the prior written consent of the Responsible Partner.
1. Matter Information
The following information summarizes the key identifying data for this matter as entered into the firm's matter management and billing systems:
Matter Number: 1005-00001
Billing Partner Client/Matter Code: IBL-NIH-2025-031
Date Opened: February 3, 2025
Client Name: Nexford Industrial Holdings Inc.
Client Type: Portfolio Company (Private Equity-Sponsored)
Matter Type: Leveraged Finance / Banking & Finance — Borrower-Side Representation
Transaction Description: Representation of Nexford Industrial Holdings Inc. ("Nexford" or the "Borrower"), a Delaware corporation headquartered at 1400 Industrial Parkway, Schaumburg, IL 60173, in connection with a $1,400,000,000 senior secured Term Loan B facility (the "New Term Loan B" or the "Facility"). The proceeds of the New Term Loan B are anticipated to be applied as follows:
(i) to refinance the Borrower's existing first lien credit facilities, consisting of an $875,000,000 term loan facility (with a payoff amount of approximately $879,375,000, inclusive of accrued and unpaid interest and any applicable prepayment premium) and a $190,000,000 revolving credit facility (currently undrawn, the commitment under which will be terminated), in each case, with Atlas Meridian Bank, N.A., as administrative agent and collateral agent, and the lenders party thereto;
(ii) to fund a dividend recapitalization of approximately $335,000,000 to the private equity sponsor, Granite Peak Capital Partners, LP, through its holding vehicle, Granite Peak NIH Holdings, LLC;
(iii) to pay transaction fees and expenses in connection with the Facility and the transactions contemplated thereby in an aggregate amount of approximately $38,625,000, inclusive of original issue discount, arrangement fees, legal fees, advisory fees, rating agency fees, and other customary transaction costs; and
(iv) to fund approximately $147,000,000 in cash to the Borrower's balance sheet for general corporate purposes.
Governing Law: New York. The Credit Agreement and the ancillary finance documents are expected to be governed by the laws of the State of New York, except to the extent that the law of any other jurisdiction governs specific collateral documents (e.g., mortgages governed by the law of the situs of the applicable real property, and certain entity-level documents governed by the law of the applicable jurisdiction of organization).
2. Client Identification
The following section sets forth the identifying information for the client, Nexford Industrial Holdings Inc., as required by the firm's new matter intake procedures and applicable ethical rules.
Full Legal Name of Client: Nexford Industrial Holdings Inc.
Entity Type: Corporation
Jurisdiction of Organization: Delaware
DE File Number: 5765432
EIN: 36-4178552
Headquarters Address: 1400 Industrial Parkway, Schaumburg, IL 60173
Registered Agent Address (Delaware): c/o Penmark Industries, 1209 Orange Street, Wilmington, DE 19801
Fiscal Year End: December 31
State of Tax Residence: Illinois
The client has designated the following individuals as its primary contacts for this engagement. All material communications regarding the transaction, including the exchange of draft documents, comments, and closing-related deliverables, should be directed through the primary client contacts unless otherwise instructed:
Primary Client Contacts:
• David Engstrom, General Counsel & Corporate Secretary — Mr. Engstrom serves as Nexford's principal legal officer and will be the firm's primary point of contact for all legal matters in connection with the transaction, including document review and negotiation, legal opinion coordination, and corporate governance matters.
• Michelle Kaplan, Chief Financial Officer — Ms. Kaplan oversees Nexford's financial reporting, treasury operations, and capital markets activities. She will serve as the primary contact for all financial, accounting, and credit-related matters, including solvency analysis, financial covenant modeling, compliance certificate mechanics, and the preparation of financial deliverables required at closing.
• Priya Mehta, VP, Treasury & Corporate Finance — Ms. Mehta reports to Ms. Kaplan and will serve as the day-to-day operational contact for funds flow mechanics, wire instructions, deposit account control agreements, and post-closing administrative matters.
Other Key Client Personnel:
• James Thornton, Chief Executive Officer — Mr. Thornton will be involved in high-level strategic discussions and executive-level approvals but is not expected to be engaged in the day-to-day transaction process. Communications with Mr. Thornton should generally be directed through Mr. Engstrom.
