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Case 21-30725 Document 346 Filed in TXSB on 03/31/21 Page 1 of 66 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: § § CASE NO. 21-30725 (DRJ) BRAZOS ELECTRIC POWER § COOPERATIVE, INC., § Chapter 11 § Debtor. 1 § DEBTOR’S APPLICATION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE RETENTION AND EMPLOYMENT OF COLLET & ASSOCIATES LLC AS INVESTMENT BANKER FOR THE DEBTOR AND DEBTOR IN POSSESSION, EFFECTIVE AS OF MARCH 6, 2021, (II) WAIVING CERTAIN TIME KEEPING REQUIREMENTS, AND (III) GRANTING RELATED RELIEF THIS APPLICATION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE APPLICATION, YOU SHOULD IMMEDIATELY CONTACT THE MOVI NG PARTY TO RESOLVE THE DI SPUTE. I F YOU AND THE MOVI NG PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTI ON SHOULD NOT BE GRANTED. I F YOU DO NOT FI LE A TI MELY RESPONSE, THE RELI EF MAY BE GRANTED WI THOUT FURTHER NOTI CE TO YOU. I F YOU OPPOSE THE APPLICATION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARI NG. UNLESS THE PARTI ES AGREE OTHERWI SE, THE COURT MAY CONSI DER EVI DENCE AT THE HEARING AND MAY DECIDE THE APPLICATION AT THE HEARI NG. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: Brazos Electric Power Cooperative, Inc. (the “Debtor”) files this Application for Entry of an Order (I) Authorizing the Retention and Employment of Collet & Associates LLC as Investment Banker for the Debtor and Debtor in Possession, Effective as of March 6, 2021, (II) Waiving Certain Time Keeping Requirements, and (III) Granting Related Relief (the 1 The Debtor in this chapter 11 case, along with the last four digits of its federal tax identification number is: Brazos Electric Power Cooperative, Inc. (4729). Additional information regarding this case may be obtained on the website of the Debtor’s claims and noticing agent at http://cases.stretto.com/Brazos. The Debtor’s address is 7616 Bagby Avenue, Waco, TX 76712. Case 21-30725 Document 346 Filed in TXSB on 03/31/21 Page 2 of 66 “Application”). In support of this Application, the Debtor submits the Declaration of William A. Collet in Support of Debtor’s Application for Entry of an Order (I) Authorizing the Retention and Employment of Collet & Associates LLC as Investment Banker for the Debtor and Debtor in Possession, Effective as of March 6, 2021, (II) Waiving Certain Time Keeping Requirements, and (III) Granting Related Relief (the “Collet Declaration”), attached hereto as Exhibit A and incorporated herein by reference. In further support of this Application, the Debtor respectfully states as follows: I. JURISDICTION, VENUE, AND AUTHORITY 1. This Court has jurisdiction over this Application pursuant to 28 U.S.C. § 1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b). The Debtor further confirms its consent to this Court’s entry of final orders or judgments on this Application if it is later determined that, in the absence of the consent of the parties, this Court does not have constitutional authority to enter final orders or judgments. 2. Venue of the Debtor’s case in this District is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 3. The bases for the relief requested herein are sections 327, 328, and 1107 of title 11 of the United States Code (the “Bankruptcy Code”), Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rules 2014-1 and 2016-1, and 9013-1 of the Bankruptcy Local Rules for the Southern District of Texas (the “Bankruptcy Local Rules”). II. FACTUAL BACKGROUND 4. On March 1, 2021 (the “Petition Date”), the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtor has continued in the possession of -2- Case 21-30725 Document 346 Filed in TXSB on 03/31/21 Page 3 of 66 its property and has continued to operate and manage its business as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 5. On March 15, 2021, the Office of the United States Trustee for the Southern District of Texas (the “U.S. Trustee”) formed the Committee in this chapter 11 case. See Dkt. No. 216. The Committee was reconstituted by the U.S. Trustee on March 24, 2021. See Dkt. No. 285. 6. Additional information about the Debtor’s business and affairs, capital structure, prepetition indebtedness, and the events leading up to the Petition Date can be found in the Declaration of Clifton Karnei in Support of Chapter 11 Petition and First Day Motions (the “First Day Declaration”) [Dkt. No. 3], which is incorporated herein by reference. III. RELIEF REQUESTED 7. By this Application, the Debtor seeks entry of an order, substantially in the form attached hereto (the “Order”), (i) authorizing and approving the employment and retention of Collet & Associates LLC (“Collet & Associates”) to serve as investment banker, effective as of March 6, 2021, in accordance with the terms and conditions set forth in that certain engagement letter (the “Engagement