Talen Energy CorpTLN
Talen Energy Corp Debt Disclosure
13. Long-term Debt and Other Credit Facilities
TES is the borrower/issuer under all the Company’s debt and credit facilities. As of December 31, 2024 (Successor), TES was not in default under any of its debt or credit agreements.
Long-Term Debt
| Successor | ||||||||||||||||||||
Interest Rate (a) | December 31, 2024 | December 31, 2023 | ||||||||||||||||||
TLB-1 | 7.02 % | $ | 857 | $ | 866 | |||||||||||||||
| TLB-2 | 7.02 % | 850 | — | |||||||||||||||||
TLC (b) | N/A | — | 470 | |||||||||||||||||
| Secured Notes | 8.63 % | 1,200 | 1,200 | |||||||||||||||||
PEDFA 2009B Bonds | 5.25 % | 50 | 50 | |||||||||||||||||
PEDFA 2009C Bonds | 5.25 % | 81 | 81 | |||||||||||||||||
Cumulus Digital TLF (b) | N/A | — | 182 | |||||||||||||||||
| Total principal | 3,038 | 2,849 | ||||||||||||||||||
| Unamortized deferred financing costs and original issuance discounts | (34) | (29) | ||||||||||||||||||
| Total carrying value | 3,004 | 2,820 | ||||||||||||||||||
| Less: long-term debt, due within one year | 17 | 9 | ||||||||||||||||||
| Long-term debt | $ | 2,987 | $ | 2,811 | ||||||||||||||||
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(a)Computed interest rate as of December 31, 2024 (Successor).
(b)See “Recent Transactions” below for additional information on extinguishments of indebtedness.
Long-term debt maturities as of December 31, 2024 (Successor) were:
| 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | ||||||||||||||||||||||||||||||||||||||
| Principal debt maturities | $ | 17 | $ | 17 | $ | 17 | $ | 17 | $ | 17 | $ | 2,952 | $ | 3,038 | ||||||||||||||||||||||||||||||
Revolving Credit and Other Facilities
| Successor | ||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Maturity | Committed Capacity (a) | Direct Cash Borrowings | LCs Issued | Unused Capacity | ||||||||||||||||||||||||||||
RCF | December 2029 | $ | 700 | $ | — | $ | — | $ | 700 | |||||||||||||||||||||||
| LCF | December 2026 | 900 | — | 374 | 526 | |||||||||||||||||||||||||||
| Total | $ | 1,600 | $ | — | $ | 374 | $ | 1,226 | ||||||||||||||||||||||||
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(a)RCF committed capacity can be used for direct cash borrowings and (or) LCs.
In December 2024, the TLC LCF and Bilateral LCF were terminated. However, as certain LCs remained outstanding under these facilities pending their transition to the LCF, corresponding backstop LCs were issued under the LCF. As of December 31, 2024 (Successor), the amount of such backstop LCs issued under the LCF were $297 million.
As of December 31, 2023 (Successor): (i) the aggregate LCs issued under the TLC LCF and Bilateral LCF were $478 million; and (ii) LCs issued under TLC LCF were collateralized by $472 million of cash presented as “Restricted cash and cash equivalents” on the Consolidated Balance Sheets. The restricted cash was released in connection with the TLC LCF termination.
See “Recent Transactions–Credit Facilities” below for additional information on LC facility terminations.
