Talen Energy Corporation has completed the sale of Talen Ironwood Holdings LLC, which through its subsidiaries owns and operates the Ironwood combined-cycle, natural gas-fired power plant in Lebanon County, Pennsylvania, to a subsidiary of TransCanada Corporation.
The total purchase price, after estimated adjustments for net working capital was US$654 million, subject to customary purchase price adjustments. In connection with the transaction, Talen Energy expects to repay approximately US$42 million of indebtedness, plus a customary pre-payment premium, associated with the facility.
Talen Energy expects to use the transaction amount to retire pre-payable and maturing debt, and for other general corporate purposes.
The sale of the Ironwood combined-cycle, natural gas-fired plant is part of a requirement to divest certain assets in specific regions of the PJM Interconnection, which include portions of eastern Pennsylvania, New Jersey and Maryland, to comply with a December 2014 Federal Energy Regulatory Commission order approving the transactions that formed Talen Energy.
Ironwood with the other two hydroelectric projects owned by Talen Energy, Holtwood and Wallenpaupack, were expected to contribute Adjusted EBITDA and Adjusted Free Cash Flow on a full-year 2016 basis of approximately US$140 million and US$80 million, respectively, and Net Income and Cash from Operations on a full-year 2016 basis of approximately US$56 million and US$101 million, respectively.
For the transaction, Credit Suisse served as financial advisor to Talen Energy and Kirkland & Ellis LLP was transaction counsel.