SEC Comment Letter 0000000000-24-006306 to Talen Energy Corp (TLN) (CIK 0001622536) (TLN)
Talen Energy Corp (TLN) (CIK 0001622536)
Date: May 31, 2024 · CIK: 0001622536 · Accession: 0000000000-24-006306
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United States securities and exchange commission logo May 31, 2024 Mark McFarland Chief Executive Officer Talen Energy Corporation 2929 Allen Pkwy, Suite 2200 Houston, TX 77019 Re:Talen Energy Corporation Amendment No. 5 to Draft Registration Statement on Form S-1 Submitted May 17, 2024 CIK No. 0001622536 Dear Mark McFarland: We have reviewed your amended 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. Unless we note otherwise, any references to prior comments are to comments in our April 18, 2024 letter. Amendment No. 5 to Draft Registration Statement on Form S-1 Prospectus Summary Recent Developments Cumulus Data Campus Sale, page 9 1.We note your disclosure responding to prior comment 1. With regard to the table on page 9, which you disclosed as showing the EBITDA values based on the described PTC reference prices and your minimum commitments with AWS, please expand your disclosure to clarify the reasons for the wide range of EBITDA each year, instead of one estimated EBITDA amount based on your reference price and minimum commitment with AWS that year.
FirstName LastNameMark McFarland Comapany NameTalen Energy Corporation May 31, 2024 Page 2 FirstName LastName Mark McFarland Talen Energy Corporation May 31, 2024 Page 2 In this regard, please clarify why footnote (2) refers to Susquehanna revenues without AWS agreements, and why footnote (3) refers to financial outcomes based on offtake outcomes dependent on the buyer, instead of just AWS as the buyer.
If you have a reasonable basis supporting the EBITDA ranges, please add clarifying supporting details. Otherwise please revise the EBITDA amounts, and footnotes as necessary, to correspond with the minimum commitments with AWS only. Financial Statements Note 17 - Acquisitions and Divestitures Completed Divestitures ERCOT Asset Sale, page F-31 2.We note disclosure of your ERCOT asset sale for $785 million that closed on May 1, 2024. Beside customary net working capital adjustments, please expand your disclosure to clarify the extent of any contingency, recourse or continuing involvement associated with the sale that would impact your gain on sale recognition in the second quarter ending June 30, 2024. Cumulus Data Campus Sale, page F-32 3.We note you disclosed on page F-32 that for the quarter ended March 31, 2024, you recognized a $324 million net gain on the sale of the Cumulus data campus assets.
Per ASC 450, a contingent gain should not be recognized prior to the gain being realized or realizable, with claim to cash reasonably assured without expectation of repayment. Please explain how you have considered ASC 450-30-25-1 in concluding that gain recognition was appropriate, given your disclosures on pages 9 and 52 that the $300 million held in escrow will not be released until zoning approvals and ordinances allowing construction and operation of the data center facilities are received, and if not received, AWS may revert the escrowed funds and you may repurchase the property.
Unless you are able to show how you have control over receiving the zoning and ordinance approvals (i.e. contingency), it appears that you will need to postpone your gain on sale recognition until the contingency is resolved and the gain is realizable.
FirstName LastNameMark McFarland Comapany NameTalen Energy Corporation May 31, 2024 Page 3 FirstName LastName Mark McFarland Talen Energy Corporation May 31, 2024 Page 3 Please contact Yolanda Guobadia at 202-551-3562 or Lily Dang at 202-551-3867 if you have questions regarding comments on the financial statements and related matters. Please contact Michael Purcell at 202-551-5351 or Karina Dorin at 202-551-3763 with any other questions. Sincerely, Division of Corporation Finance Office of Energy & Transportation cc: Anthony Sanderson
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United States securities and exchange commission logo
May 31, 2024
Mark McFarland
Chief Executive Officer
Talen Energy Corporation
2929 Allen Pkwy, Suite 2200
Houston, TX 77019
Re:Talen Energy Corporation
Amendment No. 5 to Draft Registration Statement on Form S-1
Submitted May 17, 2024
CIK No. 0001622536
Dear Mark McFarland:
We have reviewed your amended 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. Unless we note otherwise, any references to prior comments are to comments in our
April 18, 2024 letter.
Amendment No. 5 to Draft Registration Statement on Form S-1
Prospectus Summary
Recent Developments
Cumulus Data Campus Sale, page 9
1.We note your disclosure responding to prior comment 1. With regard to the table on page
9, which you disclosed as showing the EBITDA values based on the described PTC
reference prices and your minimum commitments with AWS, please expand your
disclosure to clarify the reasons for the wide range of EBITDA each year, instead of one
estimated EBITDA amount based on your reference price and minimum commitment with
AWS that year.
FirstName LastNameMark McFarland
Comapany NameTalen Energy Corporation
May 31, 2024 Page 2
FirstName LastName
Mark McFarland
Talen Energy Corporation
May 31, 2024
Page 2
In this regard, please clarify why footnote (2) refers to Susquehanna revenues without
AWS agreements, and why footnote (3) refers to financial outcomes based on offtake
outcomes dependent on the buyer, instead of just AWS as the buyer.
If you have a reasonable basis supporting the EBITDA ranges, please add clarifying
supporting details. Otherwise please revise the EBITDA amounts, and footnotes as
necessary, to correspond with the minimum commitments with AWS only.
Financial Statements
Note 17 - Acquisitions and Divestitures
Completed Divestitures
ERCOT Asset Sale, page F-31
2.We note disclosure of your ERCOT asset sale for $785 million that closed on May 1,
2024. Beside customary net working capital adjustments, please expand your disclosure to
clarify the extent of any contingency, recourse or continuing involvement associated with
the sale that would impact your gain on sale recognition in the second quarter ending June
30, 2024.
Cumulus Data Campus Sale, page F-32
3.We note you disclosed on page F-32 that for the quarter ended March 31, 2024, you
recognized a $324 million net gain on the sale of the Cumulus data campus assets.
Per ASC 450, a contingent gain should not be recognized prior to the gain being realized
or realizable, with claim to cash reasonably assured without expectation of repayment.
Please explain how you have considered ASC 450-30-25-1 in concluding that gain
recognition was appropriate, given your disclosures on pages 9 and 52 that the $300
million held in escrow will not be released until zoning approvals and ordinances allowing
construction and operation of the data center facilities are received, and if not received,
AWS may revert the escrowed funds and you may repurchase the property.
Unless you are able to show how you have control over receiving the zoning and
ordinance approvals (i.e. contingency), it appears that you will need to postpone your gain
on sale recognition until the contingency is resolved and the gain is realizable.
FirstName LastNameMark McFarland
Comapany NameTalen Energy Corporation
May 31, 2024 Page 3
FirstName LastName
Mark McFarland
Talen Energy Corporation
May 31, 2024
Page 3
Please contact Yolanda Guobadia at 202-551-3562 or Lily Dang at 202-551-3867 if you
have questions regarding comments on the financial statements and related matters. Please
contact Michael Purcell at 202-551-5351 or Karina Dorin at 202-551-3763 with any other
questions.
Sincerely,
Division of Corporation Finance
Office of Energy & Transportation
cc: Anthony Sanderson