Long-Term Debt, Revolving Credit, and Other Facilities
Certain key terms of our indebtedness include:
| Secured Notes | TLB-1 | TLB-2 | RCF | LCF | PEDFA Bonds | |||||||||||||||
| Maturity: | June 2030 | May 2030 | December 2031 | December 2029 | December 2026 | 2009B: December 2038 2009C: December 2037 | ||||||||||||||
| Index: | None | Term SOFR | Term SOFR | Term SOFR | None | None | ||||||||||||||
| Rate, Applicable Margin, and Amortization: | 8.625% per annum fixed rate No applicable margin No amortization | 2.50% per annum applicable margin; leverage-based step-downs to 2.25% and 2.00% Amortization 1.00% per annum; paid quarterly | Same as TLB-1 | Cash borrowings: 2.00% per annum applicable margin; leverage-based step-downs to 1.75% and 1.50% LCs: LC fee equal to applicable margin above + fronting fee of 0.125% Unused commitments: 0.375%; leverage-based step-down to 0.25% No amortization | LCs: Same as RCF Unused commitments: Same as RCF | 5.25% per annum fixed rate No applicable margin No amortization | ||||||||||||||
| Prepayment Penalty: | Prior to June 1, 2026: Redeemable at par plus a customary “make-whole” premium. 40% redeemable from the proceeds of certain equity offerings at 108.625%. 10% redeemable at 103% from June 1, 2025 – May 31, 2026 On or after June 1 of the following years: 2026: 104.313%; 2027: 102.156%; 2028 and after: 100% | 1.00% to the extent prepaid prior to June 20, 2025 in connection with a repricing transaction | 1.00% to the extent prepaid prior to June 13, 2025 in connection with a repricing transaction | None | None | Prior to June 1, 2026: Par plus a customary “make-whole” premium On or after June 1, 2026: Par | ||||||||||||||
Credit Agreement. The Credit Agreement governs the RCF, TLB-1, TLB-2, and LCF. The Credit Agreement contains customary negative covenants including but not limited to limitations on incurrence of liens and additional indebtedness, making investments, payment of dividends, and asset sales. The Credit Agreement also contains customary affirmative covenants. Solely with respect to the RCF and LCF, and solely during a compliance period (i.e., when RCF cash borrowings exceed 50% of revolving commitments), the Credit Agreement requires TES’s consolidated first lien net leverage ratio not to exceed 4.25x. This financial covenant does not apply to the TLB-1 or TLB-2. The Credit Agreement also contains customary representations and warranties, events of default, and remedies (including acceleration of amounts due and (or) termination of commitments).
Secured Notes. Interest on the Secured Notes is payable semi-annually on June 1 and December 1 of each year and at maturity. The Secured Notes are subject to customary negative covenants, including but not limited to certain limitations on incurrence of liens and additional indebtedness, making investments, payment of dividends, and transactions involving the Susquehanna assets, but do not contain any financial covenants. The Secured Notes also contain customary affirmative covenants, events of default, and remedies (including acceleration).
PEDFA Bonds. The PEDFA 2009B and 2009C Bonds were issued by the PEDFA on behalf of TES, and TES then received the proceeds under corresponding back-to-back exempt facilities loan agreements with the PEDFA. Corresponding TES unsecured promissory notes for each series contain the applicable principal, interest, and prepayment provisions. The PEDFA Bonds bear interest at a fixed rate until the end of the current term rate period on June 1, 2027, at which time they are subject to mandatory remarketing during which TES may elect a different interest rate mode. Aside from principal amount and final maturity, the terms of the PEDFA 2009B Bonds and 2009C Bonds are substantially identical. The PEDFA Bonds are subject to customary affirmative and negative covenants appropriate for such tax-exempt facilities, including but not limited to limitations on incurrence of liens (but not unsecured indebtedness), and asset sales. The PEDFA Bonds are also subject customary events of default and remedies (including acceleration).
Secured ISDAs. Talen Energy Marketing is party to certain Secured ISDAs, under which TES and the Subsidiary Guarantors provide the applicable counterparties with a first priority lien on and security interest (which ranks pari passu with the liens securing the Credit Facilities and the Secured Notes) in certain assets in lieu of posting collateral in the form of cash equivalents or LCs. The secured obligations under the Secured ISDAs were $17 million as of December 31, 2024 (Successor).
Security Interests, Guarantees, and Cross-Defaults
Secured Obligations. The obligations under the Credit Facilities, Secured Notes, and Secured ISDAs are secured by a first-priority lien on and security interest in substantially all of the assets of TES and the Subsidiary Guarantors. The Subsidiary Guarantors guarantee TES’s obligations under the Credit Facilities and the Secured Notes. TES and the Subsidiary Guarantors guarantee Talen Energy Marketing’s obligations under the Secured ISDAs. The amount for which TES and the Subsidiary Guarantors may be liable is equal to the amount of obligations outstanding under such agreements and may also include unpaid interest, premiums, penalties, and (or) other fees and expenses. An event of default under the Credit Facilities, Secured Notes, or Secured ISDAs, if not cured or waived, may result in a cross acceleration of amounts due and (or) cross termination across all these agreements.
