Confirmation positions Talen to complete strategic recapitalization in first half of 2023
HOUSTON, Dec. 15, 2022 /PRNewswire/ -- Talen Energy Corporation ("TEC") and Talen Energy Supply ("TES" and, together with TEC, the "Company", "Talen Energy" or "Talen") announced today that the Company's chapter 11 plan of reorganization (the "Plan") has been confirmed by the U.S. Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). This milestone paves the way for the Company to complete its strategic recapitalization, as outlined in the Plan, and the consensual restructuring contemplated in the restructuring support agreement ("RSA") following receipt of regulatory approvals, which are expected in the first half of 2023.
The Plan received strong support from, and was approved by, the overwhelming majority of creditors across the Company's capital structure. As contemplated in the amended RSA, the Plan includes the infusion of up to $1.9 billion of new equity capital pursuant to a common equity rights offering (the "Equity Rights Offering"), $1.55 billion of which is backstopped by various leading financial institutions that hold approximately $1.1 billion of TES' existing unsecured notes and will become the new owners of TEC. The Plan and Equity Rights Offering investment achieves an approximately $3 billion reduction in TES' debt, provides for full repayment of TES' first lien funded debt, and the consensual equitization of all of TES' existing unsecured notes.
Chief Executive Officer Alejandro "Alex" Hernandez said, "We are pleased to have achieved this significant milestone in the Company's recapitalization expeditiously in a matter of only 219 days, driven by our team's tireless efforts, broad support for our Plan by the Company's key stakeholders, and a $1.55 billion equity commitment from our new ownership group. Our collective efforts have placed Talen 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. I am also proud of our team for delivering the strongest safety and operational results in recent history through this process."
Chief Financial Officer John Chesser added, "Our strategic recapitalization creates a strong capital structure suitable for today's elevated commodity market and positions the Company for growth. In addition to addressing the legacy balance sheet, we also successfully advanced several growth initiatives including our Montour gas conversion project, made significant progress on Phase 1 of our flagship Cumulus data center campus, which is expected to be commercially available early next year, and furthered the development of our 2.7-Gigawatt renewable energy project portfolio. Together we have positioned the Talen platform and our people for value creation in the years ahead."
In May 2022, TES and certain of its affiliates filed for chapter 11 protection in the Bankruptcy Court. As contemplated by the RSA, TEC filed for chapter 11 protection in December 2022 to join and effectuate the Plan. The cases are pending before the Honorable Marvin Isgur and are jointly administered under Case No. 22-90054. Talen subsidiaries that are not included in the bankruptcy filing include its Cumulus subsidiaries, LMBE-MC Holdco II LLC and its subsidiaries, and Talen Receivables Funding.
Court documents and other information are available on a website hosted by the Company's claims agent, Kroll, at https://cases.ra.kroll.com/talenenergy. The Company 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.
The Company has retained Weil Gotshal & Manges LLP as its restructuring legal advisor, Evercore as its investment banker, and Alvarez & Marsal as its restructuring financial advisor. The ad hoc group of unsecured noteholders has retained Kirkland & Ellis LLP as legal advisor and Rothschild & Co. as its investment banker and financial advisor.
Talen is one of the largest competitive power generation and infrastructure companies in North America. Talen, through 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.
Additionally, through its Cumulus subsidiaries, Talen is 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/about-talen/.
Director Corporate Communications
SOURCE Talen Energy