EX-99.8 14 tm2526385d1_ex99-8.htm EXHIBIT 99.8

Exhibit 99.8

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2024 and 2023

(With Independent Auditors’ Report Thereon)

KPMG LLP

Suite 4000

1735 Market Street

Philadelphia, PA 19103-7501

Independent Auditors’ Report

The Member

Linebacker Power Funding, LLC:

Opinion

We have audited the consolidated financial statements of Linebacker Power Funding, LLC and its subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of operations, member’s equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

As discussed in Note 11 to the consolidated financial statements, the Company has elected to change its method of accounting for interest rate swaps to remove the application of the simplified hedge accounting alternative available for private companies in 2024. Consequently, the Company’s consolidated financial statements for 2024 and 2023 have been revised. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

| KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. |

In performing an audit in accordance with GAAS, we:

| · | Exercise professional judgment and maintain professional skepticism throughout the audit.

| · | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

| · | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

| · | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

| · | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Philadelphia, Pennsylvania

June 24, 2025

2

Linebacker Power Funding, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2024 and 2023

(In thousands)

|  | 2024 |  |  | 2023 |
Assets |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Restricted cash |  | $ | 18,825 |  |  |  | 18,559 |
Accounts receivable |  |  | 12,848 |  |  |  | 11,040 |
Inventory |  |  | 33,865 |  |  |  | 33,684 |
Prepaid expenses |  |  | 15,481 |  |  |  | 6,502 |
Assets from risk management activities |  |  | 44,254 |  |  |  | 37,380 |
Other current assets |  |  | 149 |  |  |  | 86 |
Total current assets |  |  | 125,422 |  |  |  | 107,251 |
Property, plant and equipment |  |  | 732,820 |  |  |  | 730,889 |
Accumulated depreciation |  |  | (38,918 | ) |  |  | (13,756 | )
Property, plant and equipment, net |  |  | 693,902 |  |  |  | 717,133 |
Assets from risk management activities |  |  | 27,803 |  |  |  | 2,796 |
Total assets |  | $ | 847,127 |  |  |  | 827,180 |
Liabilities and Member's Equity |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 28,993 |  |  |  | 15,797 |
Accounts payable - affiliate |  |  | 603 |  |  |  | 351 |
Liabilities from risk management activities |  |  | 35,611 |  |  |  | 61,601 |
Total current liabilities |  |  | 65,207 |  |  |  | 77,749 |
Long term debt |  |  | - |  |  |  | 238,786 |
Liabilities from risk management activities |  |  | 14,795 |  |  |  | 6,600 |
Asset retirement obligation |  |  | 2,006 |  |  |  | 1,849 |
Deferred taxes |  |  | 354 |  |  |  | 140 |
Total liabilities |  |  | 82,362 |  |  |  | 325,124 |
Commitments and contingencies (see note 10) |  |  |  |  |  |  |  |
Member's equity |  |  | 764,765 |  |  |  | 502,056 |
Total liabilities and member's equity |  | $ | 847,127 |  |  |  | 827,180 |

See accompanying notes to the consolidated financial statements

3

Linebacker Power Funding, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Consolidated Statements of Operations

Year ended December 31, 2024 and for the period of June 12, 2023 to December 31, 2023

(In thousands)

|  | 2024 |  |  | 2023 |
Revenues: |  |  |  |  |  |  |  |
Energy revenues |  | $ | 282,238 |  |  |  | 560,335 |
Gain (loss) on risk management activities |  |  | 240,317 |  |  |  | (137,047 | )
Total revenues |  |  | 522,555 |  |  |  | 423,288 |
Operating expenses: |  |  |  |  |  |  |  |
Fuel and transportation |  |  | 162,186 |  |  |  | 114,763 |
Loss on risk management activities |  |  | 10,635 |  |  |  | 27,619 |
Operating and maintenance |  |  | 84,632 |  |  |  | 37,420 |
General and administrative |  |  | 5,946 |  |  |  | 4,195 |
Depreciation |  |  | 25,162 |  |  |  | 13,756 |
Accretion |  |  | 157 |  |  |  | 74 |
Total operating expenses |  |  | 288,718 |  |  |  | 197,827 |
Operating income |  |  | 233,837 |  |  |  | 225,461 |
Interest expense, net |  |  | (40,119 | ) |  |  | (27,815 | )
Income before income taxes |  |  | 193,718 |  |  |  | 197,646 |
Income tax expense |  |  | (2,153 | ) |  |  | (1,811 | )
Net income |  | $ | 191,565 |  |  |  | 195,835 |

See accompanying notes to the consolidated financial statements

4

Linebacker Power Funding, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Consolidated Statements of Member's Equity

Year ended December 31, 2024

and for the period of June 12, 2023 to December 31, 2023

(In thousands)

|  | Member's |
|  | equity |
Balance at June 12, 2023 |  | $ | - |
Capital contributions |  |  | 412,863 |
Net income |  |  | 195,835 |
Distributions |  |  | (106,642 | )
Balance at December 31, 2023 |  | $ | 502,056 |
Capital contributions |  |  | 389,104 |
Net income |  |  | 191,565 |
Distributions |  |  | (317,960 | )
Balance at December 31, 2024 |  | $ | 764,765 |

See accompanying notes to the consolidated financial statements

5

Linebacker Power Funding, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Year ended December 31, 2024 and for the period of June 12, 2023 to December 31, 2023

