PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 125 Broad Street New York, NY 10004
MEMORANDUM
To: Stephanie Okafor, Responsible Partner, Banking & Finance, Calderwood & Harkness LLP
From: Daniel Obi, Lead Associate, Banking & Finance; Lisa Morrow, Working Associate, Banking & Finance
Date: April 25, 2024
Re: OFAC, EU, UK/OFSI, and German AML Sanctions Compliance Analysis — Ironhaven Data Centers LLC $950,000,000 Senior Secured Term Loan B Financing
Matter No.: 1043-00001
Billing Code: IHDC-TLB-2024
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I. Executive Summary
This memorandum presents a comprehensive sanctions and anti-money laundering ("AML") compliance analysis undertaken in connection with the $950,000,000 Senior Secured Term Loan B credit facility (the "Facility" or "Credit Facility") to be entered into pursuant to that certain Credit Agreement dated as of May 15, 2024 (the "Signing Date"), with a targeted closing and initial funding date of June 3, 2024 (the "Closing Date"), among the parties described herein.
The Borrower under the Credit Facility is Ironhaven Data Centers LLC ("IHDC" or the "Borrower"), a limited liability company organized and existing under the laws of the State of Delaware, with its principal executive offices located in Ashburn, Virginia. The Co-Borrower with respect to the EUR sub-tranche is Ironhaven Frankfurt GmbH ("IHDC Frankfurt" or the "Co-Borrower"), a German limited liability company (Gesellschaft mit beschränkter Haftung) registered at the Amtsgericht Frankfurt am Main under HRB 129457, with its registered office in Frankfurt am Main, Germany. The parent guarantor is Ironhaven Holdings Inc., a Delaware corporation, and the ultimate equity sponsor is Thornfield Capital Partners, LP, a Delaware limited partnership, through its Thornfield Infrastructure Fund III, LP vehicle.
Crescent Harbor Bank, N.A. serves as Administrative Agent, and Pinnacle Trust Company, N.A. serves as Collateral Agent and, through its London branch, as Security Trustee for the German-law security package under a parallel-debt structure.
The Facility will be syndicated among a cross-border syndicate of seven lenders (the "Lenders"). Notably, the Facility includes a EUR sub-tranche in the amount of €253,571,429 (approximately $275,000,000 at the applicable EUR/USD exchange rate of 1.0846), which is designated to fund the construction and build-out of IHDC's Frankfurt, Germany campus (the "Frankfurt Campus"). The inclusion of this EUR sub-tranche and the Frankfurt Campus creates significant nexus to European Union and German regulatory regimes, in addition to the U.S. sanctions regimes that apply by virtue of the U.S. domicile of the Borrower, the U.S.-dollar denomination of the primary tranche, and the U.S. status of most Lenders. The participation of Osprey Insurance Capital, Ltd., a Bermuda exempted company, further implicates United Kingdom sanctions administered by the Office of Financial Sanctions Implementation ("OFSI"), given that Bermuda is a British Overseas Territory and certain of Osprey's key personnel maintain UK-person status.
Accordingly, this memorandum analyzes compliance across the following key sanctions and AML regimes:
(a) U.S. OFAC Sanctions — including the Specially Designated Nationals and blocked Persons List ("SDN List"), the Sectoral Sanctions Identifications List ("SSI List"), and the Consolidated Sanctions List maintained by the Office of Foreign Assets Control ("OFAC") within the U.S. Department of the Treasury;
(b) EU Sanctions — including Council Regulation (EU) No 269/2014, Council Regulation (EU) No 833/2014, and the EU Consolidated Financial Sanctions List maintained by the European Commission;
(c) UK Sanctions — administered by HM Treasury's Office of Financial Sanctions Implementation ("OFSI") under the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA") and the Russia (Sanctions) (EU Exit) Regulations 2019 (as amended); and
(d) German AML Requirements — under the Geldwäschegesetz ("GwG") (German Anti-Money Laundering Act), the Kreditwesengesetz ("KWG") (German Banking Act), and related BaFin requirements, including the Transparenzregister (German beneficial ownership register).
Summary Conclusion. Based on comprehensive screening conducted as of April 15, 2024, all parties to the transaction — including all Loan Parties, all Lenders, all agents, and all identified service providers, together with their respective beneficial owners, directors, officers, and key personnel — have been cleared under all applicable sanctions regimes. One Lender, Osprey Insurance Capital, Ltd. (Bermuda), was flagged for enhanced due diligence due to its incorporation in a British Overseas Territory and the UK-person nexus of its Head of Credit Investments, Fiona Abernathy. Enhanced sanctions representations and a separate Lender Sanctions Representations Side Letter have been negotiated and obtained from Osprey, including an indemnification provision. No blocking issues have been identified, and we recommend proceeding to closing without sanctions-related reservations, subject to the receipt of all outstanding Lender KYC / OFAC Compliance Certificates and the execution of the Osprey side letter at closing.
