Can Talen Energy Nuke Its Capital Structure By Unrestricting the Nuclear Business?

Can Talen Energy Nuke Its Capital Structure By Unrestricting the Nuclear Business?

In a new special report, Xtract Research analyzes how Talen Energy could try to monetize its valuable nuclear asset by designating it an unrestricted subsidiary. However, because we believe that the guarantee release provisions in certain of Talen’s debt are broken, simply unrestricting the subsidiary may not operate to remove it as an obligor for all of the debt it currently supports.

.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; }

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2021 hedge fund letters, conferences and more

How Talen Energy Can Monetize NukeCo

Highlights from the report include:

How To Invest In India’s Growth with INDF’s Amit Anand

IndiaValueWalk’s Raul Panganiban interviews Amit Anand, Co-Founder of INDF, and discusses his approach to investing and why India Financials are very attractive today. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with INDF’s Amit Anand

The analysis under all the Senior Notes may appear simple at first glance: surely it is a non-event, as there is no restricted/unrestricted regime and unrestricting NukeCo is only a covenant concern under the other debt instruments.

Investors need to be aware, though, that one potential issue with the removal of NukeCo from the system is the guarantee release provision under the Senior Notes.

Unrestricting NukeCo would leave it levered up, as it would remain contractually obligated to guarantee at least some of the Senior Notes unless they are refinanced or holders agreed to release.

As a non-guarantor NukeCo is not subject to the Secured Notes’ liens covenants nor the Revolver’s debt and liens covenants. But in order to monetize NukeCo, the Senior Notes will need to be refinanced because of the guarantee issue (or consent would need to be obtained to release the guarantee).

Comments are closed.