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United States securities and exchange commission logo
October 6, 2023
Mark McFarland
Chief Executive Officer
Talen Energy Corporation
2929 Allen Pkwy, Suite 2200
Houston, TX 77019
Re: Talen Energy
Corporation
Draft Registration
Statement on Form S-1
Submitted September
8, 2023
CIK No. 0001622536
Dear Mark McFarland:
We have reviewed your
draft registration statement and have the following comments.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe a comment applies to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to this
letter and your amended
draft registration statement or filed registration statement, we may
have additional comments.
Draft Registration Statement on Form S-1
Our Business
Our Cumulus Platform Opportunities, page 4
1. Please revise your
disclosure to clarify what you describe as cutting-edge digital
infrastructure.
Prospectus Summary
Our Business Strategies, page 7
2. Please provide the
bases for your statement that your platform is industry-leading.
Mark McFarland
FirstName LastNameMark
Talen Energy Corporation McFarland
Comapany
October NameTalen Energy Corporation
6, 2023
October
Page 2 6, 2023 Page 2
FirstName LastName
Unaudited Pro Forma Condensed Consolidated Financial Information
Notes to the Unaudited Pro Forma Financial Information
Note 2. Plan of Reorganization and Fresh Start Adjustments, page 49
3. We note adjustments to your Predecessor historical reorganization
income (expense), net
amounts on pages 47 and 48. Please revise pro forma adjustment (b) on
page 49 to
disclose, in greater detail, the nature of each of your reorganization
and fresh-start
adjustments, or reference where such adjustments are explained.
If the $(1,259) million reorganization adjustment on page 47
represents gain on debt
discharge in the Predecessor period January 1 through May 17, 2023,
please reconcile that
amount to the $(1,459) million gain on debt discharge disclosed on
page 57.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Commodity Markets, page 51
4. Please revise your disclosure to include the definition of Spark
Spread.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
Talen Liquidity, page 65
5. We note your risk factor disclosure on page 36 that your cash flows
and ability to meet
your obligations are largely dependent upon the operating cash flows
of TES and your
other subsidiaries. Please expand your disclosure to describe any
limitations and/or
restrictions on the ability of your subsidiaries to make payments to
you in the form of
dividends, distributions, and loans, and how such may impact your
liquidity.
Additionally, discuss how you intend to fund your obligations if
distributions from TES
and your other subsidiaries are not sufficient to meet your
obligations.
Business, page 78
6. We note your reference to bitcoin and other digital assets on page 34.
Please add
disclosure to discuss your bitcoin and digital asset related plan of
operations for the next
12 months, or beyond if known. If other digital assets are involved,
describe nature of
operations, material terms and characteristics of the digital assets,
how the digital assets
will be used and risks of holding such assets. Describe known or
anticipated material
commitments for capital expenditures and source of funds, and known
trends or
uncertainties that are reasonably expected to have a material impact
on results of
operations or financial condition.
Mark McFarland
FirstName LastNameMark
Talen Energy Corporation McFarland
Comapany
October NameTalen Energy Corporation
6, 2023
October
Page 3 6, 2023 Page 3
FirstName LastName
Description of Capital Stock, page 134
7. We note your disclosure regarding your exclusive forum provision for
certain litigation,
including any derivative action. Please revise to disclose
whether this provision applies
to actions arising under the Exchange Act.
Talen Energy Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
Notes to the Interim Financial Statements
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Summary of Significant Accounting Policies, page F-8
8. We note your disclosure on page F-34 referencing bitcoin and other
digital assets, page 55
stating that your other revenues relate to bitcoin operations of
Nautilus which commenced
operations in February 2023, and page F-74 stating that expenditures
for bitcoin mining
facilities are recorded as part of your Property, Plant and Equipment.
Please expand your
disclosure to clarify the extent of costs recorded as of June 30, 2023
that related to your
bitcoin facilities, bitcoin and other digital assets. Additionally,
disclose your accounting
policies for bitcoin revenue recognition, and for bitcoin and other
digital assets including
how you record and value the assets initially and on an ongoing basis.
Note 4. Fresh Start Accounting
Reorganization Value, page F-11
9. We note your disclosure stating that your reorganization value was
derived from an
estimate of your enterprise value, and that although management
believes the assumptions
and estimates used to develop the enterprise value and reorganization
value are reasonable
and appropriate, different assumptions and estimates could materially
impact the analysis
and resulting conclusions.