II. Transaction Overview
A. Parties Screened
The following sections identify all natural persons and legal entities that were subjected to sanctions screening in connection with the Facility. A complete alphabetical list is attached as Exhibit A to this memorandum.
1. Borrower and Loan Parties
The following entities constitute the "Loan Parties" under the Credit Agreement and were each subjected to comprehensive sanctions screening under all applicable regimes:
(a) Ironhaven Data Centers LLC (the "Borrower") — a limited liability company organized under the laws of the State of Delaware; Employer Identification Number ("EIN") 84-3291057; principal executive offices located at 4500 Dominion Ridge Boulevard, Suite 300, Ashburn, VA 20147. IHDC is the primary operating entity and the direct borrower under both the USD Tranche and (jointly with IHDC Frankfurt) the EUR Sub-Tranche.
(b) Ironhaven Holdings Inc. (the "Parent Guarantor") — a corporation organized under the laws of the State of Delaware; EIN 84-3291044. Ironhaven Holdings Inc. is the sole member of IHDC and serves as the parent guarantor of all obligations under the Credit Facility. Ironhaven Holdings Inc. is a direct, wholly owned subsidiary of Thornfield Infrastructure Fund III, LP.
(c) Ironhaven Frankfurt GmbH (the "Co-Borrower") — a German limited liability company (Gesellschaft mit beschränkter Haftung); Steuernummer 045/127/98321; Umsatzsteuer-Identifikationsnummer (USt-IdNr.) DE347891205; registered at the Amtsgericht Frankfurt am Main under Handelsregister Abteilung B Nummer (HRB) 129457; registered office at Hanauer Landstraße 188, 60314 Frankfurt am Main, Germany. IHDC Frankfurt is a wholly owned subsidiary of IHDC and serves as Co-Borrower solely with respect to the EUR Sub-Tranche. IHDC Frankfurt is the entity that will own and operate the Frankfurt Campus.
(d) Thornfield Capital Partners, LP (the "Sponsor") — a limited partnership organized under the laws of the State of Delaware; principal offices at 800 Park Avenue, 22nd Floor, New York, NY 10021. Thornfield Capital Partners, LP is the ultimate equity owner of the Borrower through its control of Ironhaven Holdings Inc. The general partner of Thornfield Capital Partners, LP is Thornfield Capital Management LLC, a Delaware limited liability company. The relevant investment vehicle is Thornfield Infrastructure Fund III, LP (vintage 2021, $4.8 billion committed capital), which holds 100% of the equity interests in Ironhaven Holdings Inc.
2. Key Individuals Screened (Borrower Side)
The following individuals were identified as key officers, directors, or principals of the Borrower, the Co-Borrower, or the Sponsor, and were individually screened against all applicable sanctions lists:
(a) Marcus Delaine — Chief Executive Officer, Ironhaven Data Centers LLC
(b) Rebecca Sung — Chief Financial Officer, Ironhaven Data Centers LLC
(c) Jonathan Pryce-Williams — General Counsel & Corporate Secretary, Ironhaven Data Centers LLC
(d) Andrei Volkov — Chief Technology Officer, Ironhaven Data Centers LLC
(e) Natasha Greenfeld — Vice President, Treasury & Capital Markets, Ironhaven Data Centers LLC
(f) Katarina Bremer — Managing Director (local management), Ironhaven Frankfurt GmbH
(g) David Thornfield — Founder & Managing Partner, Thornfield Capital Partners, LP
(h) Elena Castillo — Partner, Head of Digital Infrastructure, Thornfield Capital Partners, LP
(i) Graham Ashworth — Principal, Portfolio Operations, Thornfield Capital Partners, LP
These individuals were selected for screening based on their roles as executive officers, authorized signatories, or persons with direct operational control over the Loan Parties. Additional individuals identified through corporate record reviews (including members of boards of managers and directors) were also screened as reflected in the master screening log attached as Exhibit A.
3. Lenders and Syndicate Members
The Facility will be syndicated among the following seven Lenders. Each Lender's full legal name, entity type, jurisdiction of organization, principal jurisdiction of regulation, commitment amount, and pro rata share of the total Facility commitment is set forth below:
Several features of the Lender group are noteworthy from a sanctions compliance perspective. First, NordBrücke AG's entire $150,000,000 commitment is allocated to the EUR Sub-Tranche, meaning that NordBrücke will fund its commitment in euros and is directly subject to EU sanctions and BaFin regulatory oversight. Second, Pacific Rim Institutional Lending Corp. is a Delaware corporation that serves as a subsidiary of a Cayman Islands-domiciled collateralized loan obligation ("CLO") vehicle, requiring enhanced diligence on the upstream CLO structure. Third, Osprey Insurance Capital, Ltd. is incorporated in Bermuda, a British Overseas Territory, and its Head of Credit Investments, Fiona Abernathy, has been identified as a UK person for purposes of the Sanctions and Anti-Money Laundering Act 2018, requiring enhanced UK/OFSI analysis.