Letter”), attached hereto as Exhibit B; (ii) approving the terms of the indemnification, contribution, reimbursement, and related provisions set forth in an indemnification letter (the “Indemnification Letter”), attached hereto as Exhibit C; (iii) approving the modification of compliance with certain requirements regarding time entry detail; and (iv) granting related relief. IV. DEBTOR’S RETENTION OF COLLET & ASSOCIATES 8. In light of size and complexity of the Debtor’s business, nature of its assets, and the Debtor’s challenging industry, the Debtor requires a qualified and experienced investment -3- Case 21-30725 Document 346 Filed in TXSB on 03/31/21 Page 4 of 66 banker with the resources, capabilities, and experience of Collet & Associates to assist it in pursuing and consummating certain transactions that are integral to the Debtor’s successful restructuring and promptly exiting chapter 11. An investment banker like Collet & Associates fulfills a critical service that complements the services provided by the Debtor’s other professionals. 9. The Debtor selected Collet & Associates as its investment banker in this case based upon Collet & Associates’ intimate knowledge of the Debtor’s unique industry and significant familiarity and knowledge of the Debtor’s business. Collet & Associates has extensive experience in, and an excellent reputation for, providing financial advisory, valuation, restructuring and consulting services to electric cooperatives. Collet’s experience includes serving as advisor to Cloverland Electric Cooperative, National Rural Utilities Cooperative Finance Corporation, Golden Spread Electric Cooperative, Inc., Kaua‘i Island Utility Cooperative, National Renewables Cooperative Organization, Southern Minnesota Energy Cooperative, Valley Electric Association, Inc., and Mohave Electric Cooperative, Inc., among others. 10. Collet & Associates’ professionals have over three decades of combined experience in the energy and infrastructure arena, with a special focus on valuation, financing, acquisition, and divestiture transactions for electric cooperatives. For these reasons, the Debtor submits that retaining Collet & Associates is in the best interest of its estate and creditors. A. Services To Be Provided 11. Collet & Associates and the Debtor have entered into the Engagement Letter, subject to this Court’s approval, which governs the relationship between them, except to the -4- Case 21-30725 Document 346 Filed in TXSB on 03/31/21 Page 5 of 66 extent it conflicts with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, or the Court’s order granting the Application. 12. The Debtor negotiated the terms and conditions of the Engagement Letter with Collet & Associates at arm’s length and in good faith, and those terms and conditions reflect their mutual agreements as to the substantial efforts that will be required in this agreement. 13. Subject to further order of this Court, in consideration for the compensation contemplated by the Engagement Letter, Collet & Associates has provided and has agreed to a number of critical and valuable services (the “Services”) to the Debtor, including the following:2 a. performing analysis of, developing, or refining financial models with regard to reorganization, financial metrics, lender considerations, and the general fairness and reasonableness of restructuring terms customary in the industry; b. providing valuation services regarding some or all of the Brazos utility plant assets to support the collateral requirements of DIP or other financing objectives; c. providing reports or testimony summarizing the various techniques and resulting valuation results utilized in the electric utility industry; d. providing reports and determination of the appropriateness of the financial models within the bankruptcy reorganization context; e. assisting in the development and analysis of legal and financial strategies as requested to respond to other parties’ positions and / or testimony; f. assisting, as and when requested, with the negotiation of terms and agreements with parties to the various proceedings which may include Brazos’ member cooperatives, lenders, and other counterparties; g. developing a memorandum or similar report to potentially be used in the preparation of any testimony, if necessary; h. providing testimony as an expert witness, if necessary. 2 The listed services are a summary of the services Collet & As s ociates may provide to the Debtor. In the event of any inconsistency between the Engagement Letter and this summary, the Engagement Letter shall govern in all respects. Capitalized terms used in this summary but not otherwise defined herein have the meanings ascribed to them in the Engagement Letter. -5- Case 21-30725 Document 346 Filed in TXSB on 03/31/21 Page 6 of 66 14.

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