Talen’s Financing Deal Reduces Bondholder Power in Debt Swap

Talen Energy Corp.’s $175 million deal to finance its planned data and Bitcoin-mining operations gives bondholders a piece of the future business, but curtails their power in a bankruptcy or debt exchange, according to research firm CreditSights.

The troubled power producer agreed Tuesday to give bondholders an undisclosed amount of convertible preferred equity in Cumulus Growth Holdings LLC, which owns the renewable energy assets in various affiliates. The deal sold transmission rights and land that would otherwise belong to Talen’s bondholders, and offered potential protections against a bankruptcy filing, analyst Andy DeVries wrote in a Sept. 22 note.

“This ...