1043-00001 · Ironhaven Holdings · Correspondence

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ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL

CALDERWOOD & HARKNESS LLP 125 Broad Street New York, NY 10004

CLIENT ALERT MEMORANDUM

FROM: Stephanie Okafor, Partner, Banking & Finance, Calderwood & Harkness LLP

TO: Marcus Delaine, Chief Executive Officer, Ironhaven Data Centers LLC Rebecca Sung, Chief Financial Officer, Ironhaven Data Centers LLC

CC: Jonathan Pryce-Williams, General Counsel & Secretary, Ironhaven Data Centers LLC Natasha Greenfeld, Vice President, Treasury & Capital Markets, Ironhaven Data Centers LLC

DATE: February 20, 2024

RE: Term Loan B Market Conditions and Pricing Benchmarks — Data Center / Digital Infrastructure Sector (Q1 2024 Update)

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This memorandum has been prepared by Calderwood & Harkness LLP in connection with its representation of Ironhaven Data Centers LLC ("IHDC"), Matter No. 1043-00001. This communication is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressees and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

I. Executive Summary

The purpose of this memorandum is to provide IHDC management and the treasury team with a current and comprehensive snapshot of the institutional Term Loan B ("TLB") market as it relates to Ironhaven's planned $950,000,000 senior secured term loan financing. The proceeds of the proposed facility will be deployed to fund the development and construction of two hyperscale data-center campuses — one located in Loudoun County, Virginia (the "Ashburn Campus") and one located in Frankfurt, Germany (the "Frankfurt Campus") — as well as to refinance existing indebtedness and pay related transaction costs and expenses.

Engagement Context. Calderwood & Harkness was engaged by IHDC on January 29, 2024 to serve as borrower's counsel in connection with the proposed financing. The mandate letter between IHDC and Crescent Harbor Bank, N.A. ("Crescent Harbor"), as lead arranger, was expected to be executed imminently at the time of our engagement and was subsequently executed on February 12, 2024. The commitment letter from Crescent Harbor is anticipated to be finalized and executed by the end of February 2024. Thornfield Capital Partners, LP, acting through its Thornfield Infrastructure Fund III, LP vehicle ("Thornfield" or the "Sponsor"), will serve as the equity sponsor for the transaction, contributing approximately $410.0 million in equity capital to the capitalization of the project.

Key Takeaway. Based on our review of recent market activity, comparable transaction data, and current investor sentiment, we believe that market conditions in early 2024 are constructive for data-center TLB issuances. Institutional investor appetite for digital infrastructure credits remains robust, driven by powerful secular tailwinds related to artificial intelligence, cloud computing adoption, and enterprise digital transformation. For a credit of IHDC's profile — with pro forma net leverage of approximately 5.0x to 5.5x, blue-chip campus locations, meaningful pre-leased capacity, and strong sponsor support — we believe a pricing outcome in the range of SOFR + 400–450 basis points is readily achievable, with an original issue discount ("OID") in the range of 99.25–99.75 (i.e., 25 to 75 basis points of discount) serving as the current market-clearing level.

We note that Ironhaven's contemplated terms — specifically, SOFR + 425 basis points on the USD tranche, EURIBOR + 425 basis points on the EUR sub-tranche, an OID of 99.50 (representing a 50 basis point discount), and a pro forma net leverage ratio of approximately 5.35x — appear well within the current market window and should be achievable in the syndication process, subject to continued stable market conditions through the anticipated March–April 2024 syndication period.

The balance of this memorandum provides a detailed overview of current TLB market conditions, sector-specific lending dynamics, comparable transaction benchmarks, a summary of key structural and pricing terms for the proposed IHDC facility, an overview of the anticipated capitalization and credit profile, and a discussion of regulatory and compliance considerations relevant to the cross-border syndication. We conclude with our recommended next steps and anticipated timeline for the transaction.

II. Current Term Loan B Market Overview

A. General Market Conditions (January–February 2024)

The broadly syndicated loan ("BSL") market experienced robust new-issue volume in January 2024, continuing the strong recovery trajectory that began in the fourth quarter of 2023. After a period of pronounced market dislocation during the first half of 2023 — characterized by elevated spreads, wider OIDs, and challenging syndication execution for all but the highest-quality credits — the institutional loan market has stabilized significantly. Investor sentiment has improved materially, underpinned by greater macroeconomic clarity, receding inflation concerns, and market expectations for a Federal Reserve policy pivot toward rate reductions in the latter half of 2024.

Spread Environment. Institutional TLB spreads have tightened meaningfully from the peaks observed in mid-2023. For single-B rated credits (which is the relevant rating category for most sponsored data-center transactions), average new-issue spreads have compressed to approximately SOFR + 400–475 basis points, depending on sector, leverage profile, and credit quality. This represents a tightening of approximately 50–75 basis points relative to mid-2023 levels for comparable credits. Double-B rated credits have experienced even more pronounced tightening, with spreads for BB-rated TLBs now in the SOFR + 250–350 basis point range, though this tier is not directly applicable to IHDC's anticipated credit profile.

SOFR Base Rate Context. Three-month Term SOFR was approximately 5.30–5.35% as of mid-February 2024. The forward SOFR curve, however, reflects market expectations for multiple Federal Reserve rate reductions commencing in mid-to-late 2024, with the December 2024 three-month Term SOFR implied rate approximately 75–100 basis points lower than the current spot rate. This forward curve dynamic is contributing to a constructive investor backdrop, as institutional lenders are pricing total yield expectations against an anticipated declining rate environment, making the current spread levels attractive on a forward-looking total return basis.

SOFR Floors. A SOFR floor of 0.50% (50 basis points) remains the standard market convention for most new-issue TLB facilities. The floor ensures a minimum level of base rate for lenders in a declining rate environment. Certain tighter or higher-quality credits (particularly those with BB ratings or low leverage profiles) have recently issued with 0.00% SOFR floors, but for a single-B rated credit such as IHDC, a 0.50% floor is the expected market standard and should not generate any resistance in syndication.

Original Issue discounts. New-issue OIDs have narrowed significantly from the levels observed during the more challenging market environment of mid-2023, when discounts of 97.00–98.00 (i.e., 200–300 basis points) were common for leveraged credits. The median OID for B-rated TLBs in recent weeks has been approximately 99.50 (a 50 basis point discount), with higher-quality credits achieving OIDs of 99.75 or even par issuance. This tightening reflects the improved supply-demand dynamic in the institutional loan market and the strong technical backdrop discussed below.

Investor Demand and Technical Backdrop. Several factors are contributing to a favorable technical environment for TLB issuers:

• CLO Formation Activity: Collateralized loan obligation ("CLO") new issuance has been strong in early 2024, with several large CLO managers bringing new vehicles to market. CLOs remain the single largest buyer category for institutional TLB paper, and robust new CLO formation creates incremental demand for broadly syndicated loan assets.

• Credit Fund Deployment: Direct lending and credit fund vehicles continue to actively deploy capital in the institutional loan market. Many credit funds entered 2024 with significant dry powder and are selectively participating in BSL transactions that offer attractive risk-adjusted returns, particularly in favored sectors such as technology, healthcare, and digital infrastructure.

• Retail Loan Fund Inflows: After experiencing sustained outflows during much of 2022 and the first half of 2023, retail loan mutual funds and ETFs have experienced positive net inflows in recent weeks, providing an additional source of demand for institutional TLB paper.

• Repricing Activity: A significant portion of January 2024 new-issue volume has consisted of repricing and refinancing transactions (i.e., existing borrowers seeking to reduce spreads on outstanding TLB facilities in light of the improved market environment). While repricing activity is not directly comparable to IHDC's new-money transaction, it demonstrates issuer confidence in market receptivity and contributes to overall market liquidity and efficiency.

Amortization. Scheduled amortization of 1.00% per annum of the original principal amount of the TLB facility remains the standard market convention for institutional TLB tranches. This minimal amortization rate (typically payable in equal quarterly installments of 0.25% per quarter) is universally accepted by institutional lenders and is not a negotiation point.

Call Protection. A 101 soft call for six months following the closing date is the standard call protection feature for most new-issue TLBs. This provision requires the borrower to pay a premium of 1.00% of the principal amount prepaid if the facility is voluntarily refinanced or repriced during the initial six-month period following the closing date. The 101/6-month structure is market convention and should not present syndication challenges.

B. Cross-Border and Multi-Currency Considerations

Given that IHDC's proposed financing involves both a United States-situs campus and a German-situs campus, the transaction will incorporate cross-border structural elements that are increasingly common in the institutional TLB market but that warrant specific attention.

EUR-Denominated Sub-Tranches. The inclusion of a Euro-denominated sub-tranche within a broadly syndicated TLB facility is well-established market practice for borrowers with material European operations or assets. Structuring a portion of the facility in Euros allows the borrower to create a natural currency hedge against Euro-denominated revenues and operating expenses, reducing foreign exchange risk at the consolidated level. In recent cross-border TLB issuances, we have observed EUR-denominated sub-tranches with spreads of approximately EURIBOR + 400–450 basis points for credits in the single-B rating category, generally tracking at parity or a modest premium to the corresponding USD tranche spread.

EURIBOR Floors. The market standard EURIBOR floor for EUR-denominated TLB tranches is 0.00% (i.e., a zero floor), in contrast to the 0.50% SOFR floor that is standard for USD tranches. This divergence reflects the different historical interest rate environments in the Eurozone relative to the United States and is universally accepted by market participants.

IHDC's EUR Sub-Tranche. IHDC's proposed structure contemplates a EUR sub-tranche of approximately €253,571,429 (equivalent to approximately $275,000,000 at a EUR/USD exchange rate of 1.0846 as of the date of this memorandum) to fund the development of the Frankfurt Campus. This allocation is consistent with market practice for funding European-situs assets in the local currency and will provide Ironhaven with a natural hedge against the Euro-denominated revenue streams anticipated from the Frankfurt Campus operations, including the anchor pre-lease with Euronova Digital GmbH.

German Institutional Lender Participation. The Frankfurt Campus component of the financing is expected to attract participation from German institutional lenders, including BaFin-regulated Aktiengesellschaften (AGs) and other European institutional investors. The participation of such lenders adds credibility and depth to the syndicate but introduces additional compliance workstreams. Specifically, German financial institutions are subject to the Geldwäschegesetz ("GwG"), Germany's anti-money laundering statute, which imposes know-your-customer and beneficial ownership verification requirements that must be satisfied prior to funding. Calderwood & Harkness, in coordination with our German counsel, Wendt Falkenberg Rechtsanwälte PartG mbB, will manage these workstreams to ensure timely completion.

German-Law Collateral Structures. The collateral package securing the EUR sub-tranche (and, on a pari passu basis, the entire TLB facility) will include German-law security interests over the Frankfurt Campus assets. The anticipated German security package will include:

• Grundschuld (land charge) over the Frankfurt Campus real property;

• Globalzession (global assignment of receivables) of IHDC Frankfurt's trade receivables and contractual claims;

• Sicherungsübereignung (security transfer of moveable assets) over the data-center equipment and other tangible personal property located at the Frankfurt Campus; and

• Share pledge over the equity interests in the German subsidiary (IHDC Frankfurt GmbH or its equivalent).

Parallel-debt structures — pursuant to which the German borrower entity undertakes a parallel payment obligation in favor of the collateral agent under a separate parallel-debt acknowledgment, thereby allowing the collateral agent to hold German-law security interests as direct creditor — are well-established in European leveraged lending practice and are accepted by institutional investors without meaningful reservation. Wendt Falkenberg will advise on the specific structural requirements under German law, including notarization requirements for the Grundschuld and the share pledge.

III. Data Center / Digital Infrastructure Sector — Lending Landscape

A. Sector Tailwinds

The data center and digital infrastructure sector is currently experiencing a period of unprecedented demand growth that is highly favorable for IHDC's financing objectives. Several interconnected secular trends are driving this demand environment:

• Cloud Computing Migration: Enterprise migration to public cloud, hybrid cloud, and multi-cloud architectures continues to accelerate, driving demand for colocation and hyperscale data-center capacity across all major markets globally. Industry analysts project that global cloud infrastructure spending will exceed $1 trillion annually by 2027, with a significant portion of that spend flowing to physical data-center capacity providers.