4. Key Lender Individuals Screened
The following individuals were identified as the principal contacts, authorized signatories, or key decision-makers for each Lender and were individually screened:
(a) Martin Gallagher — Managing Director, Syndicated Lending, Crescent Harbor Bank, N.A.
(b) Priya Nair — Senior Vice President, Credit Risk, Crescent Harbor Bank, N.A.
(c) Thomas Beckett — Vice President, Loan Operations, Crescent Harbor Bank, N.A.
(d) Sarah Dalmqvist — Director, Institutional Finance, Ridgeline National Bank
(e) Robert Jennings — Senior Portfolio Manager, Marlowe Asset Management Meridian Capital, LLC
(f) Christine Fahey — Partner, Atlas Peak Credit Partners, LP
(g) Dr. Stefan Kleinhans — Managing Director & Chief Compliance Officer, NordBrücke AG
(h) James Tanaka — Vice President, CLO Management, Pacific Rim Institutional Lending Corp.
(i) Fiona Abernathy — Head of Credit Investments, Osprey Insurance Capital, Ltd.
In addition to the individuals listed above, the beneficial owners (at the greater-than-25% ownership threshold) of each Lender entity were identified and screened, as were upstream fund investors holding greater than 10% economic interest in any Lender entity, to the extent such information was available through KYC documentation packages and public records.
5. Agents and Service Providers
The following agents and service providers were identified as parties to the transaction or as entities whose roles create a sufficient nexus to warrant sanctions screening:
(a) Pinnacle Trust Company, N.A. — Collateral Agent and, through its London branch, Security Trustee for German-law security under the parallel-debt structure; principal offices in Washington, D.C. Key contact: William Hargrove, Senior Vice President, Corporate Trust Division.
(b) Blackthorn & Sundial Software — Counsel to the Administrative Agent and the Lenders, with offices in New York and Frankfurt am Main. Key contacts: Catherine Ellsworth (New York partner), Derek Huang (New York associate), and Maximilian Roth (Frankfurt partner).
(c) Wendt Falkenberg Rechtsanwälte PartG mbB — German local counsel to the Borrower and IHDC Frankfurt, specializing in German real estate finance and corporate law. Key contacts: Dr. Lukas Wendt (partner) and Julia Falkenberg (partner).
(d) NordBrücke AG — In its additional capacity as Frankfurt Escrow Bank under the Frankfurt Campus Construction Escrow Agreement, NordBrücke has been screened in both its Lender capacity and its Escrow Bank capacity.
Additional service providers screened include Calloway & Strand Insurance Brokers, Inc. (insurance broker), Keystone Title Guaranty Company (title insurer), Ashford & Mercer LLP (Borrower's Virginia real estate counsel), Greenline Environmental Solutions, Inc. (environmental consultant), Meridian Valuation Group, LLC (appraiser), and Sentinel Ratings International, LLC (private credit rating agency). The complete list of screened service providers is included in Exhibit A.
B. Transaction Structure Summary
The $950,000,000 Credit Facility is structured as a senior secured term loan B, divided into two tranches:
(a) USD Tranche: $675,000,000 in aggregate principal amount, denominated in U.S. dollars, to be funded by all Lenders other than NordBrücke AG (whose commitment is allocated entirely to the EUR Sub-Tranche) and including portions of NordBrücke's overall commitment where applicable to the USD component of the Facility.
(b) EUR Sub-Tranche: €253,571,429 in aggregate principal amount (approximately $275,000,000 at the applicable EUR/USD exchange rate of 1.0846 as of the pricing date), denominated in euros, to be funded primarily by NordBrücke AG and available for draw by IHDC Frankfurt for the construction and build-out of the Frankfurt Campus.
The proceeds of the Facility will be applied to the following uses:
(i) Approximately $475,000,000 for the construction and build-out of IHDC's Virginia campus, including land acquisition, site preparation, data hall construction, and critical infrastructure (power, cooling, and connectivity);
(ii) Approximately $275,000,000 (via the EUR Sub-Tranche) for the construction and build-out of the Frankfurt Campus, including leasehold improvements, data hall fit-out, and EU-compliant power and cooling infrastructure;
(iii) Approximately $130,000,000 for the refinancing and repayment in full of outstanding mezzanine notes issued by Greystone Mezzanine Fund II, LP (the "Greystone Notes"), which were incurred by IHDC in connection with its initial platform acquisition;
(iv) Approximately $32,500,000 for transaction fees and expenses, including legal fees, agency fees, arrangement fees, and syndication expenses; and
(v) Approximately $37,500,000 for general corporate purposes and working capital.
