Alejandro ("Alex") Hernandez Announces Departure Upon Closing of Restructuring Transactions
Mark "Mac" McFarland to Join Talen as Incoming CEO
HOUSTON, April 5, 2023 /PRNewswire/ -- Today, Talen Energy Corporation ("Talen" or "the Company") reported that CEO Alejandro "Alex" Hernandez announced his departure effective as of the date that Talen closes the strategic transactions contemplated by its chapter 11 plan of reorganization (the "Plan") and completes its restructuring. The Plan includes the infusion of new equity capital pursuant to a common equity rights offering of up to $1.55 billion (the "Equity Rights Offering"). The Equity Rights Offering is backstopped by various leading financial institutions that hold approximately $1.1 billion of Talen Energy Supply's ("TES") existing unsecured notes and will, in the aggregate, hold the substantial majority of the equity of Talen upon consummation of the Plan. 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.
Mr. Hernandez will be succeeded as CEO by Mark "Mac" McFarland on the closing of the transactions under the Plan, which is expected to occur in the second quarter of 2023 and is conditioned on the Company's receipt of remaining regulatory approvals, successful completion of the Equity Rights Offering, backstop funding and debt financing transactions, and the satisfaction of closing conditions under the Plan.
Mr. Hernandez has served as CEO since 2021, President and Director of the Company since 2019, and previously as CFO from 2016 through 2021. Following an orderly transition, Mr. McFarland will be responsible for overseeing all aspects of the Company's long-term strategy and overall performance, including leadership of the Company's wholesale power generation business.
"I thank Alex for his leadership in guiding Talen successfully through the recapitalization and restructuring process. We welcome Mac McFarland to Talen and look forward to a successful and orderly transition," commented incoming Talen Board Chairman Stephen Schaefer.
"I am proud of what our team has accomplished together since Talen's take-private in 2016," said Hernandez. "We transformed the legacy public company into a high-performing, value-driven organization with some of the best performing assets in the power industry. We have addressed the balance sheet through this recapitalization. We formed the Cumulus growth business, which is driving the convergence between digital infrastructure assets and carbon free energy. I am grateful for the opportunity to have served as Talen and Cumulus CEO and remain committed to ensuring a smooth transition for the benefit of the Company, our new CEO, Board of Directors, and new owners."
Carol Flaton and Gary Wojtaszek, independent directors of Talen's current Board of Directors, commented, "We thank Alex for his leadership since 2016 and for guiding the Company through the operating turnaround, transformation, and strategic equity recapitalization and restructuring process. The Company has been transformed in recent years and is well positioned for the future. We and Alex remain focused on maximizing value for all stakeholders through an orderly transition period while ensuring a successful close of the restructuring pursuant to the Plan."
Mr. McFarland is currently the President and Chief Executive Officer of California Resources Corporation and has served on the Board of Directors since October 2020. Mr. McFarland previously served on the Board of Directors of GenOn Energy, an independent power producer, until September 2022. He was formerly Executive Chairman and served as President and Chief Executive Officer from April 2017 to December 2018. He served as Chief Executive Officer of Luminant Holding Company LLC, a subsidiary of Energy Future Holdings Corporation and large independent power producer, from 2013 to 2016. From 2008 to 2013, he served as both Chief Commercial Officer of Luminant and Executive Vice President, Corporate Development and Strategy of Energy Future Holdings. Previously, Mr. McFarland served in various roles at Exelon Corporation for nearly a decade, including as Senior Vice President, Corporate Development. He has served on the Boards of Bruin E&P Partners, TerraForm Power, and Chaparral Energy. Mr. McFarland earned his Master of Business Administration from the University of Delaware and a Bachelor of Science degree in Civil Engineering (Environmental Concentration) from Virginia Polytechnic Institute and State University. He received his professional engineer license in 1995.
Talen has disclosed that Stephen Schaefer will be appointed as the Chairman of the reconstituted Board of Directors of the Company, replacing Ralph Alexander, who has served in this capacity since 2019. In addition to Mr. Schaefer and Mr. McFarland, following Talen's emergence, the following individuals will be appointed to the Company's reconstituted Board of Directors: Gizman Abbas, Anthony Horton, Karen Hyde, and Joseph Nigro.
Additionally, Talen announced that it has received regulatory approvals for the transactions contemplated by the Plan from the Federal Energy Regulatory Commission ("FERC") and the Nuclear Regulatory Commission ("NRC").
Additional Information
Talen's chapter 11 cases are pending before the Honorable Marvin Isgur and are jointly administered under Case No. 22-90054. As previously reported, on December 15, 2022, the U.S. Bankruptcy Court for the Southern District of Texas confirmed the Plan.
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 talenenergyinfo@ra.kroll.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.
About Talen
Talen is one of the largest competitive power generation and infrastructure companies in North America. Talen, through its subsidiary, TES, owns and/or controls approximately 12,400 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/.
Investor Contact
InvestorRelations@talenenergy.com
Media Contact
Taryne Williams
Director Corporate Communications
610-601-0327
Taryne.Williams@talenenergy.com
SOURCE Talen Energy Corp.