• Artificial intelligence and Machine Learning Workloads: The rapid proliferation of generative AI applications and large language model ("LLM") training workloads has created a step-function increase in demand for high-density, GPU-optimized data-center capacity. AI/ML workloads require substantially higher power density per rack unit than traditional enterprise computing workloads, placing a premium on purpose-built hyperscale facilities such as those contemplated by IHDC.

• Enterprise Digital Transformation: Broader enterprise digital transformation initiatives — including edge computing deployment, Internet of Things ("IoT") infrastructure, and 5G network buildout — continue to drive incremental demand for data-center capacity across both primary and secondary markets.

• Data Sovereignty and Regulatory Requirements: Evolving data sovereignty regulations in the European Union (including the General Data Protection Regulation and the EU Data Act) are driving demand for in-region data-center capacity, particularly in established markets such as Frankfurt, Amsterdam, London, and Dublin. IHDC's Frankfurt Campus is well-positioned to benefit from this regulatory-driven demand.

Campus Locations. IHDC's selection of campus locations is a significant credit positive. Loudoun County, Virginia (encompassing the Ashburn data-center corridor) remains the largest data-center market in the world by total installed capacity, accounting for approximately 70% of the internet traffic in the United States. The region benefits from favorable power availability, extensive fiber connectivity, a deep talent pool, and a supportive local regulatory environment. Frankfurt, Germany is the largest data-center market in continental Europe, serving as the primary interconnection hub for European internet traffic and hosting the DE-CIX, the world's largest internet exchange by peak traffic volume. Both locations enjoy robust barriers to entry (including power availability constraints and zoning restrictions) that support long-term pricing power for established operators.

Pre-Leased Capacity. A critical de-risking element for IHDC's credit profile during the construction phase is the presence of signed anchor pre-lease letters of intent. Specifically:

• Ashburn Campus: IHDC has executed a letter of intent with Stratos Cloud Services, Inc. for a pre-lease of 30 megawatts ("MW") of critical IT load capacity on a five-year initial term, with two five-year renewal options, at an annual base rent of approximately $14.4 million. Stratos Cloud Services is a Fortune 200 hyperscale cloud platform provider with investment-grade credit quality.

• Frankfurt Campus: IHDC has executed a letter of intent with Euronova Digital GmbH for a pre-lease of 20 MW of critical IT load capacity on a seven-year initial term, with one five-year renewal option, at an annual base rent of approximately €9.8 million. Euronova Digital is a leading European managed services and colocation provider with strong credit fundamentals.

Together, these pre-lease commitments represent a substantial portion of the Phase 1 capacity at both campuses and provide significant revenue visibility during the construction and initial lease-up period. Institutional lenders consistently identify pre-leased capacity as one of the most important credit-positive factors in evaluating data-center construction financings.

Expanded Lender Universe. The lender universe for data-center credits has broadened meaningfully over the past several years as the sector has matured and investor familiarity with the asset class has increased. The investor base now includes traditional commercial banks, institutional CLO vehicles, credit opportunity funds, direct lending platforms, and insurance-company capital vehicles. This diversified investor base provides strong syndication support for well-structured data-center TLB issuances and contributes to competitive pricing outcomes for borrowers.

B. Comparable Recent Data Center TLB Transactions

To contextualize IHDC's proposed pricing and structural terms, we have compiled the following table of recent TLB transactions in the data center and digital infrastructure sector. These comparable transactions (presented on an anonymized basis) represent a representative cross-section of recent market activity and provide useful benchmarking data for IHDC's financing.

Commentary on Comparable Transactions:

Avalon Digital Holdings (January 2024). The Avalon transaction represents the tightest pricing in the recent comparable set, reflecting Avalon's relatively conservative leverage profile (5.0x) and its status as an established operating platform with stabilized, cash-flowing assets and minimal construction exposure. Avalon's SOFR + 400 bps spread and 99.50 OID establish the "tight end" of the current pricing range for B-rated data-center credits. IHDC's slightly higher leverage (5.35x vs. 5.0x) and construction-phase risk profile suggest that a modest premium to Avalon's pricing is appropriate.

Vomunex Colo Group (December 2023). Nextera priced at the wider end of the range at SOFR + 450 bps with a 99.25 OID, reflecting its higher leverage (5.8x) and a more aggressive capital structure relative to other data-center comparables. The wider OID (75 bps) also reflected the somewhat less constructive market environment in December 2023 relative to the tighter conditions prevailing in February 2024. IHDC's lower leverage and stronger pre-lease coverage should support meaningfully tighter pricing than the Nextera benchmark.

ClearBridge Data Infrastructure (November 2023). ClearBridge achieved the tightest OID in the comparable set (99.75) despite pricing its spread at SOFR + 425 bps, reflecting the market's favorable view of ClearBridge's lower leverage (4.8x) and its fully operational asset portfolio. ClearBridge's spread of SOFR + 425 bps at 4.8x leverage suggests that IHDC's proposed SOFR + 425 bps spread at 5.35x leverage is achievable, though IHDC's construction-phase profile may result in a modestly wider OID relative to ClearBridge.

Fortis Digital Partners (January 2024). The Fortis transaction is the most structurally comparable to IHDC's proposed facility, as it incorporated both a USD tranche and a EUR-denominated sub-tranche (€200 million), with the EUR sub-tranche priced at EURIBOR + 425 bps with a 0.00% EURIBOR floor. Fortis's pro forma leverage of 5.2x is close to IHDC's anticipated 5.35x, and the identical spread and OID levels (SOFR/EURIBOR + 425 bps, 99.50 OID) provide strong support for IHDC's proposed pricing. The successful execution of Fortis's cross-border structure also validates the market's acceptance of multi-currency TLB facilities in the data-center sector.

Horizon Campus Realty (October 2023). Horizon represents the widest pricing in the comparable set (SOFR + 475 bps, 99.00 OID), reflecting a combination of higher leverage (6.0x), a higher SOFR floor (0.75%), and the less favorable market conditions prevailing in October 2023. Horizon's pricing establishes the "wide end" of the current comparable range and provides useful context for the outer boundary of IHDC's pricing negotiation.

Key Observation. Based on the foregoing comparable analysis, IHDC's proposed pricing of SOFR + 425 bps with a 99.50 OID and a 0.50% SOFR floor is squarely within the range of recent data-center TLB transactions at the 5.0x to 5.5x net leverage level. The pricing is neither aggressively tight (which could risk syndication difficulties) nor unnecessarily wide (which would result in excessive cost of capital for the borrower). We believe this pricing represents a reasonable and achievable target for the syndication, assuming market conditions remain stable through the anticipated March–April 2024 syndication window.

C. Investor Base and Syndication Dynamics

For a facility of IHDC's size ($950,000,000, including the EUR sub-tranche), the anticipated syndicate will consist of a diversified mix of institutional investor categories:

• Lead Arranger Hold: Crescent Harbor Bank, N.A. is expected to retain a hold position of approximately $200,000,000 (approximately 21% of the total facility) as lead arranger and administrative agent. The balance of approximately $750,000,000 will be syndicated to institutional investors.

• CLO Vehicles: CLOs structured under Delaware limited partnership or Cayman Islands exempted limited partnership vehicles are expected to be the largest investor category in the syndication, consistent with the broader institutional loan market composition. CLO eligibility will require a private credit estimate from a recognized rating agency (see discussion of Sentinel Ratings International below).

• Credit Funds: Institutional credit funds (including direct lending platforms, credit opportunity funds, and multi-strategy credit vehicles) are actively deploying capital in the data-center TLB space and are expected to constitute a meaningful portion of the investor base for IHDC's facility.

• Specialty Lenders: Specialty finance companies and non-bank lenders with sector-specific expertise in digital infrastructure and technology lending may participate in the syndication, particularly in light of the strong sector dynamics.

• European Institutional Lenders: The cross-border element of the transaction — including the EUR sub-tranche and the German collateral package — is expected to attract participation from European institutional lenders, including German bank lenders, European CLO vehicles, and regional credit funds with mandates covering European leveraged credit.

• Insurance Capital Vehicles: Bermuda- and other offshore-domiciled insurance capital vehicles (including reinsurance company investment portfolios) have increasingly become active participants in the institutional TLB market. These investors typically provide large hold amounts and stable capital but require enhanced sanctions screening and KYC diligence procedures, as discussed further in Section VI below.

Private Credit Estimate. In order to facilitate CLO eligibility for the IHDC TLB and support the broader investor marketing process, we understand that Crescent Harbor intends to engage Sentinel Ratings International, LLC to provide a private credit estimate for the facility. A private credit estimate is not a published credit rating; rather, it is a confidential assessment provided to the arranger and certain qualified institutional investors for the purpose of CLO eligibility determination and internal credit evaluation. Calderwood & Harkness has worked with Sentinel Ratings on numerous prior transactions and will coordinate with Crescent Harbor's capital markets team on the engagement, including the information package to be provided to Sentinel's analytical team. The lead contact at Sentinel Ratings is Lorraine Dupont, Senior Director, Private Credit Estimates.

IV. Key Structural and Pricing Terms — Benchmarking IHDC's Proposed Facility

In this section, we provide a detailed assessment of each of the key structural and pricing terms proposed for IHDC's TLB facility, benchmarked against current market standards and the comparable transaction data set forth in Section III above.

A. Pricing

Proposed Spread:

• USD Tranche: SOFR + 425 basis points

• EUR Sub-Tranche: EURIBOR + 425 basis points

Assessment: The proposed spread of SOFR/EURIBOR + 425 basis points is competitive within the current market range for B-rated data-center TLB facilities. The 425 basis point spread reflects a balanced view of IHDC's credit profile, accounting for IHDC's moderate leverage (5.35x pro forma net leverage) and the credit-positive attributes of the campus locations and pre-leased capacity, offset by the construction-phase execution risk inherent in a development-stage financing. The proposed spread is consistent with the Fortis Digital Partners and ClearBridge Data Infrastructure comparable transactions and represents a modest premium to the tightest recent data-center pricing (Avalon Digital Holdings at SOFR + 400 bps). We do not anticipate meaningful pushback from institutional investors on the proposed spread at the current level.

SOFR Floor: The proposed SOFR floor of 0.50% is standard for the institutional TLB market and consistent with all five comparable transactions in the data set (with the exception of Horizon Campus Realty, which featured a 0.75% floor reflective of its wider pricing and higher leverage). No investor pushback is expected on this term.

EURIBOR Floor: The proposed EURIBOR floor of 0.00% for the EUR sub-tranche is the market standard for Euro-denominated institutional loan tranches and is consistent with the Fortis Digital Partners comparable. No investor pushback is expected.

Original Issue discount: The proposed OID of 99.50 (representing a 50 basis point discount to par) is in line with the median OID observed for recent B-rated TLB issuances across all sectors and is consistent with the Avalon Digital Holdings and Fortis Digital Partners comparables in the data-center space. Based on the $950,000,000 aggregate facility size, the 50 basis point OID translates to net proceeds to the borrower of $945,250,000, representing a $4,750,000 upfront discount retained by the lenders.

B. Financial Covenants

Proposed Covenants:

• Maximum net leverage ratio: 6.00x

• Minimum interest coverage ratio: 2.00x

• Both covenants are springing/maintenance covenants, tested on a quarterly basis commencing September 30, 2024

Market Observations: The inclusion of maintenance financial covenants is a notable structural feature of the proposed IHDC facility. In the current broadly syndicated TLB market, "cov-lite" structures — featuring financial covenants that are tested only on an incurrence basis (i.e., when the borrower seeks to take a specified action such as incurring additional indebtedness or making a restricted payment) rather than on a maintenance basis — remain the dominant convention for most pure-play BSL TLB facilities. Cov-lite structures represent approximately 85–90% of new institutional TLB issuance by volume.