The collateral package securing the Facility includes first-priority security interests in substantially all assets of the Borrower and the Parent Guarantor (under U.S. law), as well as German-law security interests (Sicherheiten) over the Frankfurt Campus assets granted by IHDC Frankfurt. The German-law security package includes a first-ranking land charge (Grundschuld) over the Frankfurt leasehold, a global assignment of receivables (Globalzession), a pledge of bank accounts (Kontoverpfändung), and a security transfer of movable assets (Sicherungsübereignung) located at the Frankfurt Campus. These German-law security interests are held through a parallel-debt structure (Parallelverpflichtung), with Pinnacle Trust Company, N.A., acting through its London branch, serving as Security Trustee (Sicherheitentreuhänder) for the benefit of the Lenders.
The cross-border nature of the transaction — involving a U.S. borrower, a German co-borrower, a German-situs collateral package, a EUR-denominated sub-tranche, a syndicate that includes a BaFin-regulated German bank, a Bermuda-incorporated insurance capital entity with UK-person connections, and a Cayman-domiciled CLO upstream structure — triggers the application of multiple sanctions and AML regulatory regimes, as analyzed in detail in Section III below.
III. Applicable Legal Frameworks
This Section provides an overview of each of the sanctions and AML regimes applicable to the Facility, together with an analysis of the specific jurisdictional nexus that triggers each regime's application.
A. U.S. Sanctions — OFAC
1. Statutory and Regulatory Authority
The U.S. sanctions regime applicable to this transaction is administered by the Office of Foreign Assets Control ("OFAC"), a bureau within the U.S. Department of the Treasury. OFAC derives its authority from several statutory sources, including:
(a) The International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, which authorizes the President to declare national emergencies and impose economic sanctions in response to unusual and extraordinary threats to the national security, foreign policy, or economy of the United States;
(b) The Trading with the Enemy Act ("TWEA"), 50 U.S.C. App. §§ 1–44, which grants the President broad authority to regulate economic transactions during times of war or declared national emergencies, and which continues to serve as the legal basis for the Cuba sanctions program;
(c) Various Executive Orders issued by the President under IEEPA and TWEA authority, which establish and modify specific sanctions programs targeting particular countries, regions, entities, and individuals; and
(d) OFAC Regulations codified at 31 C.F.R. Parts 500–599, which implement the foregoing statutory authorities and Executive Orders through detailed regulatory provisions governing prohibited transactions, licensing, reporting, and penalties.
OFAC is responsible for the administration and enforcement of more than thirty active sanctions programs, targeting countries and regions (including, inter alia, Cuba, Iran, North Korea, Syria, and the Crimea, so-called Donetsk People's Republic, and so-called Luhansk People's Republic regions of Ukraine), as well as specific individuals, entities, and vessels designated as threats to U.S. national security and foreign policy.
2. Scope of OFAC Prohibitions
The OFAC sanctions regime relevant to this transaction encompasses the following principal prohibitions and designations:
(a) Specially Designated Nationals and blocked Persons List ("SDN List"). OFAC maintains the SDN List, which identifies individuals and entities whose property and interests in property are blocked (frozen) and with whom U.S. persons are generally prohibited from dealing. The SDN List includes individuals and entities designated under various sanctions programs, including those related to terrorism, narcotics trafficking, weapons of mass destruction proliferation, and country-specific sanctions. Transactions involving SDN-listed persons — including the provision of financial services, the making of loans, and the extension of credit — are strictly prohibited absent a specific license from OFAC.
(b) Sectoral Sanctions Identifications List ("SSI List"). The SSI List identifies persons operating in specific sectors of certain countries' economies (most notably Russia) with respect to whom specific types of transactions are prohibited. Unlike the SDN List, the SSI List does not impose a complete asset freeze but instead prohibits specific categories of transactions, such as the provision of new debt with a maturity exceeding a specified number of days to identified entities in the Russian financial services, energy, and defense sectors.
(c) Consolidated Sanctions List. OFAC also maintains the Consolidated Sanctions List, which aggregates the SDN List, the SSI List, the Foreign Sanctions Evaders List ("FSE List"), the Non-SDN Menu-Based Sanctions List ("NS-MBS List"), the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions ("CAPTA List"), and other sub-lists into a single searchable database.
(d) "50 Percent Rule." Under OFAC guidance, entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are themselves considered blocked, even if the entity is not independently listed on the SDN List. This rule requires analysis of the ownership structure of each screened party to determine whether any blocked person holds a 50% or greater interest.
All U.S. persons — defined to include U.S. citizens and permanent residents wherever located, entities organized under U.S. law (including their foreign branches), and any person in the United States — are subject to OFAC sanctions. In addition, transactions denominated in U.S. dollars that clear through U.S. financial institutions (including through correspondent banking relationships) create an independent basis for OFAC jurisdiction, even where the underlying parties are non-U.S. persons. Certain sanctions programs also impose "secondary sanctions" that may apply to non-U.S. persons engaging in specified conduct.