3. Sponsor / Parent Information
Nexford is a portfolio company of Granite Peak Capital Partners, LP. The following section summarizes the relevant information concerning the private equity sponsor, the applicable fund vehicles, and the direct parent holding entity.
Private Equity Sponsor: Granite Peak Capital Partners, LP, a Delaware limited partnership headquartered at 600 Steamboat Road, Suite 300, Greenwich, CT 06830. Granite Peak is a middle-market and upper-middle-market private equity firm focused on industrial, manufacturing, and business services investments. Granite Peak acquired Nexford in 2019 through its fourth institutional fund vehicle.
Fund Vehicle: Granite Peak Capital Fund IV, LP, a Delaware limited partnership, holds approximately 92% of the equity interests in the Holdings entity. GP Fund IV Co-Invest, LP, a Delaware limited partnership, holds the remaining approximately 8% of the equity interests in the Holdings entity. Both fund vehicles are managed by Granite Peak Capital Partners, LP, acting through its general partner. For purposes of the Credit Agreement, Granite Peak Capital Partners, LP, together with its controlled affiliates, is expected to be identified as the "Sponsor" as defined therein.
Direct Parent / Holdings Entity: Granite Peak NIH Holdings, LLC, a Delaware limited liability company. This entity is the direct 100% parent of the Borrower and serves as the holding company through which the Granite Peak fund vehicles hold their investment in Nexford.
• EIN: 85-3291047
• DE File Number: 7234891
• Registered Address: c/o Penmark Industries, 1209 Orange Street, Wilmington, DE 19801
Granite Peak NIH Holdings, LLC will be the entity to which the approximately $335,000,000 dividend payment is made in connection with the dividend recapitalization. Holdings is expected to enter into a pledge agreement with respect to 100% of its equity interests in the Borrower.
Sponsor Key Contacts:
• Derek Calloway, Co-Founder & Managing Partner — Mr. Calloway is one of the founding partners of Granite Peak and serves on the investment committee. He will be involved in key strategic and governance decisions relating to the transaction.
• Vanessa Liu, Co-Founder & Managing Partner — Ms. Liu is the other founding partner of Granite Peak and co-chairs the investment committee. She is expected to participate in key decision points alongside Mr. Calloway.
• Ryan Ostrowski, Principal, Deal Team Lead — Mr. Ostrowski is the Granite Peak deal team lead for the Nexford investment and will serve as the sponsor's primary day-to-day contact for the transaction. All communications with the sponsor should be directed through Mr. Ostrowski unless otherwise specifically requested.
Sponsor's Counsel: Kellner Brandt & Associates LLP, 900 Third Avenue, New York, NY 10022. Kellner Brandt represents Granite Peak Capital Partners, LP, and its affiliates in connection with the dividend recapitalization and related governance matters. The lead partner on the matter is Patricia Voss, who heads the firm's Private Equity practice. Sponsor's counsel is not representing Nexford in this engagement. Calderwood & Harkness represents only the Borrower and the Borrower's subsidiary guarantors in this transaction. To the extent that the interests of the Borrower and the Sponsor diverge, the respective counsel will manage those issues independently and in accordance with applicable ethical obligations.
4. Staffing and Billing
4.1 Calderwood & Harkness Engagement Team
The following attorneys have been assigned to this matter. Staffing is subject to adjustment based on workload, availability, and the evolving needs of the transaction. Any changes to the engagement team will be reflected in the staffing memorandum maintained separately under this matter number.
Billing Partner: Ian Blackwood. Mr. Blackwood will be responsible for all billing, invoicing, and collections matters relating to this engagement. He will supervise the preparation of monthly invoices and ensure compliance with the client's outside counsel guidelines.
Responsible Partner: Claudia Merritt. Ms. Merritt will exercise overall supervisory responsibility for the engagement, including management of the client relationship, strategic direction of the transaction, lead negotiation of principal terms with arranger's counsel, and coordination with local counsel and the sponsor's counsel.
Lead Associate: Marcus Leung. Mr. Leung will manage the day-to-day execution of the transaction, including initial and subsequent mark-ups of the Credit Agreement and ancillary documents, coordination of due diligence workstreams, preparation of the closing checklist and funds flow memorandum, and primary communication with the arranger's counsel working team.
