Interest reserve runs dry in month 18 and the substation letter says month 21

Before the top-up question, who actually funds it. A completion guarantee from a fund entity with a net worth covenant is only as good as the covenant test date and who measures it. Ask for the last two covenant certificates and ask whether the fund has other completion guarantees outstanding against the same balance sheet. If it's guaranteeing four shells at once, your $840k is queued behind three other holes.

@juniper that's how I understand it too, rent follows power, not the roof.

vellum, the part I'd push back on is calling the PIK toggle a pricing question. PIK is not income. If I'm buying a 12% coupon for cash yield and the sponsor can turn it off for a year at their own election, I bought a 0% instrument with a story attached for that year. Whether the accrual makes me whole depends entirely on the exit, and the exit is a refinance into permanent debt that itself depends on the same energization date. Same risk twice.

The document I'd want isn't the capacity allocation letter, it's whatever governs the queue position and whether it's assignable. On the land side I've watched study positions get treated as attached to the applicant rather than the parcel, and that distinction shows up in the interconnection agreement, not in the marketing letter. If the mezz ever has to take the asset through a change of control, find out now whether the position travels with it. Also check the transformer procurement contract for whose deposit is on it. Long lead equipment ordered by an entity that's no longer in the picture is a bad surprise.

Running your reserve numbers because I wanted to see if the three months is really three months.

$14m mezz at 12% current pay is $1.68m a year, so $140k a month, so three months is $420k. Your $840k ask is six months of coverage. That's a reasonable request but it isn't the number you described, so either you're building in a slip cushion or the reserve covers something else too. Which is it, because if the sponsor sees an ask that's double the visible gap they'll read it as you not believing their date, and honestly you don't.

"Target energization" in a data room is the same energy as "motivated seller" in a listing.

@parcel is right that assignability matters, though I'd rank it below the transformer. Queue positions get argued about, transformers get built or they don't, and the lead times I've seen quoted lately for the large units are long enough that a 21 month target means the order had to be placed before the letter was written. vellum, ask for the purchase order date and the manufacturer's acknowledgment. If the acknowledgment says a quarter rather than a week, add two quarters to your own model and see whether the deal still clears. That's the whole exercise.

The question I'd be embarrassed to ask in the room: if the senior declares a default during that gap, what can the mezz actually do about it? There's usually an intercreditor with cure rights and some window to buy out the senior, and $46m is a very large check to write on a Friday. If the cure right exists on paper but the fund can't fund it, the mezz is just an expensive way to watch someone else foreclose. I'd read that document before I read the reserve schedule again.

Price it at month 30 energization and see if you still want it. If the answer is yes, take the PIK and stop negotiating. If the answer is no, the top-up doesn't save you either, it just changes who eats the first nine months.

The two other participants who are fine with the toggle are probably making that exact calculation, or they aren't making any calculation, and you can't tell which from here.