3. OFAC Screening Requirements for This Transaction
The following OFAC screening requirements are applicable to this transaction:
(a) Screening of all Loan Parties — including IHDC, Ironhaven Holdings Inc., and IHDC Frankfurt — together with their directors, officers, and beneficial owners at the greater-than-25% ownership threshold;
(b) Screening of all Lenders — including their beneficial owners at the greater-than-25% ownership threshold and, for fund-structure Lenders, upstream fund investors holding greater than 10% economic interest in any Lender entity;
(c) Screening of the Sponsor — Thornfield Capital Partners, LP, its general partner (Thornfield Capital Management LLC), the relevant fund vehicle (Thornfield Infrastructure Fund III, LP), and key personnel;
(d) Screening of all agents and service providers — including Crescent Harbor Bank, N.A. (as Administrative Agent), Pinnacle Trust Company, N.A. (as Collateral Agent and Security Trustee), and all other service providers identified in Section II.A.5 above; and
(e) Credit Agreement compliance provisions — The Credit Agreement requires OFAC representations from each Loan Party (in the representations and warranties article) and from each Lender (via a Lender KYC / OFAC Compliance Certificate to be delivered as a condition precedent to funding). These provisions are discussed in detail in Section VIII below.
B. EU Sanctions
1. Legal Framework
The European Union maintains a comprehensive autonomous sanctions regime that is directly applicable in all EU Member States, including Germany. The principal EU sanctions instruments relevant to this transaction include:
(a) Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, as amended by successive Council Implementing Regulations. This regulation imposes asset freezes on designated natural and legal persons, entities, and bodies, and prohibits the making available of funds or economic resources, directly or indirectly, to or for the benefit of designated persons.
(b) Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilizing the situation in Ukraine, as substantially amended following Russia's full-scale invasion of Ukraine in February 2022 (through the Fourteenth Package of sanctions adopted in June 2024 and preceding packages). This regulation imposes sectoral sanctions, including restrictions on the provision of loans and credit to certain Russian entities, and prohibitions on the import and export of specified goods and technologies.
(c) EU Consolidated Financial Sanctions List maintained by the European Commission, which aggregates all EU designations across all EU sanctions programs into a single searchable database.
EU sanctions are directly applicable in all Member States without the need for national implementing legislation. Non-compliance with EU sanctions may result in criminal prosecution under the national laws of individual Member States. In Germany, violations of EU sanctions are subject to penalties under the Außenwirtschaftsgesetz ("AWG") (Foreign Trade and Payments Act) and related regulations.
2. Nexus to This Transaction
EU sanctions are applicable to this transaction through multiple jurisdictional nexus points:
(a) IHDC Frankfurt is a German entity (GmbH) organized under German law with its registered office in Frankfurt am Main, and is therefore an "EU person" subject to EU sanctions in its own right;
(b) NordBrücke AG is a German Aktiengesellschaft regulated by BaFin and is therefore an EU person subject to EU sanctions;
(c) The Frankfurt Campus — the construction, operation, and financing of which constitute a substantial portion of the Facility's purpose — is located in Germany, creating an ongoing EU territorial nexus for the life of the Facility;
(d) The EUR Sub-Tranche (€253,571,429) creates euro-denominated payment flows that are subject to EU sanctions compliance, particularly with respect to EU correspondent banking relationships used to process euro payments; and
(e) Pinnacle Trust Company, N.A., through its London branch acting as Security Trustee for the German-law security package, may engage in activities within the EU that create additional EU nexus. While the United Kingdom is no longer an EU Member State, the London branch's interactions with German-law collateral and German counterparties (including IHDC Frankfurt and the Grundbuchamt) may implicate EU sanctions compliance obligations.
C. UK Sanctions — OFSI
1. Legal Framework
Following the United Kingdom's withdrawal from the European Union, the UK established its own autonomous sanctions regime under the following legal framework:
(a) Sanctions and Anti-Money Laundering Act 2018 ("SAMLA"), which provides the statutory framework for the UK to impose, update, and enforce autonomous financial sanctions, trade sanctions, and other restrictive measures;
(b) Russia (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/855), as amended, which implement the UK's autonomous Russia-related sanctions program, including asset freezes, financial restrictions, and trade restrictions;
(c) HM Treasury Office of Financial Sanctions Implementation ("OFSI"), which is responsible for the implementation and enforcement of UK financial sanctions, including the maintenance of the UK Sanctions List (the "OFSI Consolidated List"); and
(d) Various other country-specific and thematic sanctions regulations adopted under SAMLA.
UK sanctions apply to UK persons, which includes: (i) individuals who are British citizens, British nationals, or ordinarily resident in the United Kingdom; (ii) entities incorporated or constituted under the law of any part of the United Kingdom; and (iii) any person (whether or not a UK person) with respect to conduct occurring within the United Kingdom. Importantly, UK sanctions are also extended to the British Overseas Territories, including Bermuda, through Orders in Council, although the specific implementation mechanism may vary by territory.