However, maintenance financial covenants are more typical, and indeed expected by institutional investors, for TLB facilities that involve significant construction-phase credit risk and substantial capital expenditure components. Given IHDC's development-stage profile, with both the Ashburn Campus and the Frankfurt Campus currently in the pre-construction or early construction phase, the inclusion of maintenance covenants is consistent with market expectations and should not impair syndication execution. To the contrary, institutional lenders with lower risk tolerance (including certain CLO vehicles subject to strict credit quality guidelines) may view the maintenance covenant package as a credit-positive feature that provides enhanced downside protection during the construction period.

Covenant Levels: The proposed maximum net leverage ratio of 6.00x provides 65 basis points of headroom above the 5.35x pro forma opening net leverage ratio, representing approximately 12% cushion. This level of headroom is within the range of typical covenant cushions for sponsored leveraged financings (which generally range from 50 to 100 basis points, or 10% to 20% of opening leverage). The minimum interest coverage ratio of 2.00x is the standard floor for data-center and infrastructure credits and is consistent with comparable facilities in the sector.

Capital Expenditure Covenant: The proposed capital expenditure covenant — capping total capital expenditures at $325,000,000 for fiscal year 2024, stepping down to $250,000,000 per year for fiscal years 2025 and thereafter, with a 25% carry-forward of unused amounts from the immediately preceding fiscal year — is within market norms for construction-phase financings. The 25% carry-forward provides the borrower with modest flexibility to manage timing variations in the construction schedule without triggering a covenant default. Calderwood & Harkness will review the specific definitions and exclusions applicable to the capital expenditure covenant (including whether maintenance capital expenditures and landlord-funded tenant improvement allowances are excluded from the cap) when the initial draft credit agreement is circulated by Blackthorn & Sundial Software.

C. Mandatory Prepayment / Excess Cash Flow Sweep

Proposed ECF Sweep:

• 75% of Excess Cash Flow ("ECF") at net leverage above 4.5x

• Stepping to 50% of ECF when net leverage is at or below 4.5x

• Stepping to 25% of ECF when net leverage is at or below 3.5x

Market Observation: The proposed starting level of 75% ECF sweep is on the higher end of current market convention for institutional TLBs. Many recent TLB issuances have featured starting ECF sweep percentages of 50% (rather than 75%), with step-downs to 25% and 0% at lower leverage levels. The 75% starting level in IHDC's facility likely reflects the construction-phase risk profile and the lender group's desire for enhanced cash recapture during the period of elevated capital deployment.

Recommendation: IHDC may wish to negotiate for a 50% starting ECF sweep rather than 75%, or alternatively, negotiate for additional deductions from the ECF calculation that would reduce the effective sweep amount. Common deductions that borrowers negotiate include:

• Capital expenditures (to the extent not already deducted in the ECF definition);

• Cash consideration paid for permitted acquisitions during the applicable fiscal year;

• Voluntary prepayments of the TLB facility (to the extent not already credited);

• Cash taxes paid in excess of tax expense included in Adjusted EBITDA; and

• Working capital adjustments and other non-recurring cash charges.

We note that the ECF sweep structure is likely to be a negotiation point with Blackthorn & Sundial Software (Catherine Ellsworth), lender's counsel to Crescent Harbor. Calderwood & Harkness will address our recommended negotiation positions on the ECF sweep structure in a separate detailed negotiation points memorandum, which we expect to circulate to the IHDC team in advance of the commitment letter execution.

D. Call Protection

Proposed: 101 soft call for 6 months post-closing.

Based on an anticipated closing date of June 3, 2024, the soft call period would expire on December 3, 2024. During the soft call period, any voluntary prepayment or repricing of the TLB facility (including through an amendment or refinancing that reduces the applicable spread) would require the borrower to pay a 1.00% premium on the amount prepaid or repriced.

This structure is standard for the institutional TLB market and is consistent with all five comparable transactions in the data set. No hard call protection (i.e., a non-callable period) is proposed, which is also consistent with current market convention for broadly syndicated TLBs.

E. Change of Control

Proposed: Mandatory prepayment at 101% of outstanding principal plus accrued and unpaid interest upon a "Change of Control" event, defined as Thornfield Capital Partners, LP (or its affiliates) ceasing to hold, directly or indirectly, more than 50% of the voting equity interests of Ironhaven Holdings Inc. (the ultimate parent entity of the borrower group).

This provision is market standard for sponsor-backed TLB facilities and is consistent with the comparable transactions. The 101% repurchase price (i.e., the 1% premium over par) is the typical market convention and reflects a balance between providing lenders with protection against a change in the ownership and control of the borrower group while avoiding excessive financial burden on the borrower or its sponsor in the event of a strategic transaction.

F. Amortization

Proposed: 1.00% per annum of the original principal amount of the TLB facility, payable in equal quarterly installments of 0.25% per quarter ($2,375,000 per quarter, or $9,500,000 in aggregate per annum), with the remaining outstanding balance due and payable at maturity.

This is the standard amortization schedule for institutional TLB facilities. The minimal scheduled amortization reflects the TLB market's convention of relying primarily on a bullet maturity repayment (supplemented by the ECF sweep and other mandatory prepayment mechanisms) rather than substantial scheduled amortization. The 1.00% per annum rate is consistent with all comparable transactions in the data set.

G. Maturity

Proposed: Seven-year tenor, with an anticipated closing date of June 3, 2024 and maturity date of June 3, 2031.

A seven-year tenor is the standard maturity for institutional TLB facilities in the current market and is consistent with all five comparable transactions in the data set. The seven-year tenor provides IHDC with a long-dated maturity profile that extends well beyond the anticipated construction completion dates for both campuses (targeted for H2 2025 for the Ashburn Campus and H1 2026 for the Frankfurt Campus), allowing sufficient time for stabilization and lease-up before any refinancing event.

V. Pro Forma Capitalization and Credit Profile Context

The following table summarizes IHDC's anticipated pro forma capitalization at closing, based on information provided by IHDC management and the Thornfield deal team. This capitalization summary is provided for contextual purposes in connection with the market assessment set forth in this memorandum and is subject to update as the transaction progresses and financial projections are refined.

Pro Forma Capitalization Summary (at Closing)

Key Observations on the Pro Forma Capitalization:

• The pro forma net leverage of 5.35x is comfortably below the proposed maximum net leverage covenant of 6.00x, providing approximately 65 basis points (or 12%) of headroom at closing. This cushion is consistent with market expectations for sponsored leveraged financings and provides adequate buffer for normal construction-phase EBITDA variability.

• The existing Super-Senior Revolving Credit Facility (the "Revolver"), also provided by Crescent Harbor Bank, N.A., has a commitment amount of $100.0 million and is expected to be undrawn at closing. The Revolver is expected to be super-senior in the priority waterfall, ranking ahead of the TLB facility in the distribution proceeds upon an enforcement event. The Revolver provides IHDC with liquidity to fund working capital, short-term construction funding needs, and other general corporate purposes during the term of the TLB facility.

• The equity contribution from Thornfield Infrastructure Fund III, LP of $410.0 million represents an equity contribution of approximately 30% of total capitalization, which is within the typical range for sponsored infrastructure financings (generally 25–35% equity contribution). Thornfield Infrastructure Fund III, LP has a total fund size of approximately $3.8 billion, and the $410.0 million commitment to IHDC represents approximately 10.8% of the fund's capital, well within normal concentration limits.

• Refinancing of Existing Mezzanine Indebtedness. A portion of the TLB proceeds will be used to refinance IHDC's existing $130.0 million in subordinated mezzanine notes held by Greystone Mezzanine Fund II, LP at a 12.50% payment-in-kind ("PIK") interest rate. The refinancing of this high-cost PIK debt is a significant credit-positive event, as it eliminates the compounding PIK interest burden (which would accrete approximately $16.25 million in non-cash interest annually) and replaces it with cash-pay TLB debt at a materially lower all-in cost of approximately 10.55–10.60% (based on current 3-month Term SOFR of ~5.30% plus the 425 bps spread plus the OID amortization). This refinancing will meaningfully improve IHDC's cash interest coverage ratios and reduce structural complexity in the capital structure.

Historical Financial Data:

• Revenue (LTM 9/30/2023): $412.6 million

• Adjusted EBITDA (LTM 9/30/2023): $158.3 million (38.4% EBITDA margin)

• Total Assets (as of 9/30/2023): $1.87 billion

Credit Strengths:

• Blue-chip campus locations in the two largest data-center markets globally (Loudoun County and Frankfurt), with strong barriers to entry and robust demand dynamics

• Strong sponsor backing from Thornfield Capital Partners, LP (approximately $14.2 billion in assets under management across its infrastructure fund family), providing both financial resources and operational expertise in the digital infrastructure sector

• Pre-leased capacity with creditworthy counterparties (Stratos Cloud Services and Euronova Digital), providing meaningful revenue visibility during the construction and stabilization phases

• Powerful sector tailwinds driven by AI/cloud demand growth, as discussed in Section III.A above

Credit Considerations:

• Construction-phase execution risk: Both campuses are in the pre-construction or early construction phase, and the facility will fund a significant portion of the development capital. Construction delays, cost overruns, or permitting issues could adversely impact the credit profile. Mitigation factors include the engagement of experienced general contractors (to be confirmed), comprehensive builder's risk insurance, and the capital expenditure covenant providing structural protection against cost overruns.

• Geographic concentration: IHDC's asset base is concentrated in two campuses. Any campus-specific event (e.g., power grid failure, regulatory change, natural disaster) could disproportionately impact the credit. Geographic diversification through future campus development would help mitigate this risk over time.

• Cross-border complexity: The multi-jurisdictional structure (US and Germany) introduces legal, regulatory, tax, and currency complexity that must be carefully managed throughout the life of the facility. Calderwood & Harkness and Wendt Falkenberg are well-positioned to address these issues.

VI. Sanctions, KYC, and Regulatory Compliance Considerations for Syndication

The multinational composition of the anticipated lender syndicate and the German-situs collateral package will require an extensive and carefully coordinated compliance workstream addressing sanctions screening, anti-money laundering requirements, and beneficial ownership verification. We flag the following key considerations:

OFAC Screening. All lenders and their beneficial owners (at the greater than 25% ownership threshold) must be screened against the Office of Foreign Assets Control ("OFAC") Specially Designated Nationals and blocked Persons List ("SDN List"), the Sectoral Sanctions Identifications List, and other applicable OFAC sanctions programs. This screening is required under the credit agreement and is a condition to each lender's participation in the syndicate. Calderwood & Harkness will prepare a standardized OFAC/sanctions compliance certificate to be delivered by each lender prior to funding.

EU Sanctions Screening. For the Frankfurt-nexus parties and the EUR sub-tranche, screening will be required under the European Union sanctions regime, including Council Regulation (EU) No. 269/2014 (concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine) and other applicable EU sanctions regulations. This screening will cover all lenders participating in the EUR sub-tranche, as well as the borrower entities and their directors and officers.

OFSI Sanctions (UK). To the extent that Bermuda- or other offshore-domiciled lenders participate in the syndicate (which is anticipated given the involvement of insurance capital vehicles), screening under the UK Office of Financial Sanctions Implementation ("OFSI") regime may also be required, depending on the nexus of such lenders to the United Kingdom. Enhanced diligence procedures will be implemented for any offshore-domiciled lender to ensure compliance with the relevant sanctions frameworks.

BaFin/GwG Compliance. German institutional lenders participating in the syndicate are subject to the requirements of the Geldwäschegesetz (GwG), Germany's Anti-Money Laundering Act, which imposes detailed customer due diligence and beneficial ownership verification obligations. IHDC's German subsidiary (IHDC Frankfurt GmbH or its equivalent) will be required to maintain a current filing with the Transparenzregister (the German Transparency Register), reflecting the beneficial ownership chain through to the ultimate beneficial owners of the borrower group.

