HOUSTON, Aug. 30, 2022 /PRNewswire/ -- Talen Energy Supply, LLC ("TES" or the "Company") announced today that it has commenced a process to solicit bids and consider proposals for a sale of the Company (the "Go-Shop"). The Go-Shop process follows the approval of the Company's upsized $1.55 billion equity backstop commitment letter ("BCL") by the U.S. Bankruptcy Court of the Southern District of Texas. With the approval of the BCL, TES has secured the equity capital required to drive the long-term success of the Talen-Cumulus platform and complete the Company's plan of reorganization by year-end.
TES is conducting the Go-Shop process in parallel with the ongoing restructuring process to maximize value to TES should a superior sale proposal emerge. The Go-Shop process commenced yesterday, led by Evercore, TES' investment banker, and continues for a period of 92 days. As previously announced, the Restructuring Committee of the Company's Board of Managers has received an unsolicited proposal to purchase 100% of TES in an all-cash transaction.
The Go-Shop process and upsized BCL are part of an amended restructuring support agreement ("RSA") reached with an ad hoc group of TES' unsecured noteholders that holds over 80% of the principal amount of the Company's unsecured notes (the "Consenting Noteholders") and backstopped by certain of the Consenting Noteholders (the "Backstop Parties"), as announced by TES on August 10th. The amendments to the initial RSA and BCL provide for an additional $250 million of equity capital commitments ("Rights Offering"), as well as other provisions that will advance TES' transformative recapitalization process. The additional capital commitments raise the upper limit of the Rights Offering from $1.65 billion to $1.9 billion and increase the Backstop Parties' commitment from $1.3 billion to $1.55 billion.
TES Chief Executive Officer Alejandro "Alex" Hernandez said, "Today marks a significant step forward in advancing the TES restructuring and positioning the Talen-Cumulus platform for long-term value creation. TES remains committed to maximizing value for the benefit of all stakeholders, including our employees and the communities we serve. With the assistance of Evercore, we will conduct a sale process for TES and its attractive asset base as we advance our strategic recapitalization in parallel. TES is at the epicenter of key global trends, including benefiting from recent commodity market cyclical strength, while anchoring our long-term future to energy transition, decarbonization and digital infrastructure growth."
Chief Financial Officer John Chesser added, "We appreciate the willingness of the Consenting Noteholders and Backstop Parties to upsize their equity investment in TES and provide the Company with the opportunity to explore additional value-maximizing opportunities. The amendments to the RSA and BCL enable TES to continue making meaningful progress towards completion of our strategic recapitalization by the end of the year. We also look forward to reviewing proposals from the Go-Shop process in partnership with Evercore over the next 92 days."
On May 9, 2022, TES and certain of its affiliates filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. The cases are pending before the Honorable Marvin Isgur and are jointly administered under Case No. 22-90054. Talen Energy Corporation, Cumulus Growth subsidiaries, LMBE-MC Holdco II LLC and its subsidiaries, and Talen Receivables Funding are not part of the filing.
Court documents and other information are available on a website hosted by TES' claims agent, Kroll, at https://cases.ra.kroll.com/talenenergy. TES has also established a call center for questions at 844-721-3899 if calling from within the United States or Canada or 347-292-4080 if calling from outside these areas. Creditor inquiries can also be directed to email@example.com.
TES has retained Weil Gotshal & Manges LLP as its restructuring legal advisor, Freshfields Bruckhaus Deringer LLP as its M&A legal advisor, Evercore as its investment banker and Alvarez & Marsal as its restructuring financial advisor. The Consenting Noteholders are represented by Kirkland & Ellis LLP and Rothschild & Co US Inc.
TES, a subsidiary of Talen Energy Corporation ("TEC"), is one of the largest competitive power generation and infrastructure companies in North America. TES owns and/or controls approximately 12,500 megawatts of generating capacity in wholesale U.S. power markets, principally in the Mid-Atlantic, Texas and Montana.
TES and TEC subsidiary, Cumulus Growth, are developing a large-scale portfolio of renewable energy, battery storage, and digital infrastructure assets across TES' expansive footprint. For more information visit, https://www.talenenergy.com/esg-efforts/.
Director Corporate Communications
Evercore – Investment Banker Contacts
SOURCE Talen Energy Supply, LLC