Working Associate: Sophie Tremblay. Ms. Tremblay will support Mr. Leung in document preparation, due diligence review and analysis, UCC and lien search review, collateral and security document preparation, closing mechanics, and post-closing matters.
Specialist Partner (Tax): Sylvia Hartwell. Ms. Hartwell will provide tax-specific advice in connection with the dividend recapitalization structure, Section 163(j) interest deductibility analysis, withholding and FATCA matters, and state and local tax implications. She will prepare or supervise the preparation of internal tax memoranda as necessary and will review tax-related provisions of the Credit Agreement.
Engagement Letter: An engagement letter was executed on February 3, 2025, between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. The executed engagement letter is on file in the matter file. The engagement letter sets forth the scope of representation, the identification of the client, the applicable hourly rates, billing terms, and the firm's standard terms of engagement.
Billing Arrangements: All billing arrangements are as set forth in the executed engagement letter dated February 3, 2025. Reference should be made to the engagement letter for hourly rates applicable to each timekeeper, billing frequency, payment terms, and any negotiated adjustments to standard rates. The firm has acknowledged the client's outside counsel guidelines, and a formal acknowledgment letter is anticipated to be delivered on or about February 5, 2025. All time entries and disbursements shall be coded under billing code IBL-NIH-2025-031.
4.2 Conflicts Clearance
A comprehensive conflict of interest check was completed on January 31, 2025, in accordance with the firm's conflict clearance procedures and applicable rules of professional conduct. The conflict check was run against all known parties to the transaction, including:
• Nexford Industrial Holdings Inc.
• Granite Peak Capital Partners, LP
• Granite Peak NIH Holdings, LLC
• Granite Peak Capital Fund IV, LP
• GP Fund IV Co-Invest, LP
• Crescent Harbor Bank, N.A.
• Atlas Meridian Bank, N.A.
• Ironwood Capital Markets, LLC
• Northvane Securities, Inc.
• Pinnacle Trust Company
• All known subsidiary guarantors of the Borrower
• All other known transaction counterparties and service providers
The conflict check was reviewed and cleared by Claudia Merritt, Responsible Partner, on January 31, 2025. No conflicts of interest or potential conflicts of interest that would preclude or condition the firm's representation of Nexford Industrial Holdings Inc. in connection with this matter were identified. A separate Conflict Check Memorandum dated January 31, 2025, setting forth the detailed results of the conflict search and the basis for clearance, has been prepared and is maintained in the matter file.
5. Transaction Summary
5.1 Transaction Type
The transaction involves a senior secured Term Loan B facility in the aggregate principal amount of $1,400,000,000 (the "New Term Loan B"). The New Term Loan B will be used to effect a full refinancing of the Borrower's existing first lien credit facilities and to fund a dividend recapitalization to the private equity sponsor. The transaction is structured as a single-tranche institutional term loan to be syndicated to a group of institutional lenders, including CLOs, loan funds, and other institutional investors, through a broadly syndicated loan process led by Crescent Harbor Bank, N.A. as sole lead left arranger and bookrunner.
5.2 Facility Terms
The principal terms of the New Term Loan B, as set forth in the term sheet provided by Crescent Harbor Bank, N.A. and subject to negotiation and documentation, are summarized below:
Facility Amount: $1,400,000,000
Facility Type: Term Loan B (institutional term loan). The Facility is expected to be structured as a single-tranche institutional term loan, without a revolving credit facility component at closing. The Credit Agreement may include provisions for a future incremental revolving credit facility and/or incremental term loan facility, subject to the terms and conditions to be negotiated.
Borrower: Nexford Industrial Holdings Inc.
Administrative Agent / Collateral Agent: Crescent Harbor Bank, N.A., located at 320 Federal Street, Boston, MA 02110. Crescent Harbor will serve in the dual capacity of administrative agent (responsible for loan administration, funding mechanics, and lender communications) and collateral agent (responsible for holding and administering the security interests granted in connection with the Facility).
Lead Left Arranger and Bookrunner: Crescent Harbor Bank, N.A.
Interest Rate: Term SOFR (as defined in the Credit Agreement) plus a margin of 400 basis points per annum. The Facility will include a SOFR floor of 0.75%, meaning that for purposes of calculating interest, the applicable Term SOFR rate shall be deemed to be not less than 0.75% per annum. Interest periods of one, three, and six months are anticipated to be available, with customary provisions for the selection and conversion of interest periods by the Borrower.
