Talen Energy Supply LLC – Debtors and Consenting Noteholders Amend Restructuring Support Agreement, Upsize Rights Offering Up to $1.9bn and Backstop Commitment to $1.55bn, Add No-Shop and Drop Diligence Conditions

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August 5, 2022 – The Debtors filed a First Amendment to their RSA (defined below) which attaches a redline of their Amended Restructuring Term Sheet at Exhibit B [Docket No. 1015].

On May 9, 2022, the Debtors entered into a restructuring support agreement (the “RSA”) with an ad hoc group of unsecured noteholders (the “Consenting Noteholders”). Pursuant to the RSA, the Debtors and the Consenting Noteholders agreed to support the transactions set forth in a term sheet attached to the RSA as Exhibit B (the “Restructuring Term Sheet”). On May 31, 2022, the Debtors entered into a commitment letter (the “Backstop Commitment Letter”) with certain of the Consenting Noteholders (the “Backstop Parties”) which provided for, among other things, the infusion of up to $1.65bn of new equity capital pursuant to a common equity rights offering (the “Rights Offering”) and a commitment by the Backstop Parties to backstop up to $1.3bn of such Rights Offering (such amount, the “Backstop Commitment”).

Since the execution of the Backstop Commitment Letter, however, the Debtors' capital needs have evolved and that almost $3.0bn infusion of capital will not be enough to fund the Debtors' revised business plan. As such, in recent months the Debtors and Consenting Noteholders have "engaged in meaningful and productive negotiations regarding amended terms of the RSA, the Restructuring Term Sheet and Backstop Commitment Letter in order to address increased funding needs arising out of the Debtors’ business plan."

Pursuant to those negotiations, on August 4, 2022, the Debtors and the Consenting Noteholders (i) executed an amendment to RSA (the “First Amendment to the RSA”) and (ii) agreed on the form of an amended and restated Backstop Commitment Letter (the “Amended and Restated BCL”) providing for meaningful concessions and additional benefits to the Debtors, including but not limited to, (i) an upsize of (a) the Rights Offering to up to $1.9bn and (b) the Backstop Commitment to up to $1.55bn, (ii) a “go-shop” sale process (the “Go-Shop”) to be launched following entry of the order approving the BCL Motion, (iii) removal of diligence conditions from the Amended Restructuring Term Sheet, and (iv) an amended confirmation timeline to account for the Go-Shop contemplated under the First Amendment to the RSA.

Key Amendments to Restructuring Term Sheet:

About the Debtors

According to the Debtors: “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."

Collectively, the Debtors consist of TES and all of its wholly-owned subsidiaries—except for LMBE-MC HoldCo I LLC and its three subsidiaries (“LMBE-MC”) and Talen Receivables Funding LLC (“TRF”)—totaling 72 entities formed under the laws of Delaware, Massachusetts, New Jersey, and Pennsylvania. The Company’s headquarters are located in The Woodlands, Texas.

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