Talen Energy Agrees to Sell Three Pennsylvania Power Plants

Talen Energy Corporation (NYSE: TLN) announced Thursday (10/8) that it has agreed to sell three Pennsylvaniapower plants with a total combined generating capacity of 996 megawatts for$1.51 billion in gross cash proceeds, subject to customary purchase priceadjustments. The sale of the Ironwood combined-cycle, natural gas-fired plant, and theseparate sale of the Holtwood and Wallenpaupack hydroelectric projects, arepart of a requirement to divest certain assets in specific regions of thePJM Interconnection, which include portions of eastern Pennsylvania, NewJersey and Maryland, to comply with a December 2014 Federal EnergyRegulatory Commission order approving the transactions that formed TalenEnergy. The 704-megawatt Ironwood plant is being sold to a subsidiary of TransCanadaCorporation (TSX, NYSE: TRP) (TransCanada) for a total purchase price of$654 million, subject to customary purchase price adjustments. In connectionwith the transaction, Talen Energy expects to repay approximately $42million of indebtedness, plus a customary pre-payment premium, associatedwith the facility. The Holtwood and Lake Wallenpaupack hydroelectric projects, with a combinedgenerating capacity of 292 megawatts, are being sold to a subsidiary ofBrookfield Renewable Energy Partners L.P. for $860 million, subject tocustomary purchase price adjustments. "We have made substantial improvements during our ownership of Ironwood, andappreciate the efforts of the dedicated employees who have operated andmaintained the plant very well. We are pleased that we will be conveyingownership to TransCanada, a large and diversified energy company withextensive plant operating experience," said Paul Farr, Talen EnergyPresident and Chief Executive Officer. "Brookfield Renewable Energy Partners is an experienced owner and operatorof hydroelectric projects and has extensive operations across North America,including the Safe Harbor hydroelectric project on the Susquehanna Riverjust upstream from Holtwood. We recognize and appreciate the dedicatedemployees who operate, maintain and support the hydro plants. They have donean outstanding job, and their skill and experience will prove invaluable toBrookfield in continuing the legacy of operating excellence and citizenshipat both facilities," Farr said. The transactions are expected to result in net proceeds of approximately$1.16 billion. In the near term, Talen Energy plans to use proceeds of thetransactions to retire pre-payable and maturing debt. Ironwood, Holtwood and Wallenpaupack would have been expected to contributeAdjusted EBITDA and Adjusted Free Cash Flow on a full-year 2016 basis ofapproximately $140 million and $80 million, respectively, and Net Income andCash from Operations on a full-year 2016 basis of approximately $56 millionand $101 million, respectively. Both transactions are expected to close in the first quarter of 2016,following the receipt of necessary regulatory approvals and other customaryclosing conditions. For the Ironwood transaction, Credit Suisse served as financial advisor toTalen Energy and Kirkland & Ellis LLP was transaction counsel. For the hydro transaction, RBC Capital Markets served as financial advisorto Talen Energy and Simpson Thacher & Bartlett LLP was transaction counsel. Talen Energy is one of the largest competitive energy and power generationcompanies in North America. Our diverse generating fleet operates inwell-developed, structured wholesale power markets. To learn more about us,visit www.talenenergy.com.