Maturity: Seven (7) years from the closing date. Based on the target closing date of March 28, 2025, the anticipated maturity date is March 28, 2032.
Amortization: 1.00% per annum of the original principal amount, payable in equal quarterly installments. Based on the original principal amount of $1,400,000,000, each quarterly amortization payment will be $3,500,000, with the balance of all outstanding principal, together with accrued and unpaid interest, due and payable on the maturity date.
OID: The New Term Loan B is expected to be issued at an original issue discount ("OID") of 50 basis points, resulting in an issue price of 99.50% of par. The aggregate OID based on the full facility amount of $1,400,000,000 is approximately $7,000,000. The OID is included in the transaction fees and expenses figure set forth below.
Target Closing Date: March 28, 2025. This date is subject to the satisfaction of all conditions precedent to closing as set forth in the Credit Agreement and commitment letter, including the successful completion of the syndication process.
5.3 Use of Proceeds
The following table summarizes the anticipated sources and uses of proceeds in connection with the transaction:
The precise amounts of the dividend and the cash-to-balance-sheet component are subject to adjustment based on the final payoff amount under the existing credit facilities, the final transaction fees and expenses, and other closing adjustments. The funds flow memorandum to be prepared in advance of closing will set forth the definitive allocation of proceeds.
5.4 Key Financial Metrics
The following key financial metrics are based on information provided by the client and its financial advisor, Stonebridge Advisory Group, LLC, and are subject to verification through the due diligence process. All metrics are based on the Borrower's last twelve months ("LTM") financial performance through December 31, 2024, and are presented on a pro forma basis giving effect to the consummation of the transactions contemplated by the New Term Loan B.
• LTM Revenue (12/31/2024): $2,100,000,000
• LTM Adjusted EBITDA (12/31/2024): $385,000,000
• Pro Forma First Lien Net Leverage at Closing: Approximately 3.38x (calculated as pro forma first lien net debt of approximately $1,300,000,000, net of unrestricted cash, divided by LTM Adjusted EBITDA of $385,000,000)
• Pro Forma Total Net Leverage at Closing: Approximately 4.03x (including the $250,000,000 Senior Unsecured Notes due 2028, described in Section 5.6 below, which are not being refinanced in connection with this transaction)
• Springing Financial Covenant: The Credit Agreement is expected to include a springing financial covenant tested on a quarterly basis, requiring the Borrower to maintain a maximum first lien net leverage ratio of 5.00x. The springing covenant is expected to be tested only in the event that the aggregate revolving credit facility exposure (if any) exceeds a threshold to be negotiated (expected to be in the range of 35% to 40% of the aggregate revolving commitments, net of cash collateralized and backstopped letters of credit). Given that no revolving credit facility is expected to be in place at closing, the springing financial covenant is not expected to be tested at closing, but the applicable threshold and testing mechanics will need to be carefully negotiated in the context of any incremental revolving facility.
The Adjusted EBITDA definition in the Credit Agreement will need to be carefully reviewed and negotiated, including with respect to add-backs for non-recurring charges, cost savings and synergies (including run-rate cost savings attributable to acquisitions and restructuring initiatives), management fees, equity-based compensation, and other customary adjustments. The engagement team should work closely with Ms. Kaplan and Ms. Mehta to ensure that the Adjusted EBITDA definition adequately captures all appropriate adjustments.
5.5 Existing Indebtedness Being Refinanced
The existing indebtedness to be refinanced in connection with this transaction consists of the following:
Existing Credit Agreement: Credit Agreement dated as of June 14, 2019, among Nexford Industrial Holdings Inc., as Borrower, Atlas Meridian Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto (as amended from time to time, the "Existing Credit Agreement"). The Existing Credit Agreement has been amended on four occasions:
• First Amendment dated March 20, 2020 (modification of certain financial covenant levels in connection with COVID-related operational disruption)
• Second Amendment dated November 8, 2021 (incremental revolving commitment increase and covenant modifications in connection with the issuance of the Senior Unsecured Notes)
• Third Amendment dated April 15, 2023 (LIBOR-to-SOFR benchmark transition)
• Fourth Amendment dated September 12, 2024 (modification of restricted payment and investment baskets in connection with the Lakeshore Precision Engineering acquisition)
Existing Term Loan: The Existing Credit Agreement includes an $875,000,000 first lien term loan facility, maturing in June 2026. The estimated payoff amount as of the anticipated closing date, inclusive of outstanding principal, accrued and unpaid interest, and any applicable prepayment premium or make-whole amount, is approximately $879,375,000. The final payoff amount will be confirmed by means of a payoff letter to be obtained from Atlas Meridian Bank, N.A. in advance of closing, and the engagement team will need to review the payoff letter carefully to confirm all components of the payoff amount, including any accrued fees, reimbursable expenses, and indemnification obligations that survive repayment.
