Talen Recapitalization
In May 2022, Talen Energy Supply, LLC (“TES”) and certain of its subsidiaries1 voluntarily filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) as part of a transformative recapitalization. The recapitalization includes a consensual restructuring supported by a majority of its creditors as contemplated in a restructuring support agreement (“RSA”).
Consistent with the RSA, TES filed a chapter 11 plan of reorganization (the “Plan”) with the Bankruptcy Court in September 2022. As contemplated by the RSA and the Plan, TES’ parent company Talen Energy Corporation (“TEC” and, together with TES, the “Company” or “Talen”) also filed for chapter 11 protection in December 2022 to join and effectuate the Plan.
On December 15, 2022, the Company announced that the Plan had been confirmed by the Bankruptcy Court. This milestone paves the way for the Company to complete its strategic recapitalization as outlined in the Plan following regulatory approvals, which are expected in the first half of 2023.
The Plan received strong support from, and was approved by, the Bankruptcy Court and the required creditors across the Company's capital structure. As contemplated in the RSA, the Plan includes the infusion of $1.55 billion of new equity capital2 pursuant to a common equity rights offering (the "Equity Rights Offering"), which is backstopped by various leading financial institutions that hold approximately $1.1 billion of TES' existing unsecured notes, along with $1.5 billion of funded exit debt financing3 and approximately $150 million cash on balance sheet. The participants in the Equity Rights Offering will become the new owners of the Company. The transactions contemplated by the Plan, including the investment under the Equity Rights Offering, will reduce TES’ pre-petition funded debt by approximately $3 billion, provide for full repayment of TES' pre-petition first lien funded debt, equitize, on a consensual basis, all of TES' pre-petition unsecured notes, and include revolving credit and letter of credit facilities to meet the Company’s post-emergence liquidity needs. The Plan confirmation, along with aforementioned transactions, demonstrate the underlying strength of company’s assets, operations, strategies, and associates.
Talen Continues to Operate in Ordinary Course
Since the commencement of the bankruptcy case, the Company, with the approval of the Bankruptcy Court, has continued to operate its day-to-day business in the normal course and expects to continue doing so pending consummation of the Plan. TES’ plants will continue to generate needed electricity for the markets they serve.
Additionally, through its Cumulus subsidiaries, which are not included in the Company’s chapter 11 cases, Talen is continuing development of its portfolio of renewable energy, battery storage, and digital infrastructure assets across the Company’s expansive footprint. For more information visit, https://www.talenenergy.com/about-talen/
Additional Information
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. Talen 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 protected].
For quick access to key company overview materials that have been posted to the docket, May 2022 Cleansing Materials are available at this link, August 2022 Cleansing Materials are available at this link and the September 7th Business Plan Overview is available at this link.
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1Talen 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.
2The rights offering is backstopped by certain unsecured creditors. Talen has the ability to upsize the equity rights offering by an additional $350mm subject to certain conditions.
3Assuming a 6/30/23 exit date; minimum funded debt balance to vary based on exit dates.