Facing multiple market pressures, major independent power producer Talen Energy has put its generating assets in Chapter 11 bankruptcy reorganization. The Wall Street Journal headlined the story, “Talen Energy to Hand Power-Plant Business to Bondholders.”
Talen Energy Corp. subsidiary Talen Energy Supply of Woodlands, Texas, on Monday (May 9) filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas, covering some 12,384 MW of generating capacity, according to S&P Global. Parent Talen Energy Corp., controlled by Riverstone Holdings LLC, is not part of the filing.
Talen’s power portfolio consists of 18 units, with eight gas-fired plants totaling 4,845 MW capacity. Coal capacity is 4,634 MW, Nuclear at 2,245 (the two-unit Susquehanna station in eastern Pennsylvania), and 660 MW of oil-fired generation. The company says it is committed to getting rid of all its coal assets, and that its bankruptcy filing will facilitate that.
Talen, facing the unexpected runup in natural gas prices in 2021, according to Reuters, “aims to substantially reduce its $4.5 billion debt load and bring in $1.65 billion in new equity from certain bondholders.” Reuters added, “Talen Energy Supply had used derivative contracts to limit its exposure to commodity price volatility risks, but the company ended up being forced to provide more cash collateral to its counterparts as prices jumped in 2021, according to court papers.”
Some 60% of Talen’s creditors support the proposal Talen filed with the bankruptcy court. In a written statement, Talen said, “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.”
Court documents and other information are available at https://cases.ra.kroll.com/talenenergy.
–Kennedy Maize
Twitter (@kennedymaize)