Existing Revolving Credit Facility: The Existing Credit Agreement includes a $190,000,000 revolving credit facility, maturing in June 2025. As of the date of this memorandum, the revolving credit facility is undrawn and no letters of credit are outstanding thereunder. The commitment under the existing revolving credit facility will be terminated at closing, and all liens securing obligations under the Existing Credit Agreement will be released. The engagement team will need to confirm that the payoff letter from Atlas Meridian Bank, N.A. includes appropriate provisions for the termination of the revolving commitment, the release of all liens and security interests, and the delivery of UCC-3 termination statements and mortgage releases as applicable.
5.6 Existing Unsecured Notes (Not Refinanced)
In addition to the existing first lien credit facilities being refinanced, Nexford has outstanding unsecured indebtedness that will remain in place following the closing of the New Term Loan B:
Indenture: Indenture dated as of November 8, 2021, among Nexford Industrial Holdings Inc., as Issuer, the subsidiary guarantors party thereto, and Pinnacle Trust Company, as Trustee (the "Existing Indenture").
Notes: $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (the "Existing Notes").
The Existing Notes are not being refinanced, repurchased, or redeemed in connection with this transaction. The Existing Notes will remain outstanding and will constitute unsecured indebtedness of the Borrower, subordinated in right of payment to the New Term Loan B to the extent of the value of the collateral securing the New Term Loan B. The relationship between the first lien secured parties and the holders of the Existing Notes will be governed by an intercreditor agreement to be entered into among the Collateral Agent under the New Term Loan B and Pinnacle Trust Company as trustee under the Existing Indenture (the "First Lien / Unsecured Intercreditor Agreement"), as further described in Section 10 below.
The engagement team will need to review the Existing Indenture carefully to confirm that the refinancing of the existing first lien credit facilities and the incurrence of the New Term Loan B are permitted under the covenants of the Existing Indenture, including the incurrence of indebtedness covenant, the liens covenant, and any applicable restricted payment or change of control provisions. In addition, the team should confirm that the dividend recapitalization is permitted under the restricted payments covenant of the Existing Indenture.
6. Counterparties and Key Third Parties
6.1 Arranger / Administrative Agent
Crescent Harbor Bank, N.A. — Sole lead left arranger and bookrunner; administrative agent; collateral agent.
• Address: 320 Federal Street, Boston, MA 02110
• Key Contacts:
• Elaine Prescott, Managing Director, Leveraged Finance Origination — Ms. Prescott is the senior relationship manager at Crescent Harbor responsible for the Nexford account and the origination of the New Term Loan B. She will serve as the primary business contact on the arranger side for commercial terms, pricing, and syndication strategy.
• Thomas Nakamura, Director, Loan Syndication — Mr. Nakamura is responsible for managing the syndication process for the New Term Loan B, including the preparation of the confidential information memorandum ("CIM"), investor outreach, allocation, and syndication timeline management.
• Arranger's Counsel: Whitfield & Gage LLP, 51 West 52nd Street, New York, NY 10019
• Lead Partner: Margaret Ashby — Ms. Ashby is a partner in the Banking & Finance group at Whitfield & Gage and will serve as the lead partner on the arranger-side documentation. She is expected to prepare the initial draft of the Credit Agreement and related ancillary documents.
• Working Associate: Jonathan Ferris — Mr. Ferris will serve as the day-to-day working associate on the Whitfield & Gage team and will be the primary point of contact for the exchange of document mark-ups and comments between counsel.
