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Talen Energy Corporation Announces Transformative Recapitalization of Talen Energy Supply

Talen Energy Corporation (“TEC”) announced on May 10th 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.

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.

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