(In thousands)

|  | 2024 |  |  | 2023 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income |  | $ | 191,565 |  |  | $ | 195,835 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation |  |  | 25,162 |  |  |  | 13,756 |
Amortization of deferred financing costs |  |  | 16,491 |  |  |  | 6,869 |
Deferred taxes |  |  | 214 |  |  |  | 140 |
Accretion |  |  | 157 |  |  |  | 74 |
Risk management activities |  |  | (49,676 | ) |  |  | 28,025 |
Change in assets and liabilities: |  |  |  |  |  |  |  |
Increase in accounts receivable |  |  | (1,808 | ) |  |  | (10,828 | )
Increase in inventory and capital spares |  |  | (181 | ) |  |  | (3,251 | )
Increase in prepaid expenses |  |  | (8,979 | ) |  |  | (3,633 | )
Increase in other current assets |  |  | (63 | ) |  |  | (86 | )
Increase in accounts payable - affiliate |  |  | 252 |  |  |  | 351 |
Increase in accounts payable and accrued expenses |  |  | 13,196 |  |  |  | 11,555 |
Net cash provided by operating activities |  |  | 186,330 |  |  |  | 238,807 |
Cash flows from investing activites: |  |  |  |  |  |  |  |
Acquisition of assets and liabilities assumed |  |  | - |  |  |  | (757,346 | )
Capital expenditures |  |  | (1,931 | ) |  |  | (1,040 | )
Net cash used in investing activities |  |  | (1,931 | ) |  |  | (758,386 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Proceeds from issuance of short term debt |  |  | - |  |  |  | 37,000 |
Principal payments on short term debt |  |  | - |  |  |  | (37,000 | )
Proceeds from issuance of long term debt |  |  | 150,000 |  |  |  | 740,000 |
Principal payments on long term debt |  |  | (401,000 | ) |  |  | (489,000 | )
Debt issuance costs |  |  | (4,277 | ) |  |  | (19,083 | )
Capital contributions |  |  | 389,104 |  |  |  | 412,863 |
Distributions |  |  | (317,960 | ) |  |  | (106,642 | )
Net cash (used in) provided by financing activities |  |  | (184,133 | ) |  |  | 538,138 |
Net change in restricted cash |  |  | 266 |  |  |  | 18,559 |
Restricted cash, beginning of year |  |  | 18,559 |  |  |  | - |
Restricted cash, end of year |  | $ | 18,825 |  |  | $ | 18,559 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 26,775 |  |  | $ | 18,315 |

See accompanying notes to the consolidated financial statements

6

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (1) | Organization

Linebacker Power Funding, LLC (the Company), a Delaware limited liability company, was formed on April 18, 2023 to own and finance certain power generation facilities. The Company is owned by Linebacker Power Holdings, LLC (Holdings). Holdings is wholly-owned by Linebacker Power, LLC (Linebacker). Linebacker is owned by LS Power Equity Partners IV, LP (Equity Partners).

On June 12, 2023 (the Acquisition Date), the Company acquired from Brazos Electric Power Cooperative, Inc. (Brazos) (the Acquisition) (see note 3) three natural gas-fired plants, providing 2,020 megawatts of power in the Electric Reliability Council of Texas, Inc (ERCOT), including Jack County Power, LLC (Jack), Johnson County Power, LLC (Johnson), and R.W. Miller Power, LLC (Miller) (collectively, the Generation Facilities).

On October 3, 2024, the interests in the Company were contributed to Thunder Generation Funding, LLC (Thunder), a limited liability company formed on June 26, 2024.

These consolidated financial statements reflect the year ended December 31, 2024, and the period of the Acquisition Date through December 31, 2023.

The Generation Facilities owned by the Company are described below:

|  |  |  |  |  | Year |  |
Entity |  | Location |  | Size |  | operational |  | Type
Jack County Power, LLC |  | Jacksboro, TX |  | 1,237 MW |  | 2005-2011 |  | Combined Cycle
Johnson County Power, LLC |  | Cleburne, TX |  | 266 MW |  | 1997-2005 |  | Combined Cycle
R.W. Miller Power, LLC |  | Palo Pinto, TX |  | 517 MW |  | 1968-1994 |  | Simple & Combined Cycle

| (2) | Summary of Significant Accounting Policies

| (a) | Basis of Presentation

The consolidated financial statements and related notes are presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These consolidated financial statements include the financial statements of the Company. All intercompany transactions have been eliminated in the consolidated financial statements.

These consolidated financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the consolidated balance sheets date through June 24, 2025, the date the consolidated financial statements were issued.

| (b) | Use of Estimates

Management makes estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses to prepare the consolidated financial statements in conformity with U.S. GAAP. The most significant of these estimates and assumptions relate to the valuation of acquired assets, derivative instruments, and asset retirement obligations. Actual results could differ materially from those estimates.