2. Nexus to This Transaction
UK sanctions are applicable to this transaction through the following nexus points:
(a) Osprey Insurance Capital, Ltd. is a Bermuda exempted company. Bermuda is a British Overseas Territory, and the Bermuda Sanctions Regulations (which mirror UK sanctions to a substantial degree) apply to entities incorporated in Bermuda. Moreover, the UK's sanctions regime under SAMLA applies to acts done by UK persons in connection with or for the benefit of Bermuda entities;
(b) Fiona Abernathy, Head of Credit Investments at Osprey Insurance Capital, Ltd., has been identified through our due diligence as holding a UK passport and maintaining a residence in London, England. Ms. Abernathy therefore qualifies as a "UK person" under SAMLA, and her activities in connection with Osprey's participation in the Facility are subject to UK sanctions;
(c) Additional UK-connected personnel at Osprey were identified through corporate records searches and screened against the OFSI Consolidated List, as discussed in Section VI.G below; and
(d) Pinnacle Trust Company, N.A., acting through its London branch as Security Trustee for the German-law security package, may engage in acts within the United Kingdom in connection with its role under the parallel-debt structure and the German-law security documents. Such acts would constitute "relevant activities" occurring within the UK and would therefore be subject to UK sanctions.
D. German Anti-Money Laundering — BaFin / GwG
1. Legal Framework
Germany's anti-money laundering regime is governed by the following principal legislation:
(a) Geldwäschegesetz ("GwG") — the German Anti-Money Laundering Act, which transposes EU AML Directives (including the Fourth and Fifth Anti-Money Laundering Directives) into German law. The GwG imposes customer due diligence ("CDD") obligations, beneficial ownership identification requirements, suspicious transaction reporting obligations, and internal compliance program requirements on "obliged entities" (Verpflichtete), including credit institutions, financial services institutions, and certain other categories of businesses and professions;
(b) Kreditwesengesetz ("KWG") — the German Banking Act, which regulates credit institutions and financial services institutions in Germany and imposes additional prudential and AML requirements on regulated entities; and
(c) Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin") — the German Federal Financial Supervisory Authority, which is responsible for the supervision of obliged entities under the GwG and the KWG, including the enforcement of AML requirements.
A key component of the German AML framework is the Transparenzregister (German Transparency Register), a centralized electronic register maintained under the GwG in which German legal entities and registered partnerships (eingetragene Personengesellschaften) must report their beneficial owners (wirtschaftlich Berechtigte). Since August 1, 2021, the Transparenzregister has operated as a full register (Vollregister), meaning that entities must affirmatively register their beneficial ownership information even if such information is available through other public registers (such as the Handelsregister).
2. Requirements Applicable to This Transaction
The GwG and related German AML requirements are applicable to this transaction as follows:
(a) IHDC Frankfurt Transparenzregister filing. IHDC Frankfurt, as a German GmbH, is required to file beneficial ownership information with the Transparenzregister. We have confirmed that IHDC Frankfurt has completed this filing, identifying the beneficial ownership chain from IHDC Frankfurt through IHDC and Ironhaven Holdings Inc. to Thornfield Capital Partners, LP, with David Thornfield identified as the ultimate beneficial owner (wirtschaftlich Berechtigter). Confirmation of filing has been obtained and is documented in Section IX.B of this memorandum.
(b) NordBrücke AG CDD obligations. NordBrücke AG, as a BaFin-regulated credit institution (Kreditinstitut), is an obliged entity under the GwG and is required to conduct its own independent KYC/AML due diligence on its customers — including IHDC Frankfurt (as Co-Borrower) and all co-lenders participating in the EUR Sub-Tranche — as a precondition to establishing a business relationship. Calderwood & Harkness, together with Wendt Falkenberg Rechtsanwälte PartG mbB (the Borrower's German local counsel), is coordinating with NordBrücke's internal compliance department to ensure that NordBrücke's independent KYC requirements are satisfied in a timely manner ahead of the Closing Date.
(c) EUR Sub-Tranche participant KYC. Each Lender participating in the EUR Sub-Tranche (currently NordBrücke AG alone, with the possibility of future assignments to other Lenders) must provide KYC documentation satisfying GwG standards. At present, NordBrücke is the sole Lender committed to the EUR Sub-Tranche, and its own internal compliance documentation has been reviewed and found satisfactory.
IV. Screening Methodology
This Section describes the screening methodology employed in conducting the sanctions and AML compliance analysis presented in this memorandum. The screening was conducted by Daniel Obi and Lisa Morrow, with oversight from Stephanie Okafor, using a combination of proprietary compliance screening software, direct database queries, and manual review procedures.
A. OFAC Screening Process
Sanctions screening under the U.S. OFAC regime was conducted as follows:
(a) SDN List screening. All persons and entities identified in Section II.A of this memorandum were screened against OFAC's Specially Designated Nationals and blocked Persons List, which was current as of April 15, 2024 (the "Screening Date"). The SDN List used was the version published by OFAC on its website (https://sanctionssearch.ofac.treas.gov/) and downloaded in both XML and delimited text formats for use in our screening software.
(b) SSI List screening. All persons and entities were separately screened against the Sectoral Sanctions Identifications List, also current as of the Screening Date.