Please expand your disclosure to disclose the sensitivity assumptions
about the reasonable
possibility that variation in assumptions could significantly affect
your reorganization
value and enterprise value, to comply with ASC 852-10-50-7c.2.
10. We note your reconciliation of the enterprise value to the estimated
reorganization value
at the Emergence Date. Please also disclose the reorganization value
immediately before
your December 20, 2022 date of plan confirmation, and the total of all
post-petition
liabilities and allowed claims, to comply with ASC 852-10-45-19.
Mark McFarland
FirstName LastNameMark
Talen Energy Corporation McFarland
Comapany
October NameTalen Energy Corporation
6, 2023
October
Page 4 6, 2023 Page 4
FirstName LastName
Annual Financial Statements for the Three Fiscal Years Ended December 31, 2022,
2021 and
2020 (Predecessor)
Notes to the Annual Financial Statements
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Operating Revenues and Revenue Recognition, page F-70
11. We note your disclosure stating that certain contracts constitute
bundled agreements to
sell energy, capacity, ancillary services and (or) renewable energy
credits (RECs), and that
all performance obligations are deemed to be delivered and (or)
performed at the same
time. As timing of revenue recognition is the same and occurs over a
contractually agreed
period of time, it is unnecessary to allocate transaction price to
multiple performance
obligations.
Please expand your disclosure to clarify how you have concluded that
RECs are not
distinct goods or services, rather they have substantially the same
pattern of transfer to
customers as the other goods or services in the bundle. Also disclose
your accounting
policy for RECs, to the extent they are material. Refer to ASC
606-10-25-14 to 25-22 for
guidance.
Note 14. Property, Plant and Equipment, page F-106
12. Please expand your disclosure to include the estimated useful life of
each significant class
of property, plant and equipment.
Note 15. Asset Retirement Obligations and Accrued Environmental Costs, page
F-110
13. Please revise your table to disclose, under the additional breakdown
section, the nuclear
and non-nuclear amounts of your ARO carrying value at December 31,
2022.
General
14. We note your disclosure that Cumulus Coin holds a 75% equity interest
in Nautilus and
that [a]lmost all of Cumulus Coin s expected revenue will be from
the sale of mined
bitcoin. Please revise to describe the material terms of the
agreement related to this joint
venture, including a description of how the mined bitcoin is
distributed pursuant to the
joint venture agreement as well as the term and termination provisions
of the agreement.
Also describe Cumulus Coin s role and responsibilities in the
operation of Nautilus,
including a description of the mining operations at the facility. For
example, please
disclose (i) the number of miners hosted, (ii) the average hash rate
of the miners, (iii) the
average age of the miners, (iv) whether the miners are insured, (v)
whether Nautilus
participates in a mining pool and, if so, a description of the mining
pool and the material
terms of the agreement with the mining pool operator, (vi) whether
Nautilus hosts miners
operated and owned by third-parties, (vii) the range of bitcoin mined
on a monthly basis
for the periods covered by your financial statements, (viii) a
detailed description of how
the mined bitcoin is valued, monetized, stored, and insured and (ix) a
breakeven analysis
Mark McFarland
Talen Energy Corporation
October 6, 2023
Page 5
for the bitcoin mining operations of the joint venture that compares the
cost to earn/mine
one bitcoin with the market value of one bitcoin. Please also consider
whether the issues
addressed in the December 2022 Sample Letter to Companies Regarding
Recent
Developments in Crypto Asset Markets are material to your business. We
may have
additional comments upon review of your response.
Please contact Yolanda Guobadia, Staff Accountant, at 202-551-3562 or
Lily Dang, Staff
Accountant, at 202-551-3867 if you have questions regarding comments on the
financial
statements and related matters. Please contact Michael Purcell, Staff Attorney,
at 202-551-5351
or Laura Nicholson, Special Counsel, at 202-551-3584 with any other questions.
Sincerely,
FirstName LastNameMark McFarland
Division of
Corporation Finance
Comapany NameTalen Energy Corporation
Office of Energy &
Transportation
October 6, 2023 Page 5
cc: Anthony Sanderson
FirstName LastName