Beneficial Ownership Certifications. IHDC and Ironhaven Holdings Inc. will be required to deliver beneficial ownership certifications in compliance with the Financial Crimes Enforcement Network ("FinCEN") Customer Due Diligence ("CDD") Rule (31 C.F.R. § 1010.230) to each bank lender in the syndicate. Calderwood & Harkness will prepare the form beneficial ownership certification and coordinate with IHDC's corporate secretary to ensure timely completion.

Impact on Syndication Timeline. These compliance workstreams — particularly the KYC and beneficial ownership verification process for a large, multinational syndicate — require meaningful lead time and can present logistical challenges if not commenced early in the syndication process. We strongly recommend commencing KYC collections immediately upon syndication launch, which is currently targeted for March 15, 2024. Calderwood & Harkness will prepare a KYC checklist and information request package for distribution to prospective lenders through Crescent Harbor's syndication desk and will work with Wendt Falkenberg to ensure that all German regulatory requirements are addressed in parallel.

VII. Anticipated Timeline and Syndication Process

Based on information available as of the date of this memorandum, and reflecting certain events that have been confirmed subsequent to our initial engagement, the anticipated timeline for the IHDC TLB transaction is as follows:

Important Notes on Timeline:

• Ticking Fee. A ticking fee of 0.25% per annum on undrawn commitments will commence on the syndication launch date and will accrue through the closing date. Based on an assumed syndication launch of March 15, 2024 and a closing date of June 3, 2024, the ticking fee period would be approximately 80 days, resulting in an aggregate ticking fee of approximately $520,000 on the full $950 million facility (or less to the extent commitments are drawn or reduced during such period). The ticking fee is a standard market feature that compensates lenders for the cost of maintaining capital commitments during the pre-closing period.

• Signing and Closing. We note that the signing of the credit agreement and the closing (funding) of the TLB facility may not occur simultaneously. A delayed draw mechanism is under consideration, pursuant to which the credit agreement would be executed at signing (targeted for May 2024) but funding would occur on a subsequent date (targeted for late May or early June 2024) upon satisfaction of specified conditions precedent (including delivery of the collateral documentation, receipt of insurance certificates, and completion of environmental and appraisal deliverables). If a delayed draw structure is employed, the ticking fee would continue to accrue through the funding date. Calderwood & Harkness will advise on the optimal structure for the signing/closing mechanics based on the collateral and condition precedent timeline.

• Confidential Information Memorandum (CIM). The preparation and timely delivery of a comprehensive Confidential Information Memorandum is critical to the syndication process. The CIM will be prepared by Crescent Harbor's capital markets team and will contain detailed business, financial, and legal information about IHDC, the proposed financing, and the campus development projects. Calderwood & Harkness will review the CIM for legal accuracy and completeness and will deliver a 10b-5-style negative assurance letter (also known as a "10b-5 letter" or "negative assurance comfort letter") confirming that, based on our participation in the preparation of the CIM, nothing has come to our attention that causes us to believe that the CIM (other than financial projections, estimates, and certain other specified information) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The delivery of this letter is a standard requirement in the BSL syndication market and is a condition to Crescent Harbor's willingness to distribute the CIM to prospective institutional lenders.

• Parallel Collateral and Security Workstreams. The preparation and execution of the US and German collateral and security documents will proceed in parallel with the syndication process. The US collateral package (including mortgages, UCC-1 financing statements, pledge agreements, and related documentation for the Ashburn Campus) and the German collateral package (including the Grundschuld, Globalzession, Sicherungsübereignung, and share pledge documentation for the Frankfurt Campus) will be coordinated by Calderwood & Harkness and Wendt Falkenberg, respectively, and must be in substantially final form prior to signing of the credit agreement. Notarization of certain German security documents (particularly the Grundschuld and the share pledge) requires scheduling with a German notary (Notar) and may require the physical presence of authorized signatories or the issuance of notarized powers of attorney, which should be planned well in advance.

VIII. Recommendations and Next Steps

Based on our assessment of the current market conditions and the status of the transaction, Calderwood & Harkness recommends the following next steps for IHDC management and the broader deal team:

1. Commitment Letter Finalization. Finalize the engagement with Crescent Harbor Bank, N.A. on commitment letter terms, including confirmation of the following economic terms:

• Arrangement fee: 1.50% of the total facility amount = $14,250,000

• Upfront fee / OID: 50 basis points (99.50 OID)

• Administrative agent fee: $175,000 per annum

• Ticking fee: 0.25% per annum on undrawn commitments from syndication launch through closing

2. Credit Agreement Mark-Up. Calderwood & Harkness will begin preparing the borrower's mark-up of the credit agreement promptly upon receipt of the initial draft from Blackthorn & Sundial Software (lender's counsel). The lead partner at Blackthorn & Brightmoor Systems is Catherine Ellsworth, with whom Calderwood & Harkness has worked on numerous prior transactions. We anticipate receiving the initial draft of the credit agreement in late March or early April 2024 and will target a two-week turnaround for the borrower's mark-up.

3. German Counsel Coordination. Coordinate with Wendt Falkenberg Rechtsanwälte PartG mbB (Dr. Lukas Wendt and Julia Falkenberg) on the preparation of the German security documents, including the Grundschuld (land charge), Globalzession (global assignment of receivables), Sicherungsübereignung (security transfer of moveable assets), and share pledge over the equity interests in the German subsidiary. Notarization requirements for the Grundschuld and share pledge must be identified early in the process and scheduled accordingly to avoid delays in the closing timeline.

4. Insurance Placement. Engage Calloway & Strand Insurance Brokers, Inc. (Patricia Calloway) for the placement of builder's risk insurance and property insurance for both campuses, in amounts and with coverage terms meeting the requirements to be set forth in the credit agreement. Builder's risk coverage should be in place no later than the commencement of physical construction activities at each campus, and evidence of insurance (in the form of certificates of insurance and, where required, endorsements naming the collateral agent as additional insured and loss payee) will be a condition precedent to closing.

5. Environmental Assessments. Commission Phase I Environmental Site Assessments (and, if warranted, Phase II assessments) for both campuses from Greenline Environmental Solutions, Inc., in accordance with ASTM Standard Practice E1527-21. Delivery of satisfactory environmental reports will be a condition precedent to closing.

6. Appraisals. Commission MAI-certified appraisals from Meridian Valuation Group, LLC for both the Ashburn Campus and the Frankfurt Campus. The appraisals should be prepared in conformance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and should be addressed to the collateral agent and the lender group.

7. Title Insurance. Confirm the title insurance commitment from Keystone Title Guaranty Company (Raymond Hobbs, Senior Vice President) for the Ashburn Campus, with a policy amount of $475,000,000. Title insurance for the Frankfurt Campus will not be available in the traditional US sense; however, the Grundschuld registration in the German Grundbuch (land register) provides equivalent assurance of priority, and Wendt Falkenberg will provide a German-law title opinion in lieu of a title insurance policy.

8. Private Credit Estimate. Engage Sentinel Ratings International, LLC (Lorraine Dupont, Senior Director) for the preparation of a private credit estimate for the IHDC TLB facility. The private credit estimate is essential for CLO eligibility and will be a key component of the investor marketing materials.

9. Calderwood & Harkness Staffing and Fees. The Calderwood & Harkness team for this engagement is as follows:

• Stephanie Okafor — Partner, Banking & Finance (Lead Partner)

• Daniel Obi — Senior Associate, Banking & Finance (Lead Associate)

• Lisa Morrow — Associate, Banking & Finance (Working Associate)

• Sylvia Hartwell — Counsel, Tax (Tax Structuring)

• Philip Hartmann — Partner, Banking & Finance (Billing Partner)

Estimated Calderwood & Harkness legal fees for this engagement: $2,850,000 (exclusive of disbursements). This estimate is exclusive of fees for Wendt Falkenberg Rechtsanwälte PartG mbB, which are estimated at approximately €385,000 for the German security and corporate work. All fees will be billed under billing code IHDC-TLB-2024.

10. Sponsor Alignment Call. We recommend scheduling a call with IHDC management and Thornfield Capital Partners, LP representatives (Elena Castillo, Managing Director, and Graham Ashworth, Vice President, Thornfield Infrastructure Fund III) to align on negotiation strategy in advance of the commitment letter execution and the subsequent credit agreement negotiation. Calderwood & Harkness is available to participate in this call at the convenience of the parties and suggests targeting the week of February 26, 2024.

Calderwood & Harkness remains available at all times for further discussion on any of the matters addressed in this memorandum. Please do not hesitate to contact the undersigned directly with any questions or to schedule a follow-up discussion.

IX. Disclaimer and Confidentiality Notice

This memorandum has been prepared by Calderwood & Harkness LLP solely for the use of Ironhaven Data Centers LLC and its management in connection with Calderwood & Harkness's representation of IHDC in Matter No. 1043-00001. This memorandum is provided for informational purposes only and does not constitute investment advice, a commitment by any party to provide financing on the terms described herein, or a guaranty of any particular outcome in the syndication or credit markets.

The market data, comparable transaction information, and pricing benchmarks contained in this memorandum are based on Calderwood & Harkness's market knowledge, experience in comparable transactions, and information obtained from sources that we believe to be reliable, including publicly available market data and proprietary deal databases. However, we have not independently verified all such information, and actual terms, pricing, and market conditions may vary materially from those described herein. Market conditions are inherently dynamic and may change rapidly; the assessments set forth in this memorandum reflect conditions as of the date hereof and may not be applicable to future periods.

This memorandum is protected by the attorney-client privilege and the attorney work product doctrine and is strictly confidential. This memorandum and its contents may not be disclosed, distributed, or made available to any person or entity outside of Ironhaven Data Centers LLC, Ironhaven Holdings Inc., and Thornfield Capital Partners, LP (and their respective officers, directors, employees, and advisors who have a need to know) without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of any applicable privilege.

Contact Information:

Stephanie Okafor Partner, Banking & Finance Calderwood & Harkness LLP 125 Broad Street New York, NY 10004 Telephone: (212) 555-7800

Email: sokafor@calderwoodharkness.com

Issuer	Closing Date	Facility Size	Spread	OID	SOFR Floor	Pro Forma Leverage	Maturity
Avalon Digital Holdings	January 2024	$800M	SOFR + 400 bps	99.50	0.50%	5.0x	7 years
Vomunex Colo Group	December 2023	$1.1B	SOFR + 450 bps	99.25	0.50%	5.8x	7 years
ClearBridge Data Infrastructure	November 2023	$650M	SOFR + 425 bps	99.75	0.50%	4.8x	7 years
Fortis Digital Partners	January 2024	$725M (incl. €200M EUR tranche)	SOFR/EURIBOR + 425 bps	99.50	0.50% / 0.00%	5.2x	7 years
Horizon Campus Realty	October 2023	$550M	SOFR + 475 bps	99.00	0.75%	6.0x	7 years
Item	Amount
Adjusted EBITDA (LTM 3/31/2024 Projected)	$165.8M

Debt:

Term Loan B (New)	$950.0M
Super-Senior Revolving Credit Facility (Crescent Harbor; committed / $0 drawn)	$100.0M
Total Debt	$950.0M
Less: Unrestricted Cash at Closing	($62.5M)
Net Total Debt	$887.5M
Pro Forma Net Leverage	5.35x

Equity:

Equity Contribution — Thornfield Infrastructure Fund III, LP	$410.0M
Total Capitalization (Debt + Equity)	~$1,360.0M
Milestone	Target Date	Status
Mandate letter execution (Crescent Harbor)	February 12, 2024	Executed
Calderwood & Harkness engagement	January 29, 2024	Completed
Commitment letter execution	End of February 2024	Targeted (subsequently executed February 28, 2024)
Syndication launch	Mid-March 2024	Targeted for March 15, 2024
Ticking fee commencement	Syndication launch date	Ticking fee of 0.25% per annum on undrawn commitments
KYC/compliance collections commence	March 15, 2024	To coincide with syndication launch
Syndication close / all lender commitments	April 2024	Targeted
Credit agreement signing	May 2024	Targeted
Closing / funding	Late May or early June 2024	Targeted (June 3, 2024 assumed for modeling)