(Continued)

7

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (c) | Restricted Cash

Restricted cash consists of amounts that are restricted under the terms of certain financing agreements from transfer or dividend until such time as certain conditions are met. Such restricted cash is used primarily for operating expenses and debt service.

| (d) | Accounts Receivable

Accounts receivable primarily consists of amounts owed to the Company from ERCOT. Accounts receivable also consists of amounts owed to the Company for hedge settlements from energy marketers or other counterparties.

| (e) | Allowance for Doubtful Accounts

Management establishes reserves on accounts receivable if it becomes probable that the Company will not collect part of the outstanding accounts receivable balance. Management reviews collectability and establishes or adjusts its allowance using the specific identification method.

| (f) | Inventory

Inventory consists of fuel oil, natural gas and spare parts used in the production of electricity. Spare parts and fuel oil are stated at the lower of weighted average cost or net realizable value. Natural gas inventories are stated at cost. The current carrying value of both fuel oil and natural gas inventories will be recovered with normal profits in the ordinary course of business through the generation and sale of energy. At December 31, 2024, fuel oil was $12.7 million, natural gas was $3.0 million and spare parts inventory was $18.2 million. At December 31, 2023, fuel oil was $10.8 million, natural gas was $3.7 million and spare parts inventory was $19.2 million. Certain capital spare parts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

| (g) | Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated remaining useful lives of individual assets or classes of assets. Plant and equipment is depreciated over the estimated useful life of the power generation facilities ranging from 19 to 29 years. The estimated useful life for computer software is 3 years, computer hardware is 5 years, vehicles is 5 years, and office equipment and furniture and fixtures are 7 years. Additions and improvements extending asset lives beyond their remaining estimated useful lives are capitalized, while repairs and maintenance, including planned major maintenance and capital spares, are charged to expense as incurred.

(Continued)

8

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (h) | Impairment of Long Lived Assets

In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360, Property, Plant, and Equipment, long-lived assets and intangible assets with determinable useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets and would be charged to earnings. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the costs to sell.

| (i) | Asset Retirement Obligation

In accordance with ASC 410, Asset Retirement Obligations and Environmental Obligations, the Company recognizes the fair value of the liability for asset retirement obligations in the period in which it is incurred if a reasonable estimate of fair value can be made. An amount equal to the present value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the useful life of the asset. The liability is accreted through charges to Accretion in the accompanying statement of operations. If the obligation is settled for an amount other than the carrying amount of the liability, a gain or loss is recognized upon settlement.

As of December 31, 2024 and 2023, the Company had a liability of $2.0 million and $1.8 million, respectively, for asset retirement obligations on the accompanying consolidated balance sheets to provide for the future removal and disposal of hazardous waste from the Generation Facilities. For the year ended December 31, 2024 and for the period ended December 31, 2023, Accretion expense was $157 thousand and $74 thousand, respectively, which is reflected in the accompanying consolidated statements of operations.

| (j) | Debt Issuance and Deferred Financing Costs

Debt issuance and deferred financing costs are amortized over the term of the Company’s financing arrangements using effective interest method. Unamortized debt issuance and deferred financing costs are reflected as a component of Long term debt on the accompanying consolidated balance sheets. For the year ended December 31, 2024, amortization of these costs was $1.5 million, $6.6 million was written off as a result of the amendment to the Credit Agreement, and $8.3 million was written off as a result of the termination of the Credit Agremeent (see note 6(b)). For the period ended December 31, 2023, amortization of these costs was $1.4 million, and $5.5 million was written off as a result of the refinancing (see note 6(b)).

| (k) | Revenue Recognition

Electric energy revenue is recognized upon transmission to the customers and consists of both physical and financial transactions. Physical transactions or the sale of generated electricity to meet supply are recorded on a gross basis in the accompanying consolidated statement of operations, in accordance with ASC 606, Revenue from Contracts with Customers. Financial transactions are recorded net within Energy and capacity revenues in the accompanying consolidated statements of operations in accordance with ASC 815, Derivatives and Hedging (ASC 815).

(Continued)

9

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (l) | Derivative Financial Instruments

The Company enters into agreements that meet the definition of a derivative in accordance with ASC 815. These agreements are entered into to mitigate or eliminate market and financial risks.

ASC 815 provides for three different ways to account for derivative instruments: (i) as an accrual agreement, if the criteria for the “normal purchase normal sale” exception are met and documented; (ii) as a cash flow or fair value hedge, if the specified criteria are met and documented; or (iii) as a mark-to-market agreement with changes in fair value recognized in current period earnings. All derivative instruments that do not qualify for the normal purchase normal sale exception are recorded at fair value in Assets and Liabilities from risk management activities on the accompanying consolidated balance sheet.

If designated as a cash flow or fair value hedge, the Company documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy. This process includes linking all derivatives that are designated as hedges to specific assets or liabilities on the accompanying consolidated balance sheet or to forecasted transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. This could occur when: (1) it is determined that a derivative is no longer effective in offsetting changes in the cash flows of a hedged item; (2) the derivative expires or is sold, terminated, or exercised; or (3) the derivative is discontinued as a hedging instrument, because it is unlikely that a forecasted transaction will occur. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective hedge of cash flows, the derivative will continue to be carried at fair value on the accompanying consolidated balance sheets and the gains and losses that were accumulated in other comprehensive income are recognized immediately or over the remaining term of the forecasted transaction in the accompanying statement of operations.

Changes in the fair value of derivative instruments are recognized in the accompanying statements of operations.

Any gains and losses resulting from changes in the market value of the derivative instruments contracts are recorded in the accompanying statements of operations in the current period.

| (m) | Fair Value Measurements

Fair value, as defined in ASC 820, Fair Value Measurements and Disclosures (ASC 820), is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs.

(Continued)

10

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (n) | Fair Value of Financial Instruments

The carrying amounts of Restricted cash, Accounts receivable, and Accounts payable and accrued expenses are equal to or approximate their fair values due to the short term maturity of those instruments. The fair value of Long term debt approximates its book value as of December 31, 2023, as the interest rates are variable.

| (o) | Income Taxes

The Company has been organized as a limited liability company and is treated as a disregarded entity for federal and state income tax purposes. Therefore, no federal and state income taxes other than Texas Gross Margin Tax (Margin Tax) are assessed at the entity level. Deferred taxes recorded on the accompanying balance sheets arise from Gross Margin Tax temporary differences associated with unrealized gains and losses on the Company’s energy risk management activities.