6.2 Existing Lender Agent (to be refinanced)
Atlas Meridian Bank, N.A. — Existing administrative agent and collateral agent under the Existing Credit Agreement.
• Address: 500 Liberty Avenue, Pittsburgh, PA 15222
• Key Contact: Sandra Vickers, Managing Director, Portfolio Management — Ms. Vickers is the relationship manager at Atlas Meridian responsible for the existing Nexford credit facilities. The engagement team will coordinate with Ms. Vickers and her team in connection with the preparation and delivery of the payoff letter, the termination of commitments under the existing revolving credit facility, the release of liens and security interests, and the delivery of UCC-3 termination statements, mortgage releases, and other lien release documentation.
6.3 Joint Lead Arrangers (anticipated)
The following institutions are anticipated to join the syndicate as joint lead arrangers, subject to the execution of formal joinder documentation during the syndication process:
• Ironwood Capital Markets, LLC, 1100 Avenue of the Americas, New York, NY 10036
• Northvane Securities, Inc., 200 South Wacker Drive, Chicago, IL 60606
Formal joinder of these institutions is expected during the syndication phase. The engagement team should confirm that the commitment letter and fee letter contemplate the joinder of additional arrangers and that any required consents or modifications to the syndication economics have been properly documented.
6.4 Existing Notes Trustee
Pinnacle Trust Company, 101 Park Avenue, New York, NY 10178. Pinnacle Trust Company serves as trustee under the Existing Indenture governing the Existing Notes. Pinnacle Trust Company will be a party to the First Lien / Unsecured Intercreditor Agreement to be entered into at closing.
6.5 Financial Advisor
Stonebridge Advisory Group, LLC, 277 Park Avenue, New York, NY 10172. Stonebridge is serving as financial advisor to Nexford and Granite Peak in connection with the refinancing and dividend recapitalization. The engagement team's primary contact at Stonebridge is Andrew Castellano, Managing Director. Mr. Castellano is responsible for advising on capital structure, pricing, syndication strategy, and rating agency presentations. The engagement team should coordinate with Mr. Castellano on the preparation of the confidential information memorandum and the financial model underlying the transaction.
6.6 Independent Auditor
Ashworth & Kendrick LLP, 200 South Michigan Avenue, Chicago, IL 60604. Ashworth & Kendrick serves as the independent auditor for Nexford and its subsidiaries. The engagement partner is Helen Yamamoto, CPA. The engagement team may need to coordinate with Ashworth & Kendrick in connection with the delivery of audited financial statements required as conditions precedent to closing, the preparation of the comfort letter (if required), and any accounting-related matters arising in the course of due diligence or document negotiation.
6.7 Rating Agencies
The New Term Loan B is expected to be rated by the following rating agencies in advance of syndication:
• Keystone Ratings Group, Inc., 7 World Trade Center, New York, NY 10007
• Sentinel Credit Analytics, LLC, 55 Water Street, New York, NY 10041
Rating agency presentations are anticipated to occur in late February 2025, and ratings are expected to be received prior to the commencement of general syndication. The engagement team should confirm that the commitment letter includes customary provisions regarding the receipt of ratings as a condition to the marketing of the Facility and should review any ratings-related flex provisions in the fee letter.
6.8 Other Service Providers
The following additional service providers have been engaged or are anticipated to be engaged in connection with the transaction:
Collateral Appraiser: Greystone Valuation Services, Inc., 1700 Market Street, Philadelphia, PA 19103. Lead Appraiser: Daniel Pritchard, MAI. Greystone has been engaged to provide appraisals of the Borrower's and subsidiary guarantors' real property assets and, to the extent required, machinery and equipment appraisals for purposes of the collateral analysis.
Insurance Broker: Vantage Risk Advisors, LLC, 350 North Clark Street, Chicago, IL 60654. Account Executive: Rachel Sorensen. Vantage serves as Nexford's insurance broker and will be responsible for coordinating the insurance deliverables required at closing, including evidence of property and casualty insurance, general commercial liability insurance, D&O insurance, and lender loss payee/additional insured endorsements.
Environmental Consultant: Clearwater Environmental Sciences, Inc., 8500 West Bryn Mawr Avenue, Chicago, IL 60631. Project Manager: Dr. Nathan Foley. Clearwater has been engaged (or is anticipated to be engaged) to prepare Phase I Environmental Site Assessments for the Borrower's and subsidiary guarantors' owned real properties, to the extent required by the Collateral Agent or the lender group.
