Talen Energy to be Acquired by Riverstone

ALLENTOWN, Pa., June 3, 2016

Talen Energy Corporation (NYSE: TLN), a competitive energy and power generation company that owns or controls 16,000 megawatts of capacity in eight states, announced today that it has entered into a definitive merger agreement with affiliates of Riverstone Holdings LLC (“Riverstone”), a private investment firm.

Under terms of the merger agreement, all outstanding shares of Talen Energy common stock not currently owned by Riverstone affiliated entities will be acquired for $14.00 per share in cash. Affiliates of Riverstone currently own approximately 35 percent of the outstanding shares of Talen Energy common stock, which were issued in the June 2015 transaction that established Talen Energy by combining competitive generation assets that had been owned by affiliates of PPL Corporation and affiliates of Riverstone.

The purchase price represents a 56 percent premium to the closing price of $9.00 per share on March 31, 2016, the last trading day before public reports of a potential sale of Talen Energy, and a 101 percent premium to the 60-day volume-weighted average price of $6.95 per share through March 31.

The transaction has a total enterprise value of approximately $5.2 billion.

“We believe the transaction offers compelling value to our stockholders, while eliminating execution risk, and will provide additional momentum to the outstanding work our employees have done to drive improvements in the safety, reliability and efficiency of our plants in the time since we became an independent company,” said Paul Farr, Talen Energy President and Chief Executive Officer.

“The disinterested directors of the Board, not including the two Riverstone directors, with the assistance of our financial and legal advisors, carefully analyzed Riverstone’s offer, and after extensive negotiation and thorough consideration, concluded that the agreement we are announcing today is in the best interests of our stockholders,” said Stuart E. Graham, Chairman of Talen Energy’s Board of Directors.

David M. Leuschen and Pierre F. Lapeyre, Jr., co-founders of Riverstone, added, “As an experienced owner of power generation assets, Riverstone is excited to acquire Talen Energy and its world class generating fleet, which is located in some of the United States’ most attractive power markets.”

‘Go Shop’

The agreement provides for a “go-shop” period, during which Talen Energy – with the assistance of its legal and financial advisors – may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals. The go-shop period is 40 days. Talen Energy will be permitted to continue discussions with certain parties that make a qualifying offer during the go-shop period for an additional 20 days and, subject to customary requirements included in the agreement, enter into or recommend a transaction with a person or group that makes a superior proposal. The agreement provides for the payment of a termination fee by Talen Energy to Riverstone in the event that the agreement is terminated for a superior proposal, which termination fee will be $50 million, but which will be reduced to $25 million if Talen Energy accepts a superior proposal made during the go-shop period.

There can be no assurance that this process will result in a superior proposal. Talen Energy does not intend to disclose developments during this process unless and until the Board makes a decision with respect to any superior proposal it may receive.

Stockholder and Regulatory Approval

In addition to approval by stockholders representing a majority of outstanding shares of common stock, the transaction is subject to approval by a majority of non- Riverstone affiliated stockholders voting at a special stockholder meeting to be scheduled. Riverstone and its affiliates have agreed to vote their 35 percent stake in favor of the proposed transaction.

The transaction is subject to expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, approval of the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission, as well as certain other customary regulatory approvals and other customary closing conditions. Riverstone’s obligation to consummate the transaction is also subject to Talen Energy having a minimum amount of cash and revolving credit facility capacity available at closing. The parties currently expect the transaction to be completed by the end of 2016.

Transaction Financing

The consideration for the common stock in the transaction, of approximately $1.8 billion, is expected to be funded by a conversion of Riverstone’s existing ownership of 35 percent of the common stock of Talen into shares of the surviving corporation, Talen Energy’s cash on hand, and proceeds of a $250 million new secured term loan. The new secured term loan is fully committed by Goldman Sachs Bank USA, Royal Bank of Canada, Barclays Bank plc, Credit Suisse AG and Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Deutsche Bank AG New York Branch, Morgan Stanley Senior Funding Inc., and the Bank of Tokyo-Mitsubishi UFJ Ltd., and will rank pari-passu with the existing first lien revolving credit facility of Talen Energy Supply LLC (a wholly owned subsidiary of Talen Energy) (“Energy Supply”), which will be reduced from $1.85 billion to $1.4 billion upon closing of the transaction. Concurrently with the signing of the merger agreement, all of Energy Supply’s subsidiaries that currently guarantee its revolving credit facility have executed guarantees (effective as of the closing of the transaction) of Talen Energy’s outstanding unsecured notes due 2025 (“2025 Notes”) and its Pennsylvania Economic Development Financing Authority revenue bonds (“Municipal Bonds”), which together comprise approximately $831 million of Energy Supply’s approximately $3.3 billion total unsecured debt that will remain outstanding. As a result of this new credit support for the 2025 Notes and the Municipal Bonds, it is expected that these notes and bonds will be structurally senior to the non-guaranteed unsecured debt of Energy Supply, and we believe that the issue ratings on the 2025 Notes and the Municipal Bonds will be maintained or improved.

Financial and Legal Advisors

Citi is serving as financial advisor to Talen Energy. Kirkland & Ellis LLP is serving as Talen Energy’s legal advisor. Goldman, Sachs & Co. and RBC Capital Markets are serving as financial advisors to Riverstone. Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP are serving as Riverstone’s legal advisors for the transaction.

About Talen Energy

Talen Energy is one of the largest competitive energy and power generation companies in North America. The company owns or controls 16,000 megawatts of generating capacity in well-developed, structured wholesale power markets, principally in the Northeast, Mid-Atlantic and Southwest regions of the United States.

About Riverstone Holdings

Riverstone is an energy and power-focused private investment firm founded in 2000 by David M. Leuschen and Pierre F. Lapeyre, Jr. with approximately $34 billion of equity capital raised. Riverstone conducts buyout and growth capital investments in the exploration & production, midstream, oilfield services, power and renewable sectors of the energy industry. With offices in New York, London, Houston and Mexico City, the firm has committed approximately $30 billion to more than 120 investments in North America, Latin America, Europe, Africa and Asia.