The Company, in accordance with ASC 740, Income Taxes, performs the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are ‘‘more likely than not’’ of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would be derecognized and recorded as a tax benefit or expense in the current period. However, the Company’s conclusions regarding these uncertain tax positions will be subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analysis of tax laws, regulations and interpretations thereof.

| (p) | Concentrations of Credit and Market Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of restricted cash, accounts receivable, and derivatives. Restricted cash accounts are generally held at major institutions. Accounts receivable is concentrated within entities engaged in the energy industry. These industry concentrations may impact the Company’s overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic, industry, or other conditions.

The Company is exposed to credit losses in the event of noncompliance by counterparties on its derivative financial instruments. The counterparties to these transactions are major financial institutions. The Company does not require collateral or other security to support its financial instruments with credit risk.

For the year ended December 31, 2024 and for the period ended December 31, 2023, all of the revenues were from sales to ERCOT, as well as hedge settlements from various third parties. All revenues are subject to geographical market risks.

(Continued)

11

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (q) | Risks and Uncertainties

The Company is subject to a variety of factors, including the economy, the regulatory environment, the electricity markets, and the availability of capital resources. As with any power generation facility, operations of the Generation Facility involves risk, including the performance of the facility below expected levels of efficiency and output, shut downs due to the breakdown or failure of equipment or processes, violations of permit requirements, operator error, labor disputes, weather interferences, or catastrophic events such as fires, earthquakes, floods, explosions, pandemics, or other similar occurrences affecting a power generation facility or its power purchasers. The occurrence of any of these events could significantly reduce or eliminate revenues generated by the facility or significantly increase the expenses of the facility, adversely impacting the Company’s ability to make payments of principal and interest on its debt when due.

| (r) | Commitments and Contingencies

In accordance with ASC 450, Contingencies (ASC 450), the Company records a loss contingency for matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Loss contingency reserves are based on estimates and judgments made by management with respect to the likely outcome of matters, including any applicable insurance coverage for litigation matters, and are adjusted as circumstances warrant. These estimates and judgments could change based on new information, changes in laws or regulations, changes in management’s plans or intentions, the outcome of legal proceedings, settlements or other factors.

Additionally, the Company follows the guidance of ASC 460, Guarantees (ASC 460), for disclosing and accounting of guarantees and indemnifications entered into during the course of business. When a guarantee or indemnification subject to ASC 460 is entered into the estimated fair value of the guarantee or indemnification is assessed. Some guarantees and indemnifications could have a financial impact under certain circumstances. Management considers the probability of such circumstances occurring when estimating fair value.

| (s) | Recent Accounting Pronouncements (Not Yet Adopted)

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires certain quantitative rate reconciliation disclosures for public entities. Additionally, this ASU requires all entities to disclose income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company for fiscal years beginning after December 15, 2025. The Company is currently evaluating the impact of the standard on the Company’s consolidated financial statements.

| (3) | Acquisition

The cost of the Company’s interest in the Generation Facility included in the Acquisition (see note 1) was approximately $757.3 million, including $7.7 million of direct acquisition costs that were recorded as Property, plant, and equipment in the accompanying balance sheet.

(Continued)

12

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

In accordance with ASC 805, Business Combinations (ASC 805), the acquired assets and assumed liabilities were recorded at their fair values, which were determined by an independent third-party valuation using a discounted cash flow method. The acquisition was funded with $350 million in debt (see note 6) and $412.9 million of capital contributions.

In accordance with ASC 805, the acquisition was determined to be an asset acquisition. The following table summarizes the estimated fair value of assets acquired and liabilities assumed at the Acquisition Date (in thousands):

Assets Acquired |  |  |
Accounts receivable |  | $ | 212 |
Inventory |  |  | 52,247 |
Property and equipment |  |  | 706,260 |
Prepaid expenses |  |  | 2,869 |
Total assets acquired |  |  | 761,588 |
Liabilities Assumed |  |  |  |
Current liabilities |  |  | 4,242 |
Total liabilities assumed |  |  | 4,242 |
Net assets acquired |  | $ | 757,346 |

| (4) | Property, Plant and Equipment, Net

As of December 31, 2024 and 2023, Property, plant and equipment, net consisted of the following (in thousands):

|  | 2024 |  |  | 2023 |
Plant and equipment |  | $ | 728,206 |  |  | 727,190 |
Computer software and hardware |  |  | 1,914 |  |  | 999 |
Land |  |  | 2,700 |  |  | 2,700 |
Total property, plant and equipment |  |  | 732,820 |  |  | 730,889 |
Accumulated Depreciation |  |  | (38,918 | ) |  | (13,756 | )
Total property, plant and equipment, net |  | $ | 693,902 |  |  | 717,133 |

For the year ended December 31, 2024 and for the period ended December 31, 2023, Depreciation for Property, plant and equipment, net was $25.2 million and $ 13.8 million, respectively.

(Continued)

13

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (5) | Facility and Contract Commitments

| (a) | Energy Management Agreement

On May 4, 2023, the Company entered into an EMA with EDF to provide power, fuel and risk management services to the Generation Facilities. EDF primarily schedules and coordinates the sale of power and other ancillary services and the natural gas supply required to operate the Generation Facilities. EDF receives a fixed weekly management fee paid monthly. The contract with EDF expires on August 1, 2025.