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL
CALDERWOOD & HARKNESS LLP 125 Broad Street New York, NY 10004
CLIENT ALERT MEMORANDUM
FROM: Stephanie Okafor, Partner, Banking & Finance, Calderwood & Harkness LLP
TO: Marcus Delaine, Chief Executive Officer, Ironhaven Data Centers LLC Rebecca Sung, Chief Financial Officer, Ironhaven Data Centers LLC
CC: Jonathan Pryce-Williams, General Counsel & Secretary, Ironhaven Data Centers LLC Natasha Greenfeld, Vice President, Treasury & Capital Markets, Ironhaven Data Centers LLC
DATE: February 20, 2024
RE: Term Loan B Market Conditions and Pricing Benchmarks — Data Center / Digital Infrastructure Sector (Q1 2024 Update)
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This memorandum has been prepared by Calderwood & Harkness LLP in connection with its representation of Ironhaven Data Centers LLC ("IHDC"), Matter No. 1043-00001. This communication is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressees and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
I. Executive Summary
The purpose of this memorandum is to provide IHDC management and the treasury team with a current and comprehensive snapshot of the institutional Term Loan B ("TLB") market as it relates to Ironhaven's planned $950,000,000 senior secured term loan financing. The proceeds of the proposed facility will be deployed to fund the development and construction of two hyperscale data-center campuses — one located in Loudoun County, Virginia (the "Ashburn Campus") and one located in Frankfurt, Germany (the "Frankfurt Campus") — as well as to refinance existing indebtedness and pay related transaction costs and expenses.
Engagement Context. Calderwood & Harkness was engaged by IHDC on January 29, 2024 to serve as borrower's counsel in connection with the proposed financing. The mandate letter between IHDC and Crescent Harbor Bank, N.A. ("Crescent Harbor"), as lead arranger, was expected to be executed imminently at the time of our engagement and was subsequently executed on February 12, 2024. The commitment letter from Crescent Harbor is anticipated to be finalized and executed by the end of February 2024. Thornfield Capital Partners, LP, acting through its Thornfield Infrastructure Fund III, LP vehicle ("Thornfield" or the "Sponsor"), will serve as the equity sponsor for the transaction, contributing approximately $410.0 million in equity capital to the capitalization of the project.
Key Takeaway. Based on our review of recent market activity, comparable transaction data, and current investor sentiment, we believe that market conditions in early 2024 are constructive for data-center TLB issuances. Institutional investor appetite for digital infrastructure credits remains robust, driven by powerful secular tailwinds related to artificial intelligence, cloud computing adoption, and enterprise digital transformation. For a credit of IHDC's profile — with pro forma net leverage of approximately 5.0x to 5.5x, blue-chip campus locations, meaningful pre-leased capacity, and strong sponsor support — we believe a pricing outcome in the range of SOFR + 400–450 basis points is readily achievable, with an original issue discount ("OID") in the range of 99.25–99.75 (i.e., 25 to 75 basis points of discount) serving as the current market-clearing level.
We note that Ironhaven's contemplated terms — specifically, SOFR + 425 basis points on the USD tranche, EURIBOR + 425 basis points on the EUR sub-tranche, an OID of 99.50 (representing a 50 basis point discount), and a pro forma net leverage ratio of approximately 5.35x — appear well within the current market window and should be achievable in the syndication process, subject to continued stable market conditions through the anticipated March–April 2024 syndication period.
The balance of this memorandum provides a detailed overview of current TLB market conditions, sector-specific lending dynamics, comparable transaction benchmarks, a summary of key structural and pricing terms for the proposed IHDC facility, an overview of the anticipated capitalization and credit profile, and a discussion of regulatory and compliance considerations relevant to the cross-border syndication. We conclude with our recommended next steps and anticipated timeline for the transaction.
II. Current Term Loan B Market Overview
A. General Market Conditions (January–February 2024)
The broadly syndicated loan ("BSL") market experienced robust new-issue volume in January 2024, continuing the strong recovery trajectory that began in the fourth quarter of 2023. After a period of pronounced market dislocation during the first half of 2023 — characterized by elevated spreads, wider OIDs, and challenging syndication execution for all but the highest-quality credits — the institutional loan market has stabilized significantly. Investor sentiment has improved materially, underpinned by greater macroeconomic clarity, receding inflation concerns, and market expectations for a Federal Reserve policy pivot toward rate reductions in the latter half of 2024.
Spread Environment. Institutional TLB spreads have tightened meaningfully from the peaks observed in mid-2023. For single-B rated credits (which is the relevant rating category for most sponsored data-center transactions), average new-issue spreads have compressed to approximately SOFR + 400–475 basis points, depending on sector, leverage profile, and credit quality. This represents a tightening of approximately 50–75 basis points relative to mid-2023 levels for comparable credits. Double-B rated credits have experienced even more pronounced tightening, with spreads for BB-rated TLBs now in the SOFR + 250–350 basis point range, though this tier is not directly applicable to IHDC's anticipated credit profile.
SOFR Base Rate Context. Three-month Term SOFR was approximately 5.30–5.35% as of mid-February 2024. The forward SOFR curve, however, reflects market expectations for multiple Federal Reserve rate reductions commencing in mid-to-late 2024, with the December 2024 three-month Term SOFR implied rate approximately 75–100 basis points lower than the current spot rate. This forward curve dynamic is contributing to a constructive investor backdrop, as institutional lenders are pricing total yield expectations against an anticipated declining rate environment, making the current spread levels attractive on a forward-looking total return basis.
SOFR Floors. A SOFR floor of 0.50% (50 basis points) remains the standard market convention for most new-issue TLB facilities. The floor ensures a minimum level of base rate for lenders in a declining rate environment. Certain tighter or higher-quality credits (particularly those with BB ratings or low leverage profiles) have recently issued with 0.00% SOFR floors, but for a single-B rated credit such as IHDC, a 0.50% floor is the expected market standard and should not generate any resistance in syndication.
Original Issue discounts. New-issue OIDs have narrowed significantly from the levels observed during the more challenging market environment of mid-2023, when discounts of 97.00–98.00 (i.e., 200–300 basis points) were common for leveraged credits. The median OID for B-rated TLBs in recent weeks has been approximately 99.50 (a 50 basis point discount), with higher-quality credits achieving OIDs of 99.75 or even par issuance. This tightening reflects the improved supply-demand dynamic in the institutional loan market and the strong technical backdrop discussed below.
Investor Demand and Technical Backdrop. Several factors are contributing to a favorable technical environment for TLB issuers:
• CLO Formation Activity: Collateralized loan obligation ("CLO") new issuance has been strong in early 2024, with several large CLO managers bringing new vehicles to market. CLOs remain the single largest buyer category for institutional TLB paper, and robust new CLO formation creates incremental demand for broadly syndicated loan assets.
• Credit Fund Deployment: Direct lending and credit fund vehicles continue to actively deploy capital in the institutional loan market. Many credit funds entered 2024 with significant dry powder and are selectively participating in BSL transactions that offer attractive risk-adjusted returns, particularly in favored sectors such as technology, healthcare, and digital infrastructure.
• Retail Loan Fund Inflows: After experiencing sustained outflows during much of 2022 and the first half of 2023, retail loan mutual funds and ETFs have experienced positive net inflows in recent weeks, providing an additional source of demand for institutional TLB paper.
• Repricing Activity: A significant portion of January 2024 new-issue volume has consisted of repricing and refinancing transactions (i.e., existing borrowers seeking to reduce spreads on outstanding TLB facilities in light of the improved market environment). While repricing activity is not directly comparable to IHDC's new-money transaction, it demonstrates issuer confidence in market receptivity and contributes to overall market liquidity and efficiency.
Amortization. Scheduled amortization of 1.00% per annum of the original principal amount of the TLB facility remains the standard market convention for institutional TLB tranches. This minimal amortization rate (typically payable in equal quarterly installments of 0.25% per quarter) is universally accepted by institutional lenders and is not a negotiation point.
Call Protection. A 101 soft call for six months following the closing date is the standard call protection feature for most new-issue TLBs. This provision requires the borrower to pay a premium of 1.00% of the principal amount prepaid if the facility is voluntarily refinanced or repriced during the initial six-month period following the closing date. The 101/6-month structure is market convention and should not present syndication challenges.
B. Cross-Border and Multi-Currency Considerations
Given that IHDC's proposed financing involves both a United States-situs campus and a German-situs campus, the transaction will incorporate cross-border structural elements that are increasingly common in the institutional TLB market but that warrant specific attention.
EUR-Denominated Sub-Tranches. The inclusion of a Euro-denominated sub-tranche within a broadly syndicated TLB facility is well-established market practice for borrowers with material European operations or assets. Structuring a portion of the facility in Euros allows the borrower to create a natural currency hedge against Euro-denominated revenues and operating expenses, reducing foreign exchange risk at the consolidated level. In recent cross-border TLB issuances, we have observed EUR-denominated sub-tranches with spreads of approximately EURIBOR + 400–450 basis points for credits in the single-B rating category, generally tracking at parity or a modest premium to the corresponding USD tranche spread.
EURIBOR Floors. The market standard EURIBOR floor for EUR-denominated TLB tranches is 0.00% (i.e., a zero floor), in contrast to the 0.50% SOFR floor that is standard for USD tranches. This divergence reflects the different historical interest rate environments in the Eurozone relative to the United States and is universally accepted by market participants.
IHDC's EUR Sub-Tranche. IHDC's proposed structure contemplates a EUR sub-tranche of approximately €253,571,429 (equivalent to approximately $275,000,000 at a EUR/USD exchange rate of 1.0846 as of the date of this memorandum) to fund the development of the Frankfurt Campus. This allocation is consistent with market practice for funding European-situs assets in the local currency and will provide Ironhaven with a natural hedge against the Euro-denominated revenue streams anticipated from the Frankfurt Campus operations, including the anchor pre-lease with Euronova Digital GmbH.
German Institutional Lender Participation. The Frankfurt Campus component of the financing is expected to attract participation from German institutional lenders, including BaFin-regulated Aktiengesellschaften (AGs) and other European institutional investors. The participation of such lenders adds credibility and depth to the syndicate but introduces additional compliance workstreams. Specifically, German financial institutions are subject to the Geldwäschegesetz ("GwG"), Germany's anti-money laundering statute, which imposes know-your-customer and beneficial ownership verification requirements that must be satisfied prior to funding. Calderwood & Harkness, in coordination with our German counsel, Wendt Falkenberg Rechtsanwälte PartG mbB, will manage these workstreams to ensure timely completion.
German-Law Collateral Structures. The collateral package securing the EUR sub-tranche (and, on a pari passu basis, the entire TLB facility) will include German-law security interests over the Frankfurt Campus assets. The anticipated German security package will include:
• Grundschuld (land charge) over the Frankfurt Campus real property;
• Globalzession (global assignment of receivables) of IHDC Frankfurt's trade receivables and contractual claims;
• Sicherungsübereignung (security transfer of moveable assets) over the data-center equipment and other tangible personal property located at the Frankfurt Campus; and
• Share pledge over the equity interests in the German subsidiary (IHDC Frankfurt GmbH or its equivalent).
Parallel-debt structures — pursuant to which the German borrower entity undertakes a parallel payment obligation in favor of the collateral agent under a separate parallel-debt acknowledgment, thereby allowing the collateral agent to hold German-law security interests as direct creditor — are well-established in European leveraged lending practice and are accepted by institutional investors without meaningful reservation. Wendt Falkenberg will advise on the specific structural requirements under German law, including notarization requirements for the Grundschuld and the share pledge.
III. Data Center / Digital Infrastructure Sector — Lending Landscape
A. Sector Tailwinds
The data center and digital infrastructure sector is currently experiencing a period of unprecedented demand growth that is highly favorable for IHDC's financing objectives. Several interconnected secular trends are driving this demand environment:
• Cloud Computing Migration: Enterprise migration to public cloud, hybrid cloud, and multi-cloud architectures continues to accelerate, driving demand for colocation and hyperscale data-center capacity across all major markets globally. Industry analysts project that global cloud infrastructure spending will exceed $1 trillion annually by 2027, with a significant portion of that spend flowing to physical data-center capacity providers.
• Artificial intelligence and Machine Learning Workloads: The rapid proliferation of generative AI applications and large language model ("LLM") training workloads has created a step-function increase in demand for high-density, GPU-optimized data-center capacity. AI/ML workloads require substantially higher power density per rack unit than traditional enterprise computing workloads, placing a premium on purpose-built hyperscale facilities such as those contemplated by IHDC.
• Enterprise Digital Transformation: Broader enterprise digital transformation initiatives — including edge computing deployment, Internet of Things ("IoT") infrastructure, and 5G network buildout — continue to drive incremental demand for data-center capacity across both primary and secondary markets.
• Data Sovereignty and Regulatory Requirements: Evolving data sovereignty regulations in the European Union (including the General Data Protection Regulation and the EU Data Act) are driving demand for in-region data-center capacity, particularly in established markets such as Frankfurt, Amsterdam, London, and Dublin. IHDC's Frankfurt Campus is well-positioned to benefit from this regulatory-driven demand.
Campus Locations. IHDC's selection of campus locations is a significant credit positive. Loudoun County, Virginia (encompassing the Ashburn data-center corridor) remains the largest data-center market in the world by total installed capacity, accounting for approximately 70% of the internet traffic in the United States. The region benefits from favorable power availability, extensive fiber connectivity, a deep talent pool, and a supportive local regulatory environment. Frankfurt, Germany is the largest data-center market in continental Europe, serving as the primary interconnection hub for European internet traffic and hosting the DE-CIX, the world's largest internet exchange by peak traffic volume. Both locations enjoy robust barriers to entry (including power availability constraints and zoning restrictions) that support long-term pricing power for established operators.
Pre-Leased Capacity. A critical de-risking element for IHDC's credit profile during the construction phase is the presence of signed anchor pre-lease letters of intent. Specifically:
• Ashburn Campus: IHDC has executed a letter of intent with Stratos Cloud Services, Inc. for a pre-lease of 30 megawatts ("MW") of critical IT load capacity on a five-year initial term, with two five-year renewal options, at an annual base rent of approximately $14.4 million. Stratos Cloud Services is a Fortune 200 hyperscale cloud platform provider with investment-grade credit quality.
• Frankfurt Campus: IHDC has executed a letter of intent with Euronova Digital GmbH for a pre-lease of 20 MW of critical IT load capacity on a seven-year initial term, with one five-year renewal option, at an annual base rent of approximately €9.8 million. Euronova Digital is a leading European managed services and colocation provider with strong credit fundamentals.
Together, these pre-lease commitments represent a substantial portion of the Phase 1 capacity at both campuses and provide significant revenue visibility during the construction and initial lease-up period. Institutional lenders consistently identify pre-leased capacity as one of the most important credit-positive factors in evaluating data-center construction financings.
Expanded Lender Universe. The lender universe for data-center credits has broadened meaningfully over the past several years as the sector has matured and investor familiarity with the asset class has increased. The investor base now includes traditional commercial banks, institutional CLO vehicles, credit opportunity funds, direct lending platforms, and insurance-company capital vehicles. This diversified investor base provides strong syndication support for well-structured data-center TLB issuances and contributes to competitive pricing outcomes for borrowers.
B. Comparable Recent Data Center TLB Transactions
To contextualize IHDC's proposed pricing and structural terms, we have compiled the following table of recent TLB transactions in the data center and digital infrastructure sector. These comparable transactions (presented on an anonymized basis) represent a representative cross-section of recent market activity and provide useful benchmarking data for IHDC's financing.
Commentary on Comparable Transactions:
Avalon Digital Holdings (January 2024). The Avalon transaction represents the tightest pricing in the recent comparable set, reflecting Avalon's relatively conservative leverage profile (5.0x) and its status as an established operating platform with stabilized, cash-flowing assets and minimal construction exposure. Avalon's SOFR + 400 bps spread and 99.50 OID establish the "tight end" of the current pricing range for B-rated data-center credits. IHDC's slightly higher leverage (5.35x vs. 5.0x) and construction-phase risk profile suggest that a modest premium to Avalon's pricing is appropriate.
Vomunex Colo Group (December 2023). Nextera priced at the wider end of the range at SOFR + 450 bps with a 99.25 OID, reflecting its higher leverage (5.8x) and a more aggressive capital structure relative to other data-center comparables. The wider OID (75 bps) also reflected the somewhat less constructive market environment in December 2023 relative to the tighter conditions prevailing in February 2024. IHDC's lower leverage and stronger pre-lease coverage should support meaningfully tighter pricing than the Nextera benchmark.
ClearBridge Data Infrastructure (November 2023). ClearBridge achieved the tightest OID in the comparable set (99.75) despite pricing its spread at SOFR + 425 bps, reflecting the market's favorable view of ClearBridge's lower leverage (4.8x) and its fully operational asset portfolio. ClearBridge's spread of SOFR + 425 bps at 4.8x leverage suggests that IHDC's proposed SOFR + 425 bps spread at 5.35x leverage is achievable, though IHDC's construction-phase profile may result in a modestly wider OID relative to ClearBridge.
Fortis Digital Partners (January 2024). The Fortis transaction is the most structurally comparable to IHDC's proposed facility, as it incorporated both a USD tranche and a EUR-denominated sub-tranche (€200 million), with the EUR sub-tranche priced at EURIBOR + 425 bps with a 0.00% EURIBOR floor. Fortis's pro forma leverage of 5.2x is close to IHDC's anticipated 5.35x, and the identical spread and OID levels (SOFR/EURIBOR + 425 bps, 99.50 OID) provide strong support for IHDC's proposed pricing. The successful execution of Fortis's cross-border structure also validates the market's acceptance of multi-currency TLB facilities in the data-center sector.
Horizon Campus Realty (October 2023). Horizon represents the widest pricing in the comparable set (SOFR + 475 bps, 99.00 OID), reflecting a combination of higher leverage (6.0x), a higher SOFR floor (0.75%), and the less favorable market conditions prevailing in October 2023. Horizon's pricing establishes the "wide end" of the current comparable range and provides useful context for the outer boundary of IHDC's pricing negotiation.
Key Observation. Based on the foregoing comparable analysis, IHDC's proposed pricing of SOFR + 425 bps with a 99.50 OID and a 0.50% SOFR floor is squarely within the range of recent data-center TLB transactions at the 5.0x to 5.5x net leverage level. The pricing is neither aggressively tight (which could risk syndication difficulties) nor unnecessarily wide (which would result in excessive cost of capital for the borrower). We believe this pricing represents a reasonable and achievable target for the syndication, assuming market conditions remain stable through the anticipated March–April 2024 syndication window.
C. Investor Base and Syndication Dynamics
For a facility of IHDC's size ($950,000,000, including the EUR sub-tranche), the anticipated syndicate will consist of a diversified mix of institutional investor categories:
• Lead Arranger Hold: Crescent Harbor Bank, N.A. is expected to retain a hold position of approximately $200,000,000 (approximately 21% of the total facility) as lead arranger and administrative agent. The balance of approximately $750,000,000 will be syndicated to institutional investors.
• CLO Vehicles: CLOs structured under Delaware limited partnership or Cayman Islands exempted limited partnership vehicles are expected to be the largest investor category in the syndication, consistent with the broader institutional loan market composition. CLO eligibility will require a private credit estimate from a recognized rating agency (see discussion of Sentinel Ratings International below).
• Credit Funds: Institutional credit funds (including direct lending platforms, credit opportunity funds, and multi-strategy credit vehicles) are actively deploying capital in the data-center TLB space and are expected to constitute a meaningful portion of the investor base for IHDC's facility.
• Specialty Lenders: Specialty finance companies and non-bank lenders with sector-specific expertise in digital infrastructure and technology lending may participate in the syndication, particularly in light of the strong sector dynamics.
• European Institutional Lenders: The cross-border element of the transaction — including the EUR sub-tranche and the German collateral package — is expected to attract participation from European institutional lenders, including German bank lenders, European CLO vehicles, and regional credit funds with mandates covering European leveraged credit.
• Insurance Capital Vehicles: Bermuda- and other offshore-domiciled insurance capital vehicles (including reinsurance company investment portfolios) have increasingly become active participants in the institutional TLB market. These investors typically provide large hold amounts and stable capital but require enhanced sanctions screening and KYC diligence procedures, as discussed further in Section VI below.
Private Credit Estimate. In order to facilitate CLO eligibility for the IHDC TLB and support the broader investor marketing process, we understand that Crescent Harbor intends to engage Sentinel Ratings International, LLC to provide a private credit estimate for the facility. A private credit estimate is not a published credit rating; rather, it is a confidential assessment provided to the arranger and certain qualified institutional investors for the purpose of CLO eligibility determination and internal credit evaluation. Calderwood & Harkness has worked with Sentinel Ratings on numerous prior transactions and will coordinate with Crescent Harbor's capital markets team on the engagement, including the information package to be provided to Sentinel's analytical team. The lead contact at Sentinel Ratings is Lorraine Dupont, Senior Director, Private Credit Estimates.
IV. Key Structural and Pricing Terms — Benchmarking IHDC's Proposed Facility
In this section, we provide a detailed assessment of each of the key structural and pricing terms proposed for IHDC's TLB facility, benchmarked against current market standards and the comparable transaction data set forth in Section III above.
A. Pricing
Proposed Spread:
• USD Tranche: SOFR + 425 basis points
• EUR Sub-Tranche: EURIBOR + 425 basis points
Assessment: The proposed spread of SOFR/EURIBOR + 425 basis points is competitive within the current market range for B-rated data-center TLB facilities. The 425 basis point spread reflects a balanced view of IHDC's credit profile, accounting for IHDC's moderate leverage (5.35x pro forma net leverage) and the credit-positive attributes of the campus locations and pre-leased capacity, offset by the construction-phase execution risk inherent in a development-stage financing. The proposed spread is consistent with the Fortis Digital Partners and ClearBridge Data Infrastructure comparable transactions and represents a modest premium to the tightest recent data-center pricing (Avalon Digital Holdings at SOFR + 400 bps). We do not anticipate meaningful pushback from institutional investors on the proposed spread at the current level.
SOFR Floor: The proposed SOFR floor of 0.50% is standard for the institutional TLB market and consistent with all five comparable transactions in the data set (with the exception of Horizon Campus Realty, which featured a 0.75% floor reflective of its wider pricing and higher leverage). No investor pushback is expected on this term.
EURIBOR Floor: The proposed EURIBOR floor of 0.00% for the EUR sub-tranche is the market standard for Euro-denominated institutional loan tranches and is consistent with the Fortis Digital Partners comparable. No investor pushback is expected.
Original Issue discount: The proposed OID of 99.50 (representing a 50 basis point discount to par) is in line with the median OID observed for recent B-rated TLB issuances across all sectors and is consistent with the Avalon Digital Holdings and Fortis Digital Partners comparables in the data-center space. Based on the $950,000,000 aggregate facility size, the 50 basis point OID translates to net proceeds to the borrower of $945,250,000, representing a $4,750,000 upfront discount retained by the lenders.
B. Financial Covenants
Proposed Covenants:
• Maximum net leverage ratio: 6.00x
• Minimum interest coverage ratio: 2.00x
• Both covenants are springing/maintenance covenants, tested on a quarterly basis commencing September 30, 2024
Market Observations: The inclusion of maintenance financial covenants is a notable structural feature of the proposed IHDC facility. In the current broadly syndicated TLB market, "cov-lite" structures — featuring financial covenants that are tested only on an incurrence basis (i.e., when the borrower seeks to take a specified action such as incurring additional indebtedness or making a restricted payment) rather than on a maintenance basis — remain the dominant convention for most pure-play BSL TLB facilities. Cov-lite structures represent approximately 85–90% of new institutional TLB issuance by volume.
