Talen Energy Corporation Announces Closing of Incremental Term Loan B Financing and Related Repurchase of Common Stock

Rhea-AI Summary

Talen Energy (NASDAQ: TLN) has successfully closed its $850 million incremental Term Loan B credit facility and completed a significant stock repurchase. The company expanded the repurchase from $850 million to $1 billion by using additional cash on hand, buying back 4,893,507 shares at $204.35 per share from Rubric Capital Management LP at a 4% discount to the 15-day VWAP.

The company has now repurchased over 20% of its outstanding Common Stock in the past year, representing nearly 75% of its market capitalization since emerging from bankruptcy in May 2023. Following the repurchase, 45,961,910 shares remain outstanding, with approximately $1.08 billion capacity remaining in the share repurchase program through 2026.

Positive

• Secured $850M Term Loan B financing
• Completed $1B stock repurchase at 4% discount
• Repurchased over 20% of outstanding shares in past year
• $1.08B remaining in share repurchase program through 2026

Negative

• Increased debt load through $850M Term Loan B
• Reduced cash position by $150M for additional share repurchase

Insights

Financial Analyst

The $850 million Term Loan B financing and expanded $1 billion stock repurchase marks a significant financial restructuring for Talen Energy. The company's ability to upsize the financing from $600 million to $850 million demonstrates strong market confidence in their credit profile. The 4% discount to VWAP represents an efficient use of capital, while reducing share count by over 20% in the past year enhances earnings per share and signals management's confidence in the company's valuation.

The aggressive share buyback strategy, having repurchased nearly 75% of market cap since bankruptcy emergence, reflects a robust capital return policy. With $1.08 billion remaining in the buyback program through 2026, there's substantial runway for continued shareholder returns. The transaction's structure, combining debt financing with cash on hand, optimizes the capital structure while maintaining operational flexibility.

Corporate Finance Expert

This transaction showcases sophisticated capital markets execution, effectively leveraging the company's balance sheet to create shareholder value. The ability to secure $850 million in Term Loan B financing shortly after emerging from bankruptcy indicates strong institutional investor confidence. The strategic decision to increase the repurchase to $1 billion using cash reserves demonstrates prudent capital allocation, balancing leverage with shareholder returns.

The repurchase price of $204.35 per share and reduction to 45.96 million shares outstanding materially changes the company's capital structure. This move significantly concentrates ownership and suggests management sees the stock as undervalued. The substantial remaining buyback capacity provides a strong technical support for the stock price while maintaining financial flexibility for future growth initiatives.

HOUSTON, Dec. 13, 2024 (GLOBE NEWSWIRE) -- Talen Energy Corporation (“Talen” or the “Company”) (NASDAQ: TLN) announced today that the Company has closed on its previously announced $850 million incremental Term Loan B credit facility (the “Financing”) and the repurchase (the “Repurchase”) of an equivalent value of shares of Talen’s outstanding Talen common stock, par value $0.001 per share (“Common Stock”) from affiliates of Rubric Capital Management LP (collectively, “Rubric”).

The Company previously announced it would use the proceeds from the Financing to repurchase an equivalent value of shares of Common Stock held by Rubric. Upon the successful upsizing of the Financing from $600 million to $850 million, the Company determined it would use cash on hand to further increase the value of the Repurchase from $850 million to $1 billion in aggregate purchase price. Shares repurchased using the proceeds from the Financing are incremental to the Company’s previously announced share repurchase program. The additional shares repurchased with $150 million of cash on hand utilized capacity under the existing share repurchase program, leaving approximately $1.08 billion of remaining capacity available under the program through 2026.

“Demonstrating our commitment to shareholder returns, we have now repurchased more than 20% of our outstanding Common Stock in the past year and, through these repurchases, have bought back nearly 75% of our market capitalization as of our emergence from bankruptcy in May 2023,” said Mac McFarland, President and Chief Executive Officer. “We will continue to deliver value to all our stakeholders, including Rubric, which remains a valued and substantial owner of Talen stock.”

The Repurchase was priced at a 4% discount to a 15-day VWAP prior to the closing of the Repurchase, resulting in the repurchase of 4,893,507 total shares at a price of $204.35 per share. Following the Repurchase, 45,961,910 shares of the Company’s Common Stock remain outstanding.

This press release is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities, nor shall there be any sale of securities in any state or jurisdiction in which the offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Talen

Talen Energy (NASDAQ: TLN) is a leading independent power producer and energy infrastructure company dedicated to powering the future. We own and operate approximately 10.7 gigawatts of power infrastructure in the United States, including 2.2 gigawatts of nuclear power and a significant dispatchable fossil fleet. We produce and sell electricity, capacity, and ancillary services into wholesale U.S. power markets, with our generation fleet principally located in the Mid-Atlantic and Montana. Our team is committed to generating power safely and reliably, delivering the most value per megawatt produced and driving the energy transition. Talen is also powering the digital infrastructure revolution. We are well-positioned to capture this significant growth opportunity, as data centers serving artificial intelligence increasingly demand more reliable, clean power. Talen is headquartered in Houston, Texas. For more information, visit https://www.talenenergy.com/.

Investor Relations:

Ellen Liu
Senior Director, Investor Relations
InvestorRelations@talenenergy.com

Media:

Taryne Williams
Director, Corporate Communications
Taryne.Williams@talenenergy.com

Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this communication, or incorporated by reference into this communication, are forward-looking statements. Throughout this communication, we have attempted to identify forward-looking statements by using words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecasts,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” or other forms of these words or similar words or expressions or the negative thereof, although not all forward-looking statements contain these terms. Forward-looking statements address future events and conditions concerning, among other things, capital expenditures, earnings, litigation, regulatory matters, hedging, liquidity and capital resources and accounting matters. Forward-looking statements are subject to substantial risks and uncertainties that could cause our future business, financial condition, results of operations or performance to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this communication. All of our forward-looking statements include assumptions underlying or relating to such statements that may cause actual results to differ materially from expectations, and are subject to numerous factors that present considerable risks and uncertainties.

FAQ

How many shares did Talen Energy (TLN) repurchase in December 2023?

Talen Energy repurchased 4,893,507 shares at $204.35 per share, for a total value of $1 billion.

What is the remaining capacity in TLN's share repurchase program?

Talen Energy has approximately $1.08 billion remaining capacity in its share repurchase program through 2026.

How much did TLN's Term Loan B financing increase from initial announcement?

The Term Loan B financing increased from initially announced $600 million to $850 million.

What percentage of TLN's market cap has been repurchased since May 2023?

Talen Energy has repurchased nearly 75% of its market capitalization since emerging from bankruptcy in May 2023.

How many shares of TLN remain outstanding after the December 2023 repurchase?

Following the repurchase, 45,961,910 shares of Talen Energy's Common Stock remain outstanding.