Title Insurance Underwriter: Landmark Title Assurance Company. Landmark will issue lender's title insurance policies in connection with the mortgaged real properties, as further described in the post-closing workstream.
D&O Insurance Carrier: Meridian Specialty Insurance Co. The engagement team should confirm that the existing D&O policy is in full force and effect and complies with the requirements of the Credit Agreement.
Property & Casualty Insurance Carrier: Continental Shield Underwriters, Inc. The engagement team should confirm that existing property and casualty insurance coverage is in full force and effect and that the required lender loss payee and additional insured endorsements can be obtained at or prior to closing.
7. Local Counsel Engagements
In connection with the delivery of legal opinions and the perfection of security interests in certain jurisdictions, the following local counsel engagements have been arranged:
Illinois Local Counsel: Hargrove & Whitmore LLP, 233 South Wacker Drive, Suite 4500, Chicago, IL 60606. Lead Partner: Robert Kimura. Hargrove & Whitmore has been engaged to provide Illinois law enforceability and perfection opinions in connection with the Credit Agreement and related security documents. Their scope of work is expected to include opinions on the enforceability of the Credit Agreement, the Guarantee Agreement, and the Security Agreement under Illinois law (to the extent governed by Illinois law), the perfection of security interests in personal property collateral through the filing of UCC-1 financing statements with the Illinois Secretary of State, and any ancillary Illinois law matters. The formal engagement letter with Hargrove & Whitmore is anticipated to be executed on or about February 6, 2025.
Delaware Local Counsel: Briarcliff Legal Group PA, 1000 North King Street, Wilmington, DE 19801. Lead Partner: Catherine Ellsworth. Briarcliff Legal Group has been engaged to provide Delaware entity opinions in connection with the Borrower and those subsidiaries organized under the laws of Delaware. Their scope of work is expected to include opinions on organization, good standing, and authority of the Borrower and each Delaware-organized subsidiary guarantor, as well as UCC filing and perfection opinions under Delaware law as applicable. The formal engagement letter with Briarcliff Legal Group is anticipated to be executed on or about February 7, 2025.
The engagement team should coordinate with both local counsel firms to ensure that opinion scope, assumptions, qualifications, and reliance language are consistent with the requirements of the Credit Agreement and the expectations of the Collateral Agent and the lender group. Draft opinions should be circulated to the engagement team and to arranger's counsel in advance of closing.
8. Borrower Corporate Structure Overview
The following is a summary of Nexford's corporate structure, prepared for matter file reference. This summary is based on information provided by the client and is subject to verification through the due diligence process. A complete Corporate Organization Chart has been prepared and is dated February 10, 2025; that chart should be referenced for the definitive depiction of the full corporate structure.
Ownership Chain:
Granite Peak Capital Fund IV, LP (92%) and GP Fund IV Co-Invest, LP (8%)
→ Granite Peak NIH Holdings, LLC (Holdings — Delaware LLC, direct 100% parent of the Borrower)
→ Nexford Industrial Holdings Inc. (Borrower — Delaware corporation)
Domestic Subsidiary Guarantors:
Nexford has eleven (11) domestic subsidiaries that are expected to serve as guarantors under the Guarantee Agreement and to grant security interests in their respective assets under the Security Agreement and related collateral documents. The domestic subsidiary guarantors are as follows:
1. Nexford Precision Components, Inc. (Delaware corporation)
2. Nexford Engineered Systems, LLC (Delaware limited liability company)
3. Nexford Coatings & Surface Technologies, Inc. (Delaware corporation)
4. Nexford Manufacturing Services, LLC (Illinois limited liability company)
5. Nexford Properties, LLC (Delaware limited liability company)
6. Nexford International Holdings, Inc. (Delaware corporation — CFC holdco)
7. Clearfield Tool & Die, Inc. (Pennsylvania corporation — acquired 2021)
8. Summit Industrial Fabrication Co. (South Carolina corporation — acquired 2022)
9. Ridgepoint Specialty Coatings, LLC (Texas limited liability company — acquired 2023)
10. Lakeshore Precision Engineering, Inc. (Michigan corporation — acquired 2024)
Note: The list above reflects ten named subsidiaries. The engagement team should confirm the identity of the eleventh domestic subsidiary guarantor referenced in the client's preliminary information and update this memorandum and the closing checklist accordingly.
