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(Reuters) – Talen Energy Supply LLC received court clearance on Wednesday to begin seeking votes from creditors on a bankruptcy restructuring plan that would convert $1.4 billion of debt into equity and raise up to 1 $.9 billion from the sale of new shares.
US bankruptcy judge Marvin Isgur in Houston said he would approve the company disclosure statement, which describes the reorganization plan, after revisions that will keep the door open to possible outbidding from outside buyers. Creditors will then vote to approve the plan.
Talen’s restructuring is supported by a group of its existing unsecured assets bondholders, including funds managed by Nuveen Asset Management LLC, Rubric Capital Management LP and Citadel. These bondholders agreed to convert $1.4 billion of existing debt into new equity and agreed to underwrite at least $1.55 billion of a planned $1.9 billion equity offering, according to the disclosure statement.
Talen, which filed for Chapter 11 protection in May, has 16 power generation facilities in the United States, with a mix of nuclear, natural gas, oil and coal facilities.
The company was pushed into bankruptcy in part by rising natural gas prices. Talen had used derivative contracts to limit its exposure to commodity price volatility risk, but the company ended up being forced to provide more cash collateral to peers as prices surged in 2021, documents show. judicial.
The case is In re Talen Energy Supply LLC, US Bankruptcy Court for the Southern District of Texas, No. 22-90054.
For Talen Energy Supply: Paul Genender and Gabriel Morgan from Weil, Gotshal & Manges; and Karl Stern and Patricia Tomasco of Quinn Emanuel Urquhart & Sullivan
For the Debentureholders Group: Patrick Nash, Christopher Koenig and Steven Serajeddini of Kirkland & Ellis
Talen Energy unit files for bankruptcy and seeks to reduce $4.5 billion in debt
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