Talen Energy files 10-Q: quarterly report (10-Q)

Recent Developments Financing Transactions

Secured Notes. In April 2026, using a portion of the net proceeds of the Unsecured Notes due 2031 and 2033, TES redeemed in full, the Company’s outstanding Secured Notes in aggregate principal amount of $1.2 billion.

Credit Facility Transactions. In April 2026, TES also undertook the following financing transactions that are expected to become effective concurrently with the closing of the Cornerstone Acquisition: (i) received commitments to increase its existing RCF (including its revolving LC capacity) from $900 million to $1.35 billion; and (ii) received commitments to upsize its existing $1.1 billion LCF to $1.5 billion and extend the maturity from December 2027 to December 2029.

See Notes 10 and 17 to the Interim Financial Statements for additional information on the financing transactions and the Cornerstone Acquisition.

Common Stock Repurchases

During the three months ended March 31, 2026, we repurchased and retired 300,000 shares of TEC’s outstanding common stock under the SRP. The aggregate purchase price, including transaction fees and excise tax, was $101 million at a weighted average price of $336.42 per share. As of March 31, 2026, the remaining capacity under the SRP is $1.9 billion through 2028. See Note 15 to the Interim Financial Statements for additional information on the SRP.

Cornerstone Acquisition

In January 2026, we entered into the Cornerstone Merger Agreement to acquire from affiliates of Energy Capital Partners (“ECP”) the 875 MW Waterford Energy Center and 456 MW Darby Generating Station, both located in Ohio, and the 1,120 MW Lawrenceburg Power Plant located in Indiana, for an aggregate purchase price of $3.45 billion, consisting of $2.55 billion in cash, subject to working capital and other customary adjustments, and 2,400,000 shares of TEC common stock, valued at approximately $900 million at the time of the entry into the Cornerstone Merger Agreement. The final value of the equity portion of the transaction price will be based on the value of TEC common stock at the close of the transaction. The cash portion of the purchase price will be funded from the proceeds of the Unsecured Notes due 2031 and 2033 which were issued in April 2026. The stock consideration will be subject to lock-ups of 90 days on 50% of the stock consideration and 180 days on the remaining stock consideration.

The addition of these assets to Talen’s portfolio will increase generation capacity by approximately 2.5 GW of natural gas generation, substantially expanding Talen’s presence in the western PJM market and adding additional efficient baseload generation assets to its fleet.

At the closing of the Cornerstone Acquisition, the Company intends to enter into the Cornerstone RRA with certain parties, under which it will use commercially reasonable efforts to file a registration statement on Form S-3 with the SEC to register the TEC common stock to be issued pursuant to the Cornerstone Merger Agreement within three business days (and in any event within five business days) after issuance.

The proposed Cornerstone Acquisition is subject to regulatory approvals and the satisfaction of other customary closing conditions, and is expected to close early in the second half of 2026.

See Note 17 to the Interim Financial Statements for additional information on the Cornerstone Acquisition and “Item 1A. Risk Factors—Risks Related to the Cornerstone Acquisition” of our 2025 Annual Report for a discussion of the associated risks.

The foregoing description of the Cornerstone Merger Agreement and the transaction contemplated thereby is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the full text of the Cornerstone Merger Agreement, a copy of which is incorporated by reference as Exhibit 2.1 to our 2025 Annual Report. The Cornerstone Merger Agreement was filed only to provide investors with information regarding their terms and are not intended to provide any other factual information about the parties thereto. Investors should not rely on the representations, warranties, or covenants in the Cornerstone Merger Agreement, which may be subject to important limitations and qualifications, and which may change after the date of the Cornerstone Merger Agreement, as characterizations of the actual state of facts or condition of the Company, the sellers, or any of their respective subsidiaries or affiliates.