However, maintenance financial covenants are more typical, and indeed expected by institutional investors, for TLB facilities that involve significant construction-phase credit risk and substantial capital expenditure components. Given IHDC's development-stage profile, with both the Ashburn Campus and the Frankfurt Campus currently in the pre-construction or early construction phase, the inclusion of maintenance covenants is consistent with market expectations and should not impair syndication execution. To the contrary, institutional lenders with lower risk tolerance (including certain CLO vehicles subject to strict credit quality guidelines) may view the maintenance covenant package as a credit-positive feature that provides enhanced downside protection during the construction period.
Covenant Levels: The proposed maximum net leverage ratio of 6.00x provides 65 basis points of headroom above the 5.35x pro forma opening net leverage ratio, representing approximately 12% cushion. This level of headroom is within the range of typical covenant cushions for sponsored leveraged financings (which generally range from 50 to 100 basis points, or 10% to 20% of opening leverage). The minimum interest coverage ratio of 2.00x is the standard floor for data-center and infrastructure credits and is consistent with comparable facilities in the sector.
Capital Expenditure Covenant: The proposed capital expenditure covenant — capping total capital expenditures at $325,000,000 for fiscal year 2024, stepping down to $250,000,000 per year for fiscal years 2025 and thereafter, with a 25% carry-forward of unused amounts from the immediately preceding fiscal year — is within market norms for construction-phase financings. The 25% carry-forward provides the borrower with modest flexibility to manage timing variations in the construction schedule without triggering a covenant default. Calderwood & Harkness will review the specific definitions and exclusions applicable to the capital expenditure covenant (including whether maintenance capital expenditures and landlord-funded tenant improvement allowances are excluded from the cap) when the initial draft credit agreement is circulated by Blackthorn & Sundial Software.
C. Mandatory Prepayment / Excess Cash Flow Sweep
Proposed ECF Sweep:
• 75% of Excess Cash Flow ("ECF") at net leverage above 4.5x
• Stepping to 50% of ECF when net leverage is at or below 4.5x
• Stepping to 25% of ECF when net leverage is at or below 3.5x
Market Observation: The proposed starting level of 75% ECF sweep is on the higher end of current market convention for institutional TLBs. Many recent TLB issuances have featured starting ECF sweep percentages of 50% (rather than 75%), with step-downs to 25% and 0% at lower leverage levels. The 75% starting level in IHDC's facility likely reflects the construction-phase risk profile and the lender group's desire for enhanced cash recapture during the period of elevated capital deployment.
Recommendation: IHDC may wish to negotiate for a 50% starting ECF sweep rather than 75%, or alternatively, negotiate for additional deductions from the ECF calculation that would reduce the effective sweep amount. Common deductions that borrowers negotiate include:
• Capital expenditures (to the extent not already deducted in the ECF definition);
• Cash consideration paid for permitted acquisitions during the applicable fiscal year;
• Voluntary prepayments of the TLB facility (to the extent not already credited);
• Cash taxes paid in excess of tax expense included in Adjusted EBITDA; and
• Working capital adjustments and other non-recurring cash charges.
We note that the ECF sweep structure is likely to be a negotiation point with Blackthorn & Sundial Software (Catherine Ellsworth), lender's counsel to Crescent Harbor. Calderwood & Harkness will address our recommended negotiation positions on the ECF sweep structure in a separate detailed negotiation points memorandum, which we expect to circulate to the IHDC team in advance of the commitment letter execution.
D. Call Protection
Proposed: 101 soft call for 6 months post-closing.
Based on an anticipated closing date of June 3, 2024, the soft call period would expire on December 3, 2024. During the soft call period, any voluntary prepayment or repricing of the TLB facility (including through an amendment or refinancing that reduces the applicable spread) would require the borrower to pay a 1.00% premium on the amount prepaid or repriced.
This structure is standard for the institutional TLB market and is consistent with all five comparable transactions in the data set. No hard call protection (i.e., a non-callable period) is proposed, which is also consistent with current market convention for broadly syndicated TLBs.
E. Change of Control
Proposed: Mandatory prepayment at 101% of outstanding principal plus accrued and unpaid interest upon a "Change of Control" event, defined as Thornfield Capital Partners, LP (or its affiliates) ceasing to hold, directly or indirectly, more than 50% of the voting equity interests of Ironhaven Holdings Inc. (the ultimate parent entity of the borrower group).
This provision is market standard for sponsor-backed TLB facilities and is consistent with the comparable transactions. The 101% repurchase price (i.e., the 1% premium over par) is the typical market convention and reflects a balance between providing lenders with protection against a change in the ownership and control of the borrower group while avoiding excessive financial burden on the borrower or its sponsor in the event of a strategic transaction.
F. Amortization
Proposed: 1.00% per annum of the original principal amount of the TLB facility, payable in equal quarterly installments of 0.25% per quarter ($2,375,000 per quarter, or $9,500,000 in aggregate per annum), with the remaining outstanding balance due and payable at maturity.
This is the standard amortization schedule for institutional TLB facilities. The minimal scheduled amortization reflects the TLB market's convention of relying primarily on a bullet maturity repayment (supplemented by the ECF sweep and other mandatory prepayment mechanisms) rather than substantial scheduled amortization. The 1.00% per annum rate is consistent with all comparable transactions in the data set.
G. Maturity
Proposed: Seven-year tenor, with an anticipated closing date of June 3, 2024 and maturity date of June 3, 2031.
A seven-year tenor is the standard maturity for institutional TLB facilities in the current market and is consistent with all five comparable transactions in the data set. The seven-year tenor provides IHDC with a long-dated maturity profile that extends well beyond the anticipated construction completion dates for both campuses (targeted for H2 2025 for the Ashburn Campus and H1 2026 for the Frankfurt Campus), allowing sufficient time for stabilization and lease-up before any refinancing event.
V. Pro Forma Capitalization and Credit Profile Context
The following table summarizes IHDC's anticipated pro forma capitalization at closing, based on information provided by IHDC management and the Thornfield deal team. This capitalization summary is provided for contextual purposes in connection with the market assessment set forth in this memorandum and is subject to update as the transaction progresses and financial projections are refined.
Pro Forma Capitalization Summary (at Closing)
Key Observations on the Pro Forma Capitalization:
• The pro forma net leverage of 5.35x is comfortably below the proposed maximum net leverage covenant of 6.00x, providing approximately 65 basis points (or 12%) of headroom at closing. This cushion is consistent with market expectations for sponsored leveraged financings and provides adequate buffer for normal construction-phase EBITDA variability.
• The existing Super-Senior Revolving Credit Facility (the "Revolver"), also provided by Crescent Harbor Bank, N.A., has a commitment amount of $100.0 million and is expected to be undrawn at closing. The Revolver is expected to be super-senior in the priority waterfall, ranking ahead of the TLB facility in the distribution proceeds upon an enforcement event. The Revolver provides IHDC with liquidity to fund working capital, short-term construction funding needs, and other general corporate purposes during the term of the TLB facility.
• The equity contribution from Thornfield Infrastructure Fund III, LP of $410.0 million represents an equity contribution of approximately 30% of total capitalization, which is within the typical range for sponsored infrastructure financings (generally 25–35% equity contribution). Thornfield Infrastructure Fund III, LP has a total fund size of approximately $3.8 billion, and the $410.0 million commitment to IHDC represents approximately 10.8% of the fund's capital, well within normal concentration limits.
• Refinancing of Existing Mezzanine Indebtedness. A portion of the TLB proceeds will be used to refinance IHDC's existing $130.0 million in subordinated mezzanine notes held by Greystone Mezzanine Fund II, LP at a 12.50% payment-in-kind ("PIK") interest rate. The refinancing of this high-cost PIK debt is a significant credit-positive event, as it eliminates the compounding PIK interest burden (which would accrete approximately $16.25 million in non-cash interest annually) and replaces it with cash-pay TLB debt at a materially lower all-in cost of approximately 10.55–10.60% (based on current 3-month Term SOFR of ~5.30% plus the 425 bps spread plus the OID amortization). This refinancing will meaningfully improve IHDC's cash interest coverage ratios and reduce structural complexity in the capital structure.
Historical Financial Data:
• Revenue (LTM 9/30/2023): $412.6 million
• Adjusted EBITDA (LTM 9/30/2023): $158.3 million (38.4% EBITDA margin)
• Total Assets (as of 9/30/2023): $1.87 billion
Credit Strengths:
• Blue-chip campus locations in the two largest data-center markets globally (Loudoun County and Frankfurt), with strong barriers to entry and robust demand dynamics
• Strong sponsor backing from Thornfield Capital Partners, LP (approximately $14.2 billion in assets under management across its infrastructure fund family), providing both financial resources and operational expertise in the digital infrastructure sector
• Pre-leased capacity with creditworthy counterparties (Stratos Cloud Services and Euronova Digital), providing meaningful revenue visibility during the construction and stabilization phases
• Powerful sector tailwinds driven by AI/cloud demand growth, as discussed in Section III.A above
Credit Considerations:
• Construction-phase execution risk: Both campuses are in the pre-construction or early construction phase, and the facility will fund a significant portion of the development capital. Construction delays, cost overruns, or permitting issues could adversely impact the credit profile. Mitigation factors include the engagement of experienced general contractors (to be confirmed), comprehensive builder's risk insurance, and the capital expenditure covenant providing structural protection against cost overruns.
• Geographic concentration: IHDC's asset base is concentrated in two campuses. Any campus-specific event (e.g., power grid failure, regulatory change, natural disaster) could disproportionately impact the credit. Geographic diversification through future campus development would help mitigate this risk over time.
• Cross-border complexity: The multi-jurisdictional structure (US and Germany) introduces legal, regulatory, tax, and currency complexity that must be carefully managed throughout the life of the facility. Calderwood & Harkness and Wendt Falkenberg are well-positioned to address these issues.
VI. Sanctions, KYC, and Regulatory Compliance Considerations for Syndication
The multinational composition of the anticipated lender syndicate and the German-situs collateral package will require an extensive and carefully coordinated compliance workstream addressing sanctions screening, anti-money laundering requirements, and beneficial ownership verification. We flag the following key considerations:
OFAC Screening. All lenders and their beneficial owners (at the greater than 25% ownership threshold) must be screened against the Office of Foreign Assets Control ("OFAC") Specially Designated Nationals and blocked Persons List ("SDN List"), the Sectoral Sanctions Identifications List, and other applicable OFAC sanctions programs. This screening is required under the credit agreement and is a condition to each lender's participation in the syndicate. Calderwood & Harkness will prepare a standardized OFAC/sanctions compliance certificate to be delivered by each lender prior to funding.
EU Sanctions Screening. For the Frankfurt-nexus parties and the EUR sub-tranche, screening will be required under the European Union sanctions regime, including Council Regulation (EU) No. 269/2014 (concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine) and other applicable EU sanctions regulations. This screening will cover all lenders participating in the EUR sub-tranche, as well as the borrower entities and their directors and officers.
OFSI Sanctions (UK). To the extent that Bermuda- or other offshore-domiciled lenders participate in the syndicate (which is anticipated given the involvement of insurance capital vehicles), screening under the UK Office of Financial Sanctions Implementation ("OFSI") regime may also be required, depending on the nexus of such lenders to the United Kingdom. Enhanced diligence procedures will be implemented for any offshore-domiciled lender to ensure compliance with the relevant sanctions frameworks.
BaFin/GwG Compliance. German institutional lenders participating in the syndicate are subject to the requirements of the Geldwäschegesetz (GwG), Germany's Anti-Money Laundering Act, which imposes detailed customer due diligence and beneficial ownership verification obligations. IHDC's German subsidiary (IHDC Frankfurt GmbH or its equivalent) will be required to maintain a current filing with the Transparenzregister (the German Transparency Register), reflecting the beneficial ownership chain through to the ultimate beneficial owners of the borrower group.