Unsecured Obligations. The PEDFA Bonds are senior unsecured obligations of TES that are effectively subordinated to TES’s secured obligations, including the Credit Facilities, Secured Notes, and Secured ISDAs, to the extent of the value of the assets securing those obligations. Certain of the Subsidiary Guarantors also guarantee TES’s obligations under the PEDFA Bonds. These guarantees are the general unsecured obligations of such Subsidiary Guarantors, rank equally with all of their other senior unsecured indebtedness, and are effectively subordinated to their secured obligations, including guarantees under the Credit Facilities, Secured Notes, and Secured ISDAs, to the extent of the value of the assets securing those obligations.
Recent Transactions
Secured Notes. In January 2025, the indenture governing the Secured Notes was amended to, among other things: (i) modify certain provisions, including certain covenants and related definitions, in order to substantially conform to the corresponding amendments to the Credit Agreement obtained in the December 2024 transactions discussed below; and (ii) waive TES’s right to optionally redeem up to 10% of the Secured Notes at a price of 103% of par prior to June 1, 2025.
Credit Facilities. In December 2024, TES completed several refinancing transactions:
•TLB-2: Issued a new $850 million TLB-2, the proceeds of which were used, together with cash on hand, to repurchase shares of our outstanding common stock from Rubric. See Note 18 for additional information on repurchases of common stock.
•TLB-1: Repriced the existing $857 million TLB-1 to reduce the current interest rate margin by 100 basis points (to SOFR plus 250 basis points, with further leverage-based step downs available) to align pricing with the new TLB-2.
•RCF: Repriced the existing $700 million RCF to reduce the current interest rate margin by 100 basis points (to SOFR plus 200 basis points, with further leverage-based step downs available), increased revolving LC capacity from $475 million to $700 million, and extended the maturity from May 2028 to December 2029.
•LCF: Issued a new $900 million standalone secured LCF to transition LCs from the TLC LCF and Bilateral LCF. LCs issued under the LCF are subject to an LC fee of 2.00% per annum (with leverage-based step downs available) plus a fronting fee of 0.125% per annum.
•TLC/TLC LCF: Repaid in full the $470 million TLC utilizing the restricted cash collateralizing the TLC LCF, and terminated the TLC and associated $470 million TLC LCF.
•Bilateral LCF: Terminated the $75 million Bilateral LCF.
In connection with these transactions, the requisite lenders under the Credit Agreement also consented to certain amendments, among other things, increasing the Company’s flexibility for restricted payments, investments, and dispositions under the Credit Facilities. As a result of these transactions, the Company derecognized the carrying value of the extinguished TLC and presents the carrying value of the newly issued TLB-2 on the Consolidated Balance Sheet.
In May 2024, TES repriced the TLB-1 and TLC, and the lenders, as part of these debt modifications, agreed to waive mandatory prepayment obligations related to the ERCOT Sale. See Note 20 for additional information on the ERCOT Sale. Additionally, the lenders under the TLB-1, TLC, and RCF consented to certain other covenant improvements.
PEDFA Bonds. In June 2024, TES completed the remarketing of its outstanding $50 million in PEDFA 2009B Bonds and $81 million in PEDFA 2009C Bonds. As part of the remarketing, (i) the PEDFA Bonds were transitioned from a variable daily interest rate to a fixed term rate of 5.25% until June 1, 2027, at which time they are subject to mandatory remarketing during which TES may elect a different interest rate mode; (ii) $133 million of TES LCs that had previously supported the PEDFA Bonds were terminated; (iii) mandatory repurchase and optional redemption provisions were modified; and (iv) certain covenants relating to changes of control, incurrence of liens, and asset sales were amended and became operative. The remarketing transaction is excluded from the Consolidated Statements of Cash Flows as a non-cash item.
Cumulus Digital TLF Repayment. In connection with the AWS Data Campus Sale, the Cumulus Digital TLF was paid in full in March 2024, together with all accrued interest and other outstanding amounts, and related liens, guarantees, and LCs were released and terminated. See Note 20 for additional information on the AWS Data Campus Sale.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 28, 2025 | Showing above |
| 2015 | Feb 29, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.