Talen Energy Supply Receives $1.3 Billion Equity Investment Commitment -- EnergyChoiceMatters.com

Talen Energy Supply Receives $1.3 Billion Equity Investment Commitment

June 3, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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Talen Energy Corporation ("TEC") announced that subsidiary Talen Energy Supply ("TES" or "the Company"), "has achieved two significant milestones outlined within its restructuring support agreement ("RSA"), which was initially announced on May 9."

TES and certain members of an ad hoc group of its unsecured noteholders (the "Backstop Parties") have successfully finalized a backstop commitment letter with respect to a common equity rights offering of $1.3 billion, with the option to upsize the rights offering to as much as $1.65 billion subject to certain adjustments at closing, as outlined within its RSA, TEC said

In addition, TES has received signatures on the RSA from the Company's unsecured noteholders holding over 71% of the principal amount of the Company's unsecured notes (the "Consenting Noteholders") satisfying the milestone required under the RSA to obtain support for the RSA from noteholders holding at least 2/3 of the Company's unsecured notes. As part of the RSA, the Consenting Noteholders have agreed to equitize more than $1.4 billion of the unsecured notes upon completion of the restructuring process. The $1.3 billion equity backstop, along with debt to be raised and cash available on the balance sheet at the completion of the restructuring process, will enable TES to eliminate $3.2 billion of debt and maximize value to stakeholders.

"The completion of these two key milestones represents another step forward as we strategically reposition TES for long-term value creation. The Backstop Parties' commitment will help facilitate both balance sheet repair and provide equity capital to drive the long-term success of the Talen-Cumulus platform and our people. These developments will allow us to create a strong capital structure suitable for today's elevated commodity market, position the Company for growth, and continue to build upon the many operational achievements we have made in recent years," said Chief Executive Officer Alejandro "Alex" Hernandez.

The Backstop Parties are expected to be the future equity owners of TES

As previously reported, on May 9, in order to effectuate the consensual restructuring contemplated by the RSA, TES and certain of its subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. Pursuant to the RSA, the Company plans to confirm its plan of reorganization approximately six months following the commencement of its restructuring, TEC said

Talen Energy Corporation, Cumulus Growth subsidiaries, LMBE-MC Holdco II LLC and its subsidiaries, and Talen Receivables Funding (TRF) are not part of the bankruptcy filing.

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