Beneficial Ownership Certifications. IHDC and Ironhaven Holdings Inc. will be required to deliver beneficial ownership certifications in compliance with the Financial Crimes Enforcement Network ("FinCEN") Customer Due Diligence ("CDD") Rule (31 C.F.R. § 1010.230) to each bank lender in the syndicate. Calderwood & Harkness will prepare the form beneficial ownership certification and coordinate with IHDC's corporate secretary to ensure timely completion.
Impact on Syndication Timeline. These compliance workstreams — particularly the KYC and beneficial ownership verification process for a large, multinational syndicate — require meaningful lead time and can present logistical challenges if not commenced early in the syndication process. We strongly recommend commencing KYC collections immediately upon syndication launch, which is currently targeted for March 15, 2024. Calderwood & Harkness will prepare a KYC checklist and information request package for distribution to prospective lenders through Crescent Harbor's syndication desk and will work with Wendt Falkenberg to ensure that all German regulatory requirements are addressed in parallel.
VII. Anticipated Timeline and Syndication Process
Based on information available as of the date of this memorandum, and reflecting certain events that have been confirmed subsequent to our initial engagement, the anticipated timeline for the IHDC TLB transaction is as follows:
Important Notes on Timeline:
• Ticking Fee. A ticking fee of 0.25% per annum on undrawn commitments will commence on the syndication launch date and will accrue through the closing date. Based on an assumed syndication launch of March 15, 2024 and a closing date of June 3, 2024, the ticking fee period would be approximately 80 days, resulting in an aggregate ticking fee of approximately $520,000 on the full $950 million facility (or less to the extent commitments are drawn or reduced during such period). The ticking fee is a standard market feature that compensates lenders for the cost of maintaining capital commitments during the pre-closing period.
• Signing and Closing. We note that the signing of the credit agreement and the closing (funding) of the TLB facility may not occur simultaneously. A delayed draw mechanism is under consideration, pursuant to which the credit agreement would be executed at signing (targeted for May 2024) but funding would occur on a subsequent date (targeted for late May or early June 2024) upon satisfaction of specified conditions precedent (including delivery of the collateral documentation, receipt of insurance certificates, and completion of environmental and appraisal deliverables). If a delayed draw structure is employed, the ticking fee would continue to accrue through the funding date. Calderwood & Harkness will advise on the optimal structure for the signing/closing mechanics based on the collateral and condition precedent timeline.
• Confidential Information Memorandum (CIM). The preparation and timely delivery of a comprehensive Confidential Information Memorandum is critical to the syndication process. The CIM will be prepared by Crescent Harbor's capital markets team and will contain detailed business, financial, and legal information about IHDC, the proposed financing, and the campus development projects. Calderwood & Harkness will review the CIM for legal accuracy and completeness and will deliver a 10b-5-style negative assurance letter (also known as a "10b-5 letter" or "negative assurance comfort letter") confirming that, based on our participation in the preparation of the CIM, nothing has come to our attention that causes us to believe that the CIM (other than financial projections, estimates, and certain other specified information) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The delivery of this letter is a standard requirement in the BSL syndication market and is a condition to Crescent Harbor's willingness to distribute the CIM to prospective institutional lenders.
• Parallel Collateral and Security Workstreams. The preparation and execution of the US and German collateral and security documents will proceed in parallel with the syndication process. The US collateral package (including mortgages, UCC-1 financing statements, pledge agreements, and related documentation for the Ashburn Campus) and the German collateral package (including the Grundschuld, Globalzession, Sicherungsübereignung, and share pledge documentation for the Frankfurt Campus) will be coordinated by Calderwood & Harkness and Wendt Falkenberg, respectively, and must be in substantially final form prior to signing of the credit agreement. Notarization of certain German security documents (particularly the Grundschuld and the share pledge) requires scheduling with a German notary (Notar) and may require the physical presence of authorized signatories or the issuance of notarized powers of attorney, which should be planned well in advance.
VIII. Recommendations and Next Steps
Based on our assessment of the current market conditions and the status of the transaction, Calderwood & Harkness recommends the following next steps for IHDC management and the broader deal team:
1. Commitment Letter Finalization. Finalize the engagement with Crescent Harbor Bank, N.A. on commitment letter terms, including confirmation of the following economic terms:
• Arrangement fee: 1.50% of the total facility amount = $14,250,000
• Upfront fee / OID: 50 basis points (99.50 OID)
• Administrative agent fee: $175,000 per annum
• Ticking fee: 0.25% per annum on undrawn commitments from syndication launch through closing
2. Credit Agreement Mark-Up. Calderwood & Harkness will begin preparing the borrower's mark-up of the credit agreement promptly upon receipt of the initial draft from Blackthorn & Sundial Software (lender's counsel). The lead partner at Blackthorn & Brightmoor Systems is Catherine Ellsworth, with whom Calderwood & Harkness has worked on numerous prior transactions. We anticipate receiving the initial draft of the credit agreement in late March or early April 2024 and will target a two-week turnaround for the borrower's mark-up.
3. German Counsel Coordination. Coordinate with Wendt Falkenberg Rechtsanwälte PartG mbB (Dr. Lukas Wendt and Julia Falkenberg) on the preparation of the German security documents, including the Grundschuld (land charge), Globalzession (global assignment of receivables), Sicherungsübereignung (security transfer of moveable assets), and share pledge over the equity interests in the German subsidiary. Notarization requirements for the Grundschuld and share pledge must be identified early in the process and scheduled accordingly to avoid delays in the closing timeline.
4. Insurance Placement. Engage Calloway & Strand Insurance Brokers, Inc. (Patricia Calloway) for the placement of builder's risk insurance and property insurance for both campuses, in amounts and with coverage terms meeting the requirements to be set forth in the credit agreement. Builder's risk coverage should be in place no later than the commencement of physical construction activities at each campus, and evidence of insurance (in the form of certificates of insurance and, where required, endorsements naming the collateral agent as additional insured and loss payee) will be a condition precedent to closing.
5. Environmental Assessments. Commission Phase I Environmental Site Assessments (and, if warranted, Phase II assessments) for both campuses from Greenline Environmental Solutions, Inc., in accordance with ASTM Standard Practice E1527-21. Delivery of satisfactory environmental reports will be a condition precedent to closing.
6. Appraisals. Commission MAI-certified appraisals from Meridian Valuation Group, LLC for both the Ashburn Campus and the Frankfurt Campus. The appraisals should be prepared in conformance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and should be addressed to the collateral agent and the lender group.
7. Title Insurance. Confirm the title insurance commitment from Keystone Title Guaranty Company (Raymond Hobbs, Senior Vice President) for the Ashburn Campus, with a policy amount of $475,000,000. Title insurance for the Frankfurt Campus will not be available in the traditional US sense; however, the Grundschuld registration in the German Grundbuch (land register) provides equivalent assurance of priority, and Wendt Falkenberg will provide a German-law title opinion in lieu of a title insurance policy.
8. Private Credit Estimate. Engage Sentinel Ratings International, LLC (Lorraine Dupont, Senior Director) for the preparation of a private credit estimate for the IHDC TLB facility. The private credit estimate is essential for CLO eligibility and will be a key component of the investor marketing materials.
9. Calderwood & Harkness Staffing and Fees. The Calderwood & Harkness team for this engagement is as follows:
• Stephanie Okafor — Partner, Banking & Finance (Lead Partner)
• Daniel Obi — Senior Associate, Banking & Finance (Lead Associate)
• Lisa Morrow — Associate, Banking & Finance (Working Associate)
• Sylvia Hartwell — Counsel, Tax (Tax Structuring)
• Philip Hartmann — Partner, Banking & Finance (Billing Partner)
Estimated Calderwood & Harkness legal fees for this engagement: $2,850,000 (exclusive of disbursements). This estimate is exclusive of fees for Wendt Falkenberg Rechtsanwälte PartG mbB, which are estimated at approximately €385,000 for the German security and corporate work. All fees will be billed under billing code IHDC-TLB-2024.
10. Sponsor Alignment Call. We recommend scheduling a call with IHDC management and Thornfield Capital Partners, LP representatives (Elena Castillo, Managing Director, and Graham Ashworth, Vice President, Thornfield Infrastructure Fund III) to align on negotiation strategy in advance of the commitment letter execution and the subsequent credit agreement negotiation. Calderwood & Harkness is available to participate in this call at the convenience of the parties and suggests targeting the week of February 26, 2024.
Calderwood & Harkness remains available at all times for further discussion on any of the matters addressed in this memorandum. Please do not hesitate to contact the undersigned directly with any questions or to schedule a follow-up discussion.
IX. Disclaimer and Confidentiality Notice
This memorandum has been prepared by Calderwood & Harkness LLP solely for the use of Ironhaven Data Centers LLC and its management in connection with Calderwood & Harkness's representation of IHDC in Matter No. 1043-00001. This memorandum is provided for informational purposes only and does not constitute investment advice, a commitment by any party to provide financing on the terms described herein, or a guaranty of any particular outcome in the syndication or credit markets.
The market data, comparable transaction information, and pricing benchmarks contained in this memorandum are based on Calderwood & Harkness's market knowledge, experience in comparable transactions, and information obtained from sources that we believe to be reliable, including publicly available market data and proprietary deal databases. However, we have not independently verified all such information, and actual terms, pricing, and market conditions may vary materially from those described herein. Market conditions are inherently dynamic and may change rapidly; the assessments set forth in this memorandum reflect conditions as of the date hereof and may not be applicable to future periods.
This memorandum is protected by the attorney-client privilege and the attorney work product doctrine and is strictly confidential. This memorandum and its contents may not be disclosed, distributed, or made available to any person or entity outside of Ironhaven Data Centers LLC, Ironhaven Holdings Inc., and Thornfield Capital Partners, LP (and their respective officers, directors, employees, and advisors who have a need to know) without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of any applicable privilege.
Contact Information:
Stephanie Okafor Partner, Banking & Finance Calderwood & Harkness LLP 125 Broad Street New York, NY 10004 Telephone: (212) 555-7800
Email: sokafor@calderwoodharkness.com
© 2024 Calderwood & Harkness LLP. All rights reserved.
Issuer | Closing Date | Facility Size | Spread | OID | SOFR Floor | Pro Forma Leverage | Maturity
Avalon Digital Holdings | January 2024 | $800M | SOFR + 400 bps | 99.50 | 0.50% | 5.0x | 7 years
Vomunex Colo Group | December 2023 | $1.1B | SOFR + 450 bps | 99.25 | 0.50% | 5.8x | 7 years
ClearBridge Data Infrastructure | November 2023 | $650M | SOFR + 425 bps | 99.75 | 0.50% | 4.8x | 7 years
Fortis Digital Partners | January 2024 | $725M (incl. €200M EUR tranche) | SOFR/EURIBOR + 425 bps | 99.50 | 0.50% / 0.00% | 5.2x | 7 years
Horizon Campus Realty | October 2023 | $550M | SOFR + 475 bps | 99.00 | 0.75% | 6.0x | 7 years
Item | Amount
Adjusted EBITDA (LTM 3/31/2024 Projected) | $165.8M
Debt:
Term Loan B (New) | $950.0M
Super-Senior Revolving Credit Facility (Crescent Harbor; committed / $0 drawn) | $100.0M
Total Debt | $950.0M
Less: Unrestricted Cash at Closing | ($62.5M)
Net Total Debt | $887.5M
Pro Forma Net Leverage | 5.35x
Equity:
Equity Contribution — Thornfield Infrastructure Fund III, LP | $410.0M
Total Capitalization (Debt + Equity) | ~$1,360.0M
Milestone | Target Date | Status
Mandate letter execution (Crescent Harbor) | February 12, 2024 | Executed
Calderwood & Harkness engagement | January 29, 2024 | Completed
Commitment letter execution | End of February 2024 | Targeted (subsequently executed February 28, 2024)
Syndication launch | Mid-March 2024 | Targeted for March 15, 2024
Ticking fee commencement | Syndication launch date | Ticking fee of 0.25% per annum on undrawn commitments
KYC/compliance collections commence | March 15, 2024 | To coincide with syndication launch
Syndication close / all lender commitments | April 2024 | Targeted
Credit agreement signing | May 2024 | Targeted
Closing / funding | Late May or early June 2024 | Targeted (June 3, 2024 assumed for modeling)

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL

CLIENT ALERT MEMORANDUM

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