The Daily Item, Sunbury, PA

News

June 10, 2014

PPL Corporation plans to exit power generation business

ALLENTOWN — PPL Corporation and Riverstone Holdings LLC, a leading energy and power investment firm, have announced a definitive agreement to combine their merchant power generation businesses into a new stand-alone, publicly traded independent power producer (IPP).

The new company, which will own and operate a diverse mix of 15,320 megawatts of generating capacity in key U.S. competitive energy markets, will be called Talen Energy Corp. Based on current generating capacity statistics, Talen Energy would be the third-largest investor-owned IPP in the nation.

Under the terms of the agreement, PPL will spin off PPL Energy Supply, LLC, the parent company of PPL Generation, LLC, and PPL EnergyPlus, LLC, to shareowners of PPL (NYSE: PPL) and then immediately combine that business with Riverstone’s generation business to form Talen Energy Corporation, an independent publicly traded company expected to be listed on the New York Stock Exchange.

When the transition is complete, PPL shareowners will own 65 percent of Talen Energy and Riverstone will own 35 percent.

PPL Corporation will have no continuing ownership interest in Talen Energy.

“The transaction has no effect on PPL Electric Utilities customers,” PPL spokeswoman Teri MacBride said Tuesday. PPL’s regulated companies will remain focused on delivering electrical service to its wholesale and retail customers, she said.

PPL shareowners will receive a pro-rata distribution of Talen Energy shares at closing based on the number of PPL shares owned as of the spinoff record date. The spinoff will have no effect on their ownership of PPL Corporation common stock and there will be no change in the number of shares of PPL Corporation common stock outstanding. The transaction is designed to be tax-free to PPL Corporation and its shareowners.

“Talen Energy will be a very significant player in the U.S. competitive generation market, bringing together the best of two robust businesses with a very strong presence in the PJM region, as well as nearly 2,000 megawatts of generating capacity in the fast growing ERCOT market in Texas,” said William H. Spence, PPL Chairman, President and Chief Executive Officer. “Talen Energy will have significant scale, a very competitive cost structure and the financial agility to pursue growth opportunities.”

Spence announced that when the merger is complete, Paul A. Farr, PPL’s executive vice president and Chief Financial Officer, will be Talen Energy’s president and Chief Executive Officer and a director of the new corporation.

Talen Energy will combine 5,325 megawatts of capacity owned and operated by Riverstone at 15 sites n Maryland, New Jersey, Texas and Massachusetts with 9,995 megawatts of capacity owned and operated by PPL Generation at 12 sites in Pennsylvania and Montana.

The new company’s planned 15,320-megawatt portfolio will have excellent fuel diversity, with 40 percent natural gas, 40 percent coal and 15 percent nuclear, company officials said.

Talen Energy will be headquartered at a yet-to-be-determined location in Pennsylvania. PPL Corporation and the company’s Pennsylvania electricity delivery operation, PPL Electric Utilities, will continue to be headquartered in Allentown.

The transaction is subject to approval by the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission (including the required market power analysis); a Hart-Scott-Rodino review; certain approvals by the Pennsylvania Public Utility Commission; and other customary closing conditions. The transaction, which does not require PPL shareowner approval, is expected to close in nine to 12 months.

 

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