(c) Consolidated Sanctions List screening. All persons and entities were screened against the OFAC Consolidated Sanctions List, which aggregates the SDN List, the SSI List, the Foreign Sanctions Evaders List, the Non-SDN Menu-Based Sanctions List, the Palestinian Legislative Council List, the CAPTA List, the Non-SDN Chinese Military-Industrial Complex Companies List, and other OFAC sub-lists, current as of the Screening Date.
(d) Search parameters. Screening was conducted using the following search parameters for each screened party: (i) full legal name; (ii) any known short names, trade names, or d/b/a designations; (iii) any known aliases; (iv) registered address and principal business address; and (v) for natural persons, date of birth and nationality (where known).
(e) Fuzzy-match methodology. The screening software was configured with a fuzzy-match threshold of 85% similarity score, meaning that any entry on the applicable sanctions list with a name or identifier matching 85% or more of the search term was flagged as a potential match requiring manual review. This threshold is consistent with OFAC guidance on reasonable compliance measures and reflects industry best practices for sanctions screening in the context of leveraged finance transactions.
(f) Manual review. All potential matches flagged by the automated screening process were subjected to manual review by Daniel Obi and Lisa Morrow. Manual review procedures included: (i) comparison of the full name, date of birth, nationality, and address of the screened party against the corresponding information for the flagged sanctions list entry; (ii) review of the OFAC designation details (including the specific sanctions program, designation date, and associated entities) for the flagged entry; and (iii) a determination as to whether the flagged entry constituted a true match or a false positive. The results of all manual reviews, including the rationale for each disposition, are documented in the OFAC SDN/SSI Screening Results Log attached as Exhibit B to this memorandum.
B. EU Sanctions Screening Process
Sanctions screening under the EU regime was conducted as follows:
(a) Screening was conducted against the EU Consolidated Financial Sanctions List maintained by the European Commission, current as of the Screening Date (April 15, 2024). The list was accessed through the European Commission's sanctions map portal and downloaded in XML format.
(b) Search parameters were consistent with those used for the OFAC screening and included full legal names, known aliases, addresses, and entity identification numbers (including German Handelsregister numbers, Steuernummern, and USt-IdNr. for German entities).
(c) Screening was focused on parties with EU nexus — specifically, IHDC Frankfurt, NordBrücke AG, Pinnacle Trust Company, N.A. (London branch, in its capacity as Security Trustee), and the beneficial owners of each — but was also conducted for all other screened parties for completeness and to support the broad sanctions representations required under the Credit Agreement.
(d) The fuzzy-match threshold and manual review procedures were consistent with those applied in the OFAC screening process. EU-specific screening results are documented in the EU Consolidated Sanctions List Screening Results Log attached as Exhibit C.
C. UK/OFSI Screening Process
Sanctions screening under the UK/OFSI regime was conducted as follows:
(a) Screening was conducted against the HM Treasury OFSI Consolidated List of Financial Sanctions Targets (the "OFSI Consolidated List"), current as of the Screening Date (April 15, 2024). The list was accessed through HM Treasury's OFSI portal and downloaded in XML and CSV formats.
(b) Focused screening was conducted on Osprey Insurance Capital, Ltd., including: (i) the entity itself; (ii) all beneficial owners holding greater than 25% of Osprey's equity; (iii) all key personnel, with particular emphasis on Fiona Abernathy (Head of Credit Investments), who was identified as a UK person; and (iv) upstream investors in Osprey holding greater than 10% economic interest, to the extent identified through corporate records and KYC documentation.
(c) Cross-reference with UK Companies House records was conducted, where applicable, for UK-connected persons identified through the Osprey corporate records review, to confirm addresses, directorships, and other identifying information for purposes of confirming or ruling out potential matches.
(d) The screening also covered Pinnacle Trust Company, N.A. in its capacity as Security Trustee acting through its London branch, together with the key London-based personnel of Pinnacle Trust identified through our diligence.
(e) Screening results are documented in the UK/OFSI Screening Results Log attached as Exhibit D.
D. GwG / BaFin Compliance Review
The German AML compliance review was conducted as follows:
(a) Transparenzregister review. We reviewed the Transparenzregister filing for IHDC Frankfurt GmbH and confirmed that the beneficial ownership chain has been properly reported. The filing identifies the following beneficial ownership chain: IHDC Frankfurt GmbH → Ironhaven Data Centers LLC (100% quotaholder / Gesellschafterin) → Ironhaven Holdings Inc. (100% member of IHDC) → Thornfield Capital Partners, LP → Thornfield Capital Management LLC (general partner) → David Thornfield (ultimate beneficial owner / wirtschaftlich Berechtigter). Confirmation of filing was obtained and is on file.
(b) NordBrücke AG coordination. We coordinated with the internal compliance department of NordBrücke AG — specifically with Dr. Stefan Kleinhans (Managing Director & Chief Compliance Officer) — to confirm that NordBrücke has conducted its own independent KYC/AML review and has accepted all EUR Sub-Tranche participants for purposes of its GwG and KWG obligations. NordBrücke has confirmed in writing that its internal sanctions compliance program has been applied to this transaction and that it has completed its CDD procedures with respect to IHDC Frankfurt and the transaction parties.
(c) KYC documentation review. We reviewed the KYC documentation packages collected from all Lenders, including certified copies of passports for authorized signatories and beneficial owners, corporate registry extracts (Handelsregisterauszüge, certificates of incorporation, certificates of good standing, and equivalent documents), and beneficial ownership declarations. The completeness and adequacy of these documentation packages were assessed against GwG standards as applicable to the EUR Sub-Tranche and against general market practice for KYC in syndicated lending transactions.
V. Screening Results — Borrower and Loan Parties
This Section presents the sanctions screening results for each Borrower and Loan Party entity, as well as the key individuals associated with the Borrower and Sponsor.
A. Ironhaven Data Centers LLC
Ironhaven Data Centers LLC, the Borrower, was screened against all applicable sanctions lists with the following results:
• OFAC SDN/SSI List: No match identified. The entity name "Ironhaven Data Centers LLC" produced no results at or above the 85% fuzzy-match threshold on any OFAC list.
• EU Consolidated Financial Sanctions List: No match identified.
• UK OFSI Consolidated List: No match identified. Although IHDC does not have a direct UK nexus, screening was conducted for completeness and to support the broad sanctions representations in the Credit Agreement.
Conclusion: Clear under all applicable sanctions regimes.
B. Ironhaven Holdings Inc.
Ironhaven Holdings Inc., the Parent Guarantor, was screened against all applicable sanctions lists with the following results:
• OFAC SDN/SSI List: No match identified.
• EU Consolidated Financial Sanctions List: No match identified.
• UK OFSI Consolidated List: No match identified.
Conclusion: Clear under all applicable sanctions regimes.
C. Ironhaven Frankfurt GmbH
Ironhaven Frankfurt GmbH, the Co-Borrower, was screened against all applicable sanctions lists with the following results:
• OFAC SDN/SSI List: No match identified.
• EU Consolidated Financial Sanctions List: No match identified. As an EU-person entity, IHDC Frankfurt was a primary focus of the EU sanctions screening process.
• UK OFSI Consolidated List: No match identified.
• Transparenzregister: Filing confirmed with the German Transparenzregister. The beneficial ownership chain has been reported as follows: IHDC Frankfurt GmbH → Ironhaven Data Centers LLC (100% quotaholder) → Ironhaven Holdings Inc. (100% member) → Thornfield Capital Partners, LP → David Thornfield (ultimate beneficial owner). No discrepancies were identified between the filed information and the corporate records reviewed.
Conclusion: Clear under all applicable sanctions regimes. Transparenzregister filing is complete and accurate.
D. Thornfield Capital Partners, LP / Thornfield Capital Management LLC / Thornfield Infrastructure Fund III, LP
The Sponsor entities were screened against all applicable sanctions lists with the following results:
• OFAC SDN/SSI List: No match identified for Thornfield Capital Partners, LP, Thornfield Capital Management LLC, or Thornfield Infrastructure Fund III, LP.
• EU Consolidated Financial Sanctions List: No match identified.
• UK OFSI Consolidated List: No match identified.
In addition, the beneficial ownership structure of the Thornfield entities was analyzed. Thornfield Capital Partners, LP is a Delaware limited partnership whose general partner is Thornfield Capital Management LLC. Thornfield Infrastructure Fund III, LP is the relevant investment vehicle and holds 100% of the equity of Ironhaven Holdings Inc. David Thornfield, as Founder and Managing Partner of Thornfield Capital Partners, LP and the controlling person of Thornfield Capital Management LLC, is the ultimate beneficial owner for purposes of both FinCEN CDD and GwG requirements.
Conclusion: Clear under all applicable sanctions regimes.
E. Key Individuals (Borrower / Sponsor Side)
The following table summarizes the sanctions screening results for all key individuals on the Borrower and Sponsor side:
Note regarding Andrei Volkov: The name "Andrei Volkov" was flagged during the OFAC SDN List screening due to a partial string match with several individuals bearing common Eastern European names who appear on the SDN List. Specifically, the automated screening identified potential matches with similarity scores ranging from 86% to 91% for individuals named "Andrei Volkov" or similar variants. Upon manual review, all potential matches were conclusively determined to be false positives. The flagged SDN entries correspond to different individuals with different dates of birth, different nationalities, and different identifying information (including passport numbers and addresses) from Mr. Volkov. Mr. Volkov is a U.S. citizen born in San Jose, California, and his biographical information does not correspond to any designated individual on the SDN List or any other OFAC list. The detailed false-positive analysis is documented in the OFAC SDN/SSI Screening Results Log attached as Exhibit B.
Conclusion: All key individuals on the Borrower and Sponsor side are clear under all applicable sanctions regimes.