TALEN ENERGY CORPORATION ("TEC") ANNOUNCES TRANSFORMATIVE RECAPITALIZATION OF TALEN ENERGY SUPPLY ("TES") TO STRENGTHEN BALANCE SHEET, FUND ESG AND DATA CENTER GROWTH INITIATIVES, AND MAXIMIZE VALUE TO STAKEHOLDERS

• $1.65 billion of equity capital provided by an ad hoc group of unsecured bondholders
• $1.76 billion debtor-in-possession financing provided by a consortium of banks led by Citigroup, Goldman Sachs, and RBC Capital Markets and an investor group of leading financial institutions
• $3.2 billion of debt eliminated through proposed recapitalization

HOUSTON, May 10, 2022 /PRNewswire/ -- Talen Energy Corporation ("TEC") today announced a major step in its corporate transformation with a recapitalization transaction that is expected to greatly strengthen the financial position of its Talen Energy Supply LLC ("TES" or the "Company") subsidiary. The transaction will include a new equity investment of up to $1.65 billion, which will accelerate TES' clean power transformation, advance carbon-free data center growth initiatives, and maximize value to stakeholders.

"Our Company is at an important inflection point to strategically reposition TES for long-term value creation. This transformation must be accompanied by balance sheet repair and equity capital to drive the long-term success of the Talen-Cumulus platform and our people. By restructuring TES' balance sheet through an in-court process, we will 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. "With leading carbon-free nuclear and baseload generation assets critical to grid resilience, and Cumulus' growing investment in energy transition growth projects, TEC's transformation will create significant opportunities for value creation. We want to thank our TES creditors and in particular the Consenting Noteholders—the future owners of TES—for their continued support of the Company and commitment to its future."

TES has executed a restructuring support agreement ("RSA") with an ad hoc group of TES' unsecured noteholders (the "Consenting Noteholders"). The Consenting Noteholders collectively hold approximately 62% of principal amount of TES' unsecured notes. Pursuant to the RSA, certain of the Consenting Noteholders have agreed to enter into a backstop commitment with respect to a common equity rights offering of up to $1.65 billion, subject to certain adjustments at closing. The Consenting Noteholders have also agreed to equitize more than $1.4 billion of their unsecured notes pursuant to the Plan. TES expects additional senior unsecured noteholders will join the RSA in the coming weeks. 

In addition, TES has secured $1.76 billion of debtor-in-possession financing (the "DIP Facilities") led by Citigroup, Goldman Sachs, and RBC Capital Markets. The DIP Facilities are comprised of a $1.0 billion term loan, a $300 million revolving credit facility, and $458 million letter of credit facility. The $1.0 billion term loan is being provided by an investor group of leading financial institutions.

In order to effectuate the consensual restructuring contemplated by the RSA, TES and certain of its subsidiaries have 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 this restructuring.

TEC, its Cumulus Growth subsidiary, and TES' LMBE subsidiaries are excluded from the in-court process. TEC's Cumulus Growth platform will continue executing on its business plan, constructing carbon-free hyperscale data centers and digital coin processing facilities, as well as renewable energy and battery storage development projects to meet rapidly growing consumer demand for clean, reliable energy. These projects, together with TES' generation assets, and complementary decarbonization projects, will advance the transformation of the overall business into a clean energy and digital infrastructure platform.

TES expects to continue its day-to-day business in the normal course and intends to move as quickly as possible through the process. TES has filed customary "first day" motions with the Court to ensure no interruption to employee wages, healthcare, and other benefits as well as the ability to conduct routine business with vendors and other business partners, including the resumption of hedging activities. TES' plants will continue to generate needed electricity for the markets they serve.

"TES provides reliable power and grid resiliency to the markets it serves and generates strong operating cash flows for our stakeholders," said John Chesser, Chief Financial Officer. "As we work to strengthen TES' financial position through this process, we will remain focused on taking care of our people and communities, investing in the reliability of our assets through decarbonization and other capital projects, continuing our strong operational and safety performance, and pursuing complementary growth projects which will bring demand to our generation facilities and drive future value creation. We are particularly grateful to our employees for their continued focus on executing our strategy and financing partners who have entrusted us with their capital."

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 protected].

TES has retained Weil Gotshal & Manges LLP as its legal advisor, Evercore as its investment banker and Alvarez & Marsal as its financial advisor for its restructuring. The Consenting Noteholders are represented by Kirkland & Ellis LLP and Rothschild & Co US Inc.

Cumulus Growth is represented by Ardea Partners and DH Capital as its investment bankers, and Gibson Dunn as legal counsel. TEC is represented by PJT Partners as financial advisors and Vinson & Elkins as legal counsel.

Talen Energy Corporation, through its subsidiary, TES, is one of the largest competitive power generation and infrastructure companies in North America. TES owns and/or controls approximately 13,000 Megawatts of generating capacity in wholesale U.S. power markets, principally in the Mid-Atlantic, Texas and Montana.

Through its non-filing subsidiary, Cumulus Growth, Talen Energy Corporation is developing a large-scale portfolio of renewable energy, battery storage, and digital infrastructure assets across its expansive footprint. For more information, visit https://www.talenenergy.com/esg-focused-future/.

SOURCE Talen Energy Corp.