Nexford International Holdings, Inc. is organized as a Delaware corporation that serves as the holding company for the foreign subsidiaries ("CFC Holdco"). Under the anticipated terms of the Security Agreement, the pledge of equity interests in Nexford International Holdings, Inc. is expected to be limited to 65% of the total combined voting power of all classes of capital stock entitled to vote, consistent with customary practice for CFC holdco entities to avoid adverse tax consequences under Sections 956 and 1248 of the Internal Revenue Code.
Foreign Subsidiaries (Excluded from Guaranty):
• Nexford Canada Holdings ULC (British Columbia, Canada)
• Nexford Canada Manufacturing, Inc. (Ontario, Canada)
The foreign subsidiaries are not expected to guarantee the Facility or grant security interests in their assets, consistent with market practice for borrower-side leveraged finance transactions involving foreign subsidiaries that are controlled foreign corporations ("CFCs") or CFC subsidiaries.
Reference: Complete Corporate Organization Chart prepared February 10, 2025, on file under Matter No. 1005-00001.
9. Anticipated Timeline and Key Milestones
The following timeline sets forth the key milestones and target dates for the transaction, based on information available as of the date of this memorandum. All dates are subject to change based on the progress of negotiations, the syndication process, and the satisfaction of conditions precedent to closing. The engagement team should monitor the timeline closely and communicate any anticipated delays to the Responsible Partner promptly.
The engagement team should prepare and maintain a detailed internal working timeline in addition to the milestone schedule set forth above, tracking all intermediate deadlines, document turn dates, and deliverable due dates.
10. Anticipated Workstreams
The following workstreams have been identified based on the anticipated scope of the engagement. Each workstream will be assigned to specific members of the engagement team, and progress will be tracked through regular internal status calls and the matter management system.
1. Term Sheet and Commitment Letter Negotiation. The engagement team will review and mark up the initial term sheet to be provided by Crescent Harbor Bank, N.A., focusing on key economic and structural terms, including pricing, maturity, amortization, prepayment provisions, conditions precedent, representations and warranties, covenants, events of default, and "market flex" provisions. Upon receipt of the draft commitment letter, the team will conduct a detailed analysis of the commitment letter terms, including the certainty of funding provisions, the conditions to funding, the syndication provisions, and the market flex provisions contained in the fee letter. The fee letter will be reviewed with particular attention to arrangement fees, OID, upfront fees, and any syndication-related flex on pricing, structure, or economics. The team will coordinate with the client, the financial advisor, and the sponsor's counsel to ensure that the commitment letter and fee letter terms are acceptable and consistent with the agreed transaction economics.
2. Due Diligence. The engagement team will prepare and issue a comprehensive due diligence request list to the client covering all material areas, including corporate and organizational documents, existing indebtedness and liens, real property, environmental matters, insurance, pending and threatened litigation, intellectual property, regulatory and compliance matters, material contracts, employment and benefit matters, and UCC and lien search results. The team will manage the due diligence review process, organize and analyze materials received, identify issues requiring further investigation or remediation, and prepare due diligence memoranda as appropriate for the file and for the benefit of the engagement team. UCC and lien search results across all relevant jurisdictions will be obtained and reviewed to confirm the state of existing liens and to identify any liens that must be released at closing or that require further investigation.
3. Credit Agreement Drafting and Negotiation. The initial draft of the Credit Agreement is expected to be prepared by Whitfield & Gage LLP (arranger's counsel). The engagement team will conduct a thorough review of the initial draft and prepare a comprehensive mark-up for negotiation. Key areas of focus will include, without limitation:
• Definition of Adjusted EBITDA and applicable add-backs
• Financial covenant mechanics (springing first lien net leverage ratio), including testing conditions and equity cure rights
• Negative covenants, including limitations on indebtedness, liens, restricted payments, investments, dispositions, affiliate transactions, and fundamental changes
• The restricted payment basket analysis, with particular attention to ensuring that future dividends to the sponsor are adequately provided for
• Change of control provisions, including the definition of "Change of Control" and any portability features