Talen Energy Supply Announces Commencement of Consent Solicitation for Its 8.625% Senior Secured Notes Due 2030

Rhea-AI Summary

Talen Energy (NASDAQ: TLN) announced that its subsidiary, Talen Energy Supply, is conducting a consent solicitation for holders of its 8.625% Senior Secured Notes due 2030. The company seeks to modify certain provisions in the Indenture to align with their credit agreement and waive the right to optionally redeem up to 10% of Notes before June 1, 2025.

The consent solicitation runs until January 13, 2025, at 5:00 p.m. (NYC time). Holders of Notes as of January 3, 2025, who provide valid consent will receive $6.25 per $1,000 principal amount of Notes. The amendments require consent from holders representing at least a majority of the aggregate principal amount. RBC Capital Markets acts as lead solicitation agent, with Citigroup Global Markets as solicitation agent.

Positive

• Offering cash payment of $6.25 per $1,000 principal amount to consenting noteholders
• Seeking alignment of indenture provisions with existing credit agreement for operational consistency

Negative

• Waiving early redemption rights for up to 10% of Notes before June 2025 at 103% of principal
• Requires majority noteholder approval for amendments to proceed

Insights

Fixed Income Analyst

This consent solicitation represents a strategic move by Talen Energy to align its 8.625% Senior Secured Notes due 2030 with their existing credit agreement terms. The proposed <money>$6.25</money> per <money>$1,000</money> principal consent fee is relatively modest, suggesting minimal impact on bondholders. The elimination of the <percent>10%</percent> optional redemption feature at <percent>103%</percent> before June 2025 actually benefits existing noteholders by removing early call risk. The tight timeline with expiration on January 13th indicates urgency in implementing these changes.

The requirement for majority consent from non-affiliated holders provides protection against potential conflicts of interest. The involvement of RBC Capital Markets as lead solicitation agent adds credibility to the process. These amendments appear primarily administrative in nature, aimed at streamlining debt documentation rather than signaling any fundamental change in credit quality.

Corporate Finance Specialist

The harmonization of debt covenants across different instruments typically streamlines financial management and reduces administrative complexity. For a company with a <money>$9.9 billion</money> market cap, this alignment could enhance operational flexibility and potentially facilitate future capital market activities. The waiver of the early redemption right suggests Talen is likely not planning near-term refinancing, which provides clarity on their debt management strategy.

Think of this as cleaning up the corporate debt closet - making sure all the financial clothes are folded the same way. While not transformative, these technical adjustments often precede more substantial corporate actions. The timing, early in the fiscal year, could indicate preparation for broader strategic initiatives in 2025.

HOUSTON, Jan. 06, 2025 (GLOBE NEWSWIRE) -- Talen Energy Corporation (NASDAQ: TLN) announced today that its wholly owned subsidiary, Talen Energy Supply, LLC (“Talen” or the “Company”), is soliciting consents (the “Consents”) from each registered holder of its 8.625% Senior Secured Notes due 2030 (the “Notes”) with respect to the adoption of certain proposed amendments (the “Proposed Amendments”) to the Indenture, dated as of May 12, 2023 (as amended, supplemented or otherwise modified prior to the date hereof, the “Indenture”), among Talen, the guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee (the “Consent Solicitation”).

Talen is seeking the Proposed Amendments in order to (i) modify certain provisions, including certain covenants and related definitions, in the Indenture in order to substantially conform to the corresponding provisions set forth in the Company’s credit agreement dated May 17, 2023 (as amended, supplemented or otherwise modified prior to the date hereof) and (ii) waive Talen's right to optionally redeem up to 10.0% of the Notes prior to June 1, 2025 at a price equal to 103.000% of the aggregate principal amount of Notes to be redeemed.

Holders of the Notes are referred to the consent solicitation statement of Talen, dated January 6, 2025 (the “Consent Solicitation Statement”), for the detailed terms and conditions of the Consent Solicitation. The Consent Solicitation was commenced today and will expire at 5:00 p.m. (New York City time) on January 13, 2025, unless extended by Talen (such date and time, as the same may be extended, is referred to as the “Expiration Time”). The Consent Solicitation is made solely by means of the Consent Solicitation Statement. The Consent Solicitation Statement contains important information that holders of Notes should carefully read before any decision is made with respect to the Consent Solicitation.

Only holders of the Notes as of 5:00 p.m. (New York City time) on January 3, 2025 (such date and time, including as such date and time may be changed by Talen, from time to time, the “Record Time”) are entitled to consent to the Proposed Amendments pursuant to the Consent Solicitation Statement. In order to implement the Proposed Amendments, a supplemental indenture to the Indenture will be entered into (the “Supplemental Indenture”). If the Supplemental Indenture is executed and the other terms and conditions set forth in the Consent Solicitation Statement are satisfied or waived, then holders of the Notes as of the Record Time will receive a cash payment equal to U.S. $6.25 per U.S. $1,000 principal amount of Notes for which such holder has delivered (and not validly revoked) consent letters and Consents to the Proposed Amendments have been validly delivered prior to the Expiration Time and not validly revoked by such holder. Holders will be permitted to revoke Consents at any time prior to the earlier of the execution and delivery of the Supplemental Indenture (which may occur prior to the Expiration Time) and the Expiration Time.

In order to execute and deliver the Supplemental Indenture, Talen must receive Consents from the holders as of the Record Time representing at least a majority of the aggregate principal amount of the Notes (not including any such Notes that are owned by Talen or any of its affiliates) (the “Requisite Consents”).

The Company’s obligation to accept, and pay for, Consents validly delivered and not revoked is conditioned upon satisfaction of certain conditions as described in the Consent Solicitation Statement, including the receipt of the Requisite Consents. The Company may, in its sole discretion, terminate the Consent Solicitation, allow the Consent Solicitation to lapse, extend the Consent Solicitation and continue soliciting Consents pursuant to the Consent Solicitation or otherwise amend the terms of the Consent Solicitation, including the waiver of any or all of the conditions set forth in the Consent Solicitation.

The Issuer has retained RBC Capital Markets, LLC as lead solicitation agent (the “Lead Solicitation Agent”) and Citigroup Global Markets as a solicitation agent.

Any questions or requests for assistance or for copies of the Consent Solicitation Statement or related documents may be directed to the Information Agent at its telephone numbers or e-mail address set forth below. A holder of Notes as of the Record Time also may contact the Lead Solicitation Agent, at its telephone numbers or e-mail address set forth below, or such holder’s broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Consent Solicitation.

The Lead Solicitation Agent for the Consent Solicitation is:

RBC Capital Markets, LLC
Toll-Free: (877) 381-2099
Collect: (212) 618-7843
E-mail: liability.management@rbccm.com

The Information Agent for the Consent Solicitation is:

D.F. King & Co., Inc.
Banks and Brokers call: (212) 269-5550 (collect)
All others call toll-free: (800) 769-4414
E-mail: TLNE@dfking.com

THIS PRESS RELEASE IS NEITHER AN OFFER TO SELL NOR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THIS ANNOUNCEMENT IS ALSO NOT A SOLICITATION OF CONSENTS TO ANY PROPOSED AMENDMENTS. NO RECOMMENDATION IS MADE AS TO WHETHER HOLDERS OF THE NOTES SHOULD CONSENT TO THE PROPOSED AMENDMENTS.

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.

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

What is the consent payment offered by TLN for its 2030 Notes holders?

TLN is offering a cash payment of $6.25 per $1,000 principal amount to noteholders who provide valid consent before January 13, 2025.

When does TLN's consent solicitation for 8.625% Senior Secured Notes expire?

The consent solicitation expires at 5:00 p.m. New York City time on January 13, 2025, unless extended by Talen.

What changes is TLN proposing to its 2030 Notes indenture?

TLN is proposing to modify certain provisions to align with their credit agreement and waive the right to optionally redeem up to 10% of Notes before June 1, 2025.

What percentage of TLN noteholders need to approve the proposed amendments?

TLN needs consent from holders representing at least a majority of the aggregate principal amount of the Notes, excluding Notes owned by Talen or its affiliates.