For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company incurred costs under the EMAs of $1.2 million and $723 thousand, respectively, which are recorded under General and administrative expenses in the accompanying consolidated statements of operations.

| (b) | Operation and Maintenance Agreement

The Company has several operations and maintenance agreements (O&M agreements) to provide for the operation and maintenance of each generation facility. The Generation Facilities pay a fixed monthly operating fee, based on their respective agreement, annual incentive fee, and reimburse the operator for all labor costs, including payroll and related taxes, and other related costs. Monthly operating fees are subject to an annual adjustment based on specified indices.

For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company incurred fixed costs under the O&M agreements of $1.5 million and $766 thousand, respectively, which are recorded under General and administrative expenses, and incurred $18.1 million and $10.2 million, respectively, of other labor costs, which are recorded under Operating and maintenance expenses in the accompanying consolidated statements of operations.

| (c) | Gas Transportation and Storage Agreements

The Company has several firm gas transportation and storage agreements with various counterparties. These agreements call for the counterparties to deliver natural gas to a specific interconnection point, for either consumption or storage, specified in the respective agreement with certain Generation Facilities.

For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company incurred costs of $16.8 million and $9.2 million, respectively, under the gas transportation and storage agreements, which are reflected as a component of Fuel and transportation expenses on the accompanying consolidated statements of operations. As of December 31, 2024 and 2023, the Company has $2.6 million and $1.8 million, respectively, in LOCs outstanding related to the gas transportation and storage agreements.

| (d) | Electric Interconnection Agreement

The Company has an interconnection agreement with ERCOT to connect the Generation Facilities to the electrical power grid.

(Continued)

14

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (e) | Long Term Service Agreement

Johnson and Siemens Energy, Inc. (Siemens) are parties to a long term service agreement (Johnson LTSA) which provides outage procedures, program management services, and other maintenance services and parts for the covered units. The payments under the Johnson LTSA are deferred as prepaid expenses until the planned outage maintenance occurs, at which time, the cost of the planned maintenance outage will be expensed. The quarterly payments are expensed. The Johnson LTSA expires on December 31, 2040. The Company pays for services as performed. The Company also pays an annual fixed fee subject to escalation. For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company expensed $1.5 million and $904 thousand, respectively, related to the Johnson LTSA, recorded under Operating and maintenance expenses in the accompanying consolidated statements of operations.

Jack and GE International (GE) are parties to a long term service agreement (Jack LTSA) which provides certain maintenance services and parts for the covered units. The payments under the Jack LTSA are deferred as prepaid expenses until the planned outage maintenance occurs, at which time, the cost of the planned maintenance outage will be expensed. The quarterly payments are expensed. The Jack LTSA expires on December 31, 2033. The Company pays for services as performed. The Company also pays an annual fixed fee subject to escalation. For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company expensed $4.6 million and $2.7 million, respectively, related to the Jack LTSA.

The Company has various long-term contractual and commercial commitments of which the significant contracts have been discussed in this footnote. The following table summarizes such obligations with respect to the significant contractual and commercial commitments as of December 31, 2024 (in thousands):

|  | Less than |  |  | 2 to 3 |  |  | 4 to 5 |  |  | More than 5 |  |  |  |
Contractual Obligations |  | 1 year |  |  | years |  |  | years |  |  | years |  |  | Total |
Energy Management |  | 1,200 |  |  | 2,400 |  |  | 2,400 |  |  | 26,900 |  |  | 32,900 |
Operations & Maintenance |  | 1,010 |  |  | 2,109 |  |  | 2,233 |  |  | 36,046 |  |  | 41,398 |
Firm Fuel Transportation |  | 12,855 |  |  | 18,413 |  |  | 9,600 |  |  | 1,200 |  |  | 42,068 |
Long Term Service Agreement |  | 5,971 |  |  | 11,516 |  |  | 12,054 |  |  | 66,003 |  |  | 95,544 |
|  | 21,036 |  |  | 34,438 |  |  | 26,287 |  |  | 130,149 |  |  | 211,910 |

(Continued)

15

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (6) | Financing Arrangements

| (a) | Bridge Credit Agreement

On June 12, 2023 the Company executed a credit agreement with a group of lenders (the Bridge Credit Agreement). The Bridge Credit Agreement consisted of the following:

| a) | a $350 million term facility (Bridge Term Loan) with a maturity date of December 12, 2024; (i) used to pay a portion of the purchase price to Brazos in connection with the Acquisition, (ii) finance the ongoing working capital requirements, and (iii) pay the fees and expenses associated with the transaction;

| b) | a $50 million revolving facility (Bridge Revolving Facility) with a maturity date of December 12, 2024 used to (i) support obligations under certain agreements and (ii) satisfy certain collateral requirements with respect to maintenance and operations.

| c) | a $50 million Letter of Credit facility (Bridge LC Facility) with a maturity date of December 12, 2024.

The Bridge Credit Agreement permitted both Eurodollar and Base rate loans. The interest rate on Eurodollar loans was equal to the Secured Overnight Financing Rate (SOFR), or other benchmark replacement as determined, for the applicable term of the loan plus an applicable margin of 4.25%.

Under the terms of the Bridge Depositary Agreement, the receipt of revenues, debt service payments and the payments for certain categories of expenses were segregated into separate bank accounts. The Company had established the required bank accounts and had pledged all its rights, title and interest in the bank accounts as security for its payment obligations under the Bridge Credit Agreement.

All obligations of the Company under the Bridge Credit Agreement were guaranteed by Holdings, as outlined in the Guarantee and Collateral Agreement.

On June 29, 2023, the Bridge Credit Agreement was terminated in connection with the refinancing with a new group of lenders (see note 6(b)).

| (b) | Credit Agreement

On June 29, 2023 the Company executed a credit agreement with a group of lenders (the Credit Agreement). The Credit Agreement consists of the following:

| a) | a $390 million term facility (Term Loan) with a maturity date of June 29, 2028; (i) used to repay the Bridge Term Loan in full, (ii) to finance the ongoing working capital requirements of the Company, and (iii) pay the fees and expenses associated with the transaction;

| b) | a $35 million revolving facility (Revolving Facility) with a maturity date of June 29, 2028 used to (i) support obligations under certain agreements and (ii) satisfy certain collateral requirements with respect to maintenance and operations.

(Continued)

16

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| c) | a $45 million Letter of Credit facility (LC Facility) with a maturity date of June 29, 2028.

On March 26, 2024, the Credit Agreement was amended to increase the Term Loan to $400 million and reduce all applicable margin rates by .25%.

On October 3, 2024, the Company received a capital contribution of $389.1 million from Thunder. This capital contribution was specifically designated for and utilized in the repayment of the

Company’s outstanding Term Loan, at which time the Credit Agreement was terminated.

The Credit Agreement permits both Eurodollar and Base rate loans. The interest rate on Eurodollar loans is equal to the SOFR, or other benchmark replacement as determined, for the applicable term of the loan plus an applicable margin of 4.00% if in compliance with the Hedge Margin Requirement, 4.50% otherwise. Interest rates on Base rate loans are equal to the Prime rate plus an applicable margin of 3.00% if in compliance with the Hedge Margin Requirement, 3.50% otherwise. The interest rate in effect at December 31, 2023 for the Term Loan was 9.66%.

Under the terms of the Credit Agreement, quarterly scheduled principal payments of the original outstanding principal amount are required starting September 30, 2023 through March 31, 2028. Each quarter, if there are excess cash flows as described in the depositary agreement (Depository Agreement), 75% of the excess cash flows are applied to repay a portion of the outstanding debt, the remaining 25%, subject to the Company meeting certain distribution conditions, is distributed up to the Company’s member. For the year ended December 31, 2024, $5.5 million of excess cash flow generated from operations was applied to repay a portion of the outstanding principal on the Term Loan. For the period ended December 31, 2023, $139.0 million of excess cash flow generated from operations was applied to repay a portion of the outstanding principal on the Term Loan. This excess cash flow satisfies mandatory amortization requirements through maturity of Term Loan.

Under the terms of the Depositary Agreement, the receipt of revenues, debt service payments and the payments for certain categories of expenses are segregated into separate bank accounts. The Company has established the required bank accounts and has pledged all its rights, title and interest in the bank accounts as security for its payment obligations under the Credit Agreement.

All obligations of the Company under the Credit Agreement are guaranteed by Holdings, as outlined in the Guarantee and Collateral Agreement.

In accordance with the Credit Agreement, the Company is also required to maintain and have available a debt service reserve at least equal to the aggregate scheduled principal, interest, interest rate swaps settlement, and other scheduled debt service projected to be payable under the Credit Agreement for the six-month period occurring after the last day of each calendar quarter. As of December 31, 2023, a letter of credit (LOC) was issued in the amount of $13.7 million to satisfy this requirement.

Under the Credit Agreement, the Company is also required to maintain and have available a major maintenance reserve in the form of cash or LOCs of at least equal to the aggregate major maintenance expenses reasonably anticipated becoming due within the six month period, occurring after the last day of each calendar quarter. As of December 31, 2023, the Company issued a LOC in the amount of $13.1 million to satisfy this requirement.

(Continued)

17

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Under the terms of the Credit Agreement, the Company is required to hedge a minimum of 50% of the sum of the outstanding principal amount of the Term Loan. The minimum hedge requirement is satisfied through several interest rate derivatives as discussed in note 7.

As of December 31, 2023, the unamortized debt issuance and deferred financing costs totaled $ 12.2 million, of which the current portion was $2.8 million. The amortization of these costs is reflected as a component of Interest expense, net on the accompanying consolidated statement of operations. For the period ended December 31, 2023, amortization of such costs totaled $1.4 million.

As of December 31, 2023, there was $251 million outstanding under the Credit Agreement, and $30.2 million of LOCs outstanding under the Revolving Facility.

| (7) | Derivative Instruments and Hedging Activities

The Company enters into interest rate swaps to reduce its exposure to market risks from changing interest rates and commodity derivatives to reduce its exposure to market fluctuations of energy and natural gas prices. The Company is a party to the following derivative instruments:

| (a) | Interest Rate Swaps

In August 2023, the Company entered into interest rate swap agreements with an initial aggregate amortizing notional amount of $157.5 million, to effectively convert the floating interest rate on a portion of the Term Loan to a fixed interest rate of 4.524% for the quarterly periods, commencing on September 29, 2023, through June 30, 2026. The interest rate swaps were terminated in connection with the termination of the credit agreement (see note 6(b)).

As of December 31, 2023, the outstanding notional amount of the interest rate swaps totaled $156.4 million.

| (b) | Commodity Derivatives

The Company entered into various energy related derivatives to manage the commodity price risk associated with power revenues and fuel costs, including:

| a) | Power Swap Contracts which require payments to or from counterparties based upon the difference between the contract and the market price for a predetermined notional amount. These contracts are used to manage commodity price risk associated with changes in the ERCOT power prices.

| b) | Gas Swap Contracts which require payments to or from counterparties based upon the difference between the contract and the market price for a predetermined notional amount. These contracts are used to manage commodity price risk at multiple delivery points associated with changes in fuel prices.

(Continued)

18

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

The Company’s outstanding net position as of December 31, 2024 is summarized in the following table (in thousands):

|  |  | 2025 |  | 2026 |  | 2027 |  | 2028 |  | 2029 |
Power Swap Contracts (MWh) | Sell |  | 4,123 |  | 588 |  | 534 |  | 793 |  | 531 |
Gas Swap Contracts (MMBtu) | Buy |  | 26,805 |  | 4,080 |  | 3,705 |  | 5,505 |  | 3,690 |

Fair Value Measurements

The following tables set forth by level within the fair value hierarchy the assets and liabilities of the Company that were accounted for at fair value on a recurring basis as of December 31, 2024. These assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The three levels of the fair value hierarchy defined by ASC 820 are as follows:

| · | Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

| · | Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and agreement prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

| · | Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

(Continued)

19

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

The following table present assets and liabilities measured and recorded at fair value on the Company ’s consolidated balance sheets and their level within the fair value hierarchy as of December 31, 2024 and 2023 (in thousands):

| Fair value as of December 31, 2-024 |
|  | Level 1 |  | Level 2 |  |  | Level 3 |  | Total |
Commodity derivatives - assets | $ | - |  | 72,057 |  |  | - |  | 72,057 |
Commodity derivatives - liabilities |  | - |  | (50,406 | ) |  | - |  | (50,406 | )
Derivative instrument assets (net) | $ | - |  | 21,651 |  |  | - |  | 21,651 |

| Fair value as of December 31, 2-024 |
|  | Level 1 |  | Level 2 |  |  | Level 3 |  | Total |
Interest rate swaps - assets | $ | - |  | 306 |  |  | - |  | 306 |
Interest rate swaps - liabilities |  | - |  | (1,2025 | ) |  | - |  | (1,205 | )
Commodity derivatives - assets |  | - |  | 39,870 |  |  | - |  | 39,870 |
Commodity derivatives - liabilities |  | - |  | (66,996 | ) |  | - |  | (66,996 | )
Derivative instrument liabilities (net) | $ | - |  | (28,025 | ) |  | - |  | (28,025 | )

For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company did not have any transfers between Levels 1, 2, or 3.

The following tables present information concerning the impact of derivative instruments on the accompanying consolidated balance sheet and consolidated statement of operations.

Impact of Derivative Instruments on the Accompanying Consolidated Balance Sheet

The following table presents the classifications and fair value of derivative instruments on the accompanying consolidated balance sheets as of December 31, 2024 and 2023 (in thousands):

|  | 2024 |  |  | 2023 |
Derivatives not designated as hedging activities: |  |  |  |  |  |  |  |
Interest rate swaps | Assets from risk-management activities – short term |  | $ | - |  |  |  | 306 |
Interest rate swaps | Liabilities from risk-management activities – long term |  |  | - |  |  |  | (1,205 | )
Commodity derivatives | Assets from risk-management activities – short term |  |  | 44,254 |  |  |  | 37,074 |
Commodity derivatives | Assets from risk-management activities – long term |  |  | 27,803 |  |  |  | 2,796 |
Commodity derivatives | Liabilities from risk-management activities – short term |  |  | (35,611 | ) |  |  | (61,601 | )
Commodity derivatives | Liabilities from risk-management activities – long term |  |  | (14,795 | ) |  |  | (5,395 | )
Total derivatives not designated as hedging activities |  |  | 21,651 |  |  |  | (28,025 | )
Total derivatives, net asset (liability) |  | $ | 21,651 |  |  |  | (28,025 | )

(Continued)

20

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Impact of Derivative Instruments on the Accompanying Consolidated Statements of Operations

The following table presents the classification and amount of the gains and losses on derivative instruments in the accompanying consolidated statements of operations for the year ended December 31, 2024 and for the period ended December 31, 2023.

The impact of derivative instruments that have not been designated as hedging instruments (in thousands):

|  |  |  | Amount of gain (loss) in income on |
|  |  |  | derivatives for the years ended |
|  | Location of gain (loss) recognized in |  | December 31, |
Instrument |  | income on derivatives |  | 2024 |  |  | 2023 |
Derivatives not designated as hedges |  |  |  |  |  |  |  |  |
Commodity derivatives - power |  | Gain (loss) on risk management activities |  | $ | 240,317 |  |  | (137,047 | )
Commodity derivatives - gas |  | Loss on risk management activities |  |  | (10,635 | ) |  | (27,619 | )
Interest rate swap |  | Interest expense, net |  |  | 899 |  |  | (899 | )
Total net gain (loss) in income on derivatives |  |  |  | $ | 230,581 |  |  | (165,565 | )

For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company did not record any ineffectiveness on the interest rate swaps.

Offsetting of Derivative Assets and Liabilities

The Company has not elected to present derivative assets and liabilities on the balance sheet by offsetting amounts that could be netted pursuant to agreements with the Company’s counterparties.

The following tables present the gross and net derivative assets and liabilities and shows the effect if the offsetting amounts were shown net pursuant to agreements with the Company’s counterparties on the accompanying balance sheets for the year ended December 31, 2024 and for the period ended December 31, 2023 (in thousands):

|  | Gross amounts not |  |  |  |  |  |  |
|  | offset in financial |  |  | Offsetting amounts of |  |  | Net amounts after |
December 31, 2024 |  | statements |  |  | derivative instruments |  |  | offset |
Assets from risk management activities |  | $ | 72,057 |  |  | (48,099 | ) |  | 23,958 |
Liabilities from risk management activities |  |  | (50,406 | ) |  | 48,099 |  |  | (2,307 | )
|  | $ | 21,651 |  |  | - |  |  | 21,651 |

(Continued)

21

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

|  | Gross amounts not |  |  |  |  |  |  |
|  | offset in financial |  |  | Offsetting amounts of |  |  | Net amounts after |
December 31, 2023 |  | statements |  |  | derivative instruments |  |  | offset |
Assets from risk management activities |  | $ | 40,176 |  |  | (39,126 | ) |  | 1,050 |
Liabilities from risk management activities |  |  | (68,201 | ) |  | 39,126 |  |  | (29,075 | )
|  | $ | (28,025 | ) |  | - |  |  | (28,025 | )

| (8) | Related Party Transactions

The Company receives certain overhead administrative and management services from an affiliate. These costs are not allocated to the Company. For the year ended December 31, 2024 and for the period ended December 31, 2023, the Company made payments of $1.2 million and $614 thousand, respectively, to an affiliate for costs related to the operation and management of the Company, which are reflected under General and administrative expenses in the accompanying consolidated statements of operations.

Certain derivative instruments are entered into by an affiliate on behalf of the Company and have been recorded in the consolidated financial statements of the Company.

| (9) | Member’s Equity

Profits, losses, and distributions are allocated in accordance with the provisions of the Company’s Limited Liability Company agreement. During 2024, the Company made distributions in the amounts of $317.9 million, consisting of $182.3 million from the financing of the amendment to the Credit Agreement and $135.6 million in connection with the termination of the Credit Agreement (see note 6(b)). During 2023, the Company made distributions in the amounts of $106.6 million, consisting of $23.3 million from the financing of the Credit Agreement and $83.3 million from excess cash flows from operations. On October 3, 2024, the Company received a capital contribution of $389.1 million from Thunder (see note 6(b)).

| (10) | Commitments and Contingencies

The Company enters into contracts in the ordinary course of business that contain various representations, warranties, indemnifications, and guarantees. Some of the agreements contain indemnities that cover the other party’s negligence or limit the other party’s liability with respect to third-party claims, in which event the Company effectively indemnifies the other party. While there is the possibility of a loss related to such representations, warranties, indemnifications, and guarantees in the contracts and such loss could be significant, the Company considers the probability of loss to be remote.

The Company, from time to time, is a party to certain other claims arising in the ordinary course of business. The Company is of the opinion that final disposition of these claims will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

(Continued)

22

LINEBACKER POWER FUNDING, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

| (11) | Change in Accounting Principle

The Company changed its method of accounting for interest rate swap agreements to remove the application of the simplified hedge accounting alternative available for private companies. These consolidated financial statements have been revised to remove the application of hedge accounting resulting in changes in the fair value of the interest rate swaps now being recognized in earnings. This change has been applied retrospectively to all periods presented.

The effects of this change in accounting principle on the Company's consolidated financial statements as of and for the year ended December 31, 2023 are as follows:

|  | 2023 Previously |  |  | 2023 As |  |  | 2023 Effect of |
Financial Statement Line Item |  | Reported |  |  | Revised |  |  | Change |
Consolidated Statements of Operations |  |  |  |  |  |  |  |  |  |
Interest expense |  | $ | (26,916 | ) |  | (27,815 | ) |  | (899 | )
Net income |  | $ | 196,734 |  |  | 195,835 |  |  | (899 | )
Consolidated Statements of Comprehensive Income |  |  |  |  |  |  |  |  |  |
Change in unrealized loss on derivatives |  | $ | (899 | ) |  | N/A |  |  | N/A |
Comprehensive income |  | $ | 195,835 |  |  | N/A |  |  | N/A |
Consolidated Statement of Member’s Equity |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 196,734 |  |  | 195,835 |  |  | (899 | )
Other comprehensive loss |  | $ | (899 | ) |  | - |  |  | 899 |
Consolidated Statement of Cash Flows |  |  |  |  |  |  |  |  |  |
Net Income |  | $ | 196,734 |  |  | 195,835 |  |  | (899 | )
Risk Management Activities |  | $ | 27,126 |  |  | 28,025 |  |  | 899 |

| (12) | Subsequent Events

On June 9, 2025, the Company entered into a credit agreement (the New Credit Agreement) with a group of lenders. The New Credit Agreement consists of the following:

| a) | a $650 million term facility with a maturity date of June 9, 2028; used to (i) make a distribution to Equity Partners, (ii) finance the ongoing working capital requirements of the Company, and (iii) pay the fees and expenses associated with the transaction.

| b) | a $50 million revolving facility with a maturity date of June 9, 2028 used to (i) support obligations under certain agreements and (ii) satisfy certain collateral requirements with respect to maintenance and operations.

| c) | a $50 million Letter of Credit facility with a maturity date of June 9, 2028.

23