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Ex. 99.5
Unaudited Pro Forma Condensed Combined Financial Information
On July 17, 2025, Talen Energy Corporation (“TEC”, “Talen”, or the “Company”), through its wholly owned subsidiary, Talen Generation, LLC, entered into two purchase and sale agreements in contemplation of each other (collectively, the “Purchase Agreements”) with affiliates of Caithness Energy, L.L.C., pursuant to which we agreed to purchase the (i) the Freedom Energy Center, a 1,045 MW (summer rating) natural gas fired combined cycle generation plant located in Luzerne County, Pennsylvania (the “Freedom Acquisition”); and (ii) the Guernsey Power Station, a 1,836 MW (summer rating) natural gas fired combined cycle generation plant located in Guernsey County, Ohio (the “Guernsey Acquisition” and, together with the Freedom Acquisition, the “Acquisitions”). The aggregate purchase price for the Acquisitions was $3.8 billion, in each case as adjusted in accordance with the applicable Purchase Agreement.
On November 25, 2025 (the “Closing Date”), the Company consummated the Acquisitions and related transactions pursuant to the Purchase Agreements (the “Closing”) and acquired all of the issued and outstanding membership interests in (i) Moxie Freedom LLC, a Delaware limited liability company and (ii) Guernsey Power Holdings, LLC, a Delaware limited liability company (which owns 100% of the membership interests in Guernsey Power Station LLC, a Delaware limited liability company) (collectively, the “Acquired Entities”).
In connection with the Acquisitions, the Company completed the following financing transactions (“Financing Transactions”):
▪Unsecured Notes Issuances. In October 2025, issued in private offerings and each at par: (i) $1.4 billion in aggregate principal amount of unsecured notes due 2034 and (ii) $1.3 billion in aggregate principal amount of unsecured notes due 2036 (together, the “Unsecured Notes”). The proceeds of the Unsecured Notes were used, together with the net proceeds of the senior secured term loan B credit facility (as discussed below), to fund the Acquisitions.
▪Credit Facility Transactions. In November 2025, several financing transactions became effective concurrently with the Closing:
•TLB-3. Drew in full the $1.2 billion senior secured term loan B credit facility (the “TLB-3”), the proceeds of which, together with the proceeds from the unsecured notes, were used to fund the Acquisitions.
•Revolving Credit Facility (the “RCF”). Increased its existing RCF (including its revolving LC capacity) from $700 million to $900 million.
•Letter of Credit Facility (the “LCF”). Upsized its existing $900 million LCF to $1.1 billion and extended the maturity from December 2026 to December 2027.
The following unaudited pro forma condensed combined financial information of Talen, referred to in this section as the pro forma financial information, is presented to illustrate the effects of the Purchase Agreements and the related Financing Transactions, which are referred to in this section as the pro forma transactions. The unaudited pro forma condensed combined financial information includes an unaudited pro forma condensed combined balance sheet as of September 30, 2025, referred to herein as the pro forma balance sheet, unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024 and unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2025, referred to herein as the pro forma income statements, and accompanying notes, referred to herein as the notes to the pro forma financial statements. The pro forma income statements give effect to the pro forma transactions, