Talen Energy to price $825 million seven-year notes on Thursday; initial talk 8¾%-9%

By Paul A. Harris

Portland, Ore., April 25 – Talen Energy Supply, LLC expects to price an $825 million offering of seven-year senior secured notes (Ba3/BB/BB+) on Thursday afternoon, according to market sources.

The deal, which was scheduled to kick off on a Tuesday morning conference call with investors, is in the market with initial guidance of 8¾% to 9%.

The Rule 144A and Regulation S for life notes become callable after three years at par plus 50% of the coupon. They feature a 40% equity clawback at par plus the full coupon during the non-call period and have a 101% poison put.

Citigroup Global Markets Inc. is the left physical bookrunner. BMO Capital Markets Corp., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, RBC Capital Markets LLC, Credit Suisse Securities (USA) LLC, MUFG Securities Americas Inc. and Morgan Stanley & Co. LLC are the joint physical bookrunners.

The Allentown, Pa.-based independent power producer plans to use the proceeds to fund the refinancing and termination of debt under the existing secured financing agreements, to add cash to the balance sheet of the company and its subsidiaries, and for general corporate purposes.

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