Talen gives early tender tally, gets consents to amend 2022, 2024 notes

By Marisa Wong

Morgantown, W.Va., May 21 – Talen Energy Supply, LLC announced the early results of its tender offers to purchase for cash up to an aggregate purchase price of $525 million, excluding interest, of its 4.6% senior notes due 2021, 9½% senior notes due 2022 and 6½% senior guaranteed notes due 2024.

As of 5 p.m. ET on May 20, the consent date, holders had tendered and the company has accepted for purchase $28,997,000 of the 2021 notes, $376,088,000 of the 2022 notes and $59,107,000 of the 2024 notes.

The tender amounts for the 2022 notes and 2024 notes represent 95.77% and 70.94% of the outstanding principal amounts, respectively, enough to amend the indentures governing those notes. The company said it has executed a supplemental indenture for each of those two series to effect the proposed changes.

As announced on May 7, the company is soliciting consents from holders to amend the indentures governing the notes to eliminate substantially all of the restrictive covenants, as well as some events of default and related provisions. Adoption of the proposed amendments requires the consents of holders of a majority in outstanding principal amount of the applicable notes.

Holders who tender their notes under the tender offer will also be providing consents with respect to the applicable amendments.

The tender offers and consent solicitations will expire at 11:59 p.m. ET on June 4.

The company is offering the following total considerations per $1,000 principal amount of existing notes, listed in order of acceptance priority level:

• $1,015 for the $143,753,000 of 4.6% senior notes due 2021;

• $1,115 for the $392,679,000 of 9½% senior notes due 2022; and

• $900 for the $83,317,000 of 6½% senior guaranteed notes due 2024.

The total consideration includes a consent payment of $50 per $1,000 principal amount of notes tendered by the consent date.

Holders tendering after the consent date will be eligible to receive only the tender offer consideration, which is the total consideration less the consent payment.

Holders will also receive accrued interest to but excluding the applicable settlement date. The company said it will pay for the early tendered notes on May 21.

Tenders may no longer be withdrawn, and related consents may no longer be revoked.

The company said it intends to fund the tender offers using proceeds from a concurrent offering of senior secured notes due 2027.

The tender offers and consent solicitations are conditioned on the financing transaction.

However, the offers are not contingent upon the tender of any minimum principal amount of securities, and the purchase of one series is not conditioned on the purchase of any other series.

Subject to the aggregate maximum tender amount and proration, all notes tendered at or before the consent date having a higher acceptance priority level will be accepted before any notes tendered at or before the consent date having a lower acceptance priority level, and all notes tendered after the consent date having a higher acceptance priority level will be accepted before any notes tendered after the consent date having a lower acceptance priority level.

However, if the tender offers are not fully subscribed as of the consent date, notes tendered at or before the consent date will be accepted for purchase in priority to notes tendered after the consent date, even if those notes tendered later have a higher acceptance priority level than those tendered earlier.

If there are sufficient remaining funds to purchase some, but not all, of the notes of any series, the amount purchased in that series may be subject to proration.

In the event of any proration of a series of notes, the consents delivered for that series will be null and void, and the required consent threshold will be considered not to have been met for that series.

Following the completion of the tender offers and consent solicitations, the company may purchase additional notes in the open market, in privately negotiated transactions, through tender or exchange offers or otherwise. The company may but is not obligated to redeem any notes that are not tendered and accepted in the offers.

Credit Suisse Securities (USA) LLC (212 325-2476 or 800 820-1653) is the dealer manager and solicitation agent. Global Bondholder Services Corp. (212 430-3774, 866 794-2200 or contact@gbsc-usa.com) is the tender agent.

The Woodlands, Tex.-based Talen is an energy and power generation company.

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