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Talen Energy raises $1.2bn to finance two gas-fired power plants in the United States

Talen Energy secures $1.2bn term financing and increases two credit facilities to support the acquisition of two natural gas power plants with a combined capacity of 2,881 MW.

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Talen Energy Supply, a wholly owned subsidiary of Talen Energy Corporation, has launched a $1.2bn term loan financing to support the acquisition of two major combined-cycle natural gas power generation facilities. The transaction includes a $200mn increase in its revolving credit facility, bringing it to $900mn, and a $200mn increase in its stand-alone letter of credit facility, now totalling $1.1bn.

A tailored financing strategy for targeted assets

The funds will be used to acquire the Freedom Energy Center, a 1,045 MW power plant located in Pennsylvania, and the Guernsey Power Station, a 1,836 MW facility based in Ohio. Both assets are being purchased from Caithness Energy affiliates under sale and purchase agreements signed on July 17. The financing structure includes delayed draw commitments, allowing flexibility in disbursements according to the timing of each transaction.

Contractual flexibility and extended maturities

The stand-alone letter of credit facility’s maturity has been extended to December 2027, beyond the original December 2026 deadline. Talen Energy has indicated that if one of the two acquisitions does not close before the contractual outside date of July 17, 2026 — extendable to January 17, 2027, under the relevant terms — the delayed draw component of the term loan will automatically terminate.

Acquisitions not conditioned upon each other

The two purchase transactions are independent, and their completion is not mutually conditioned. As a result, Talen Energy retains flexibility to finalise one acquisition even if the other faces delay or termination. This flexibility is supported by the two-tranche loan structure, which allows funds to be drawn according to the liquidity needs arising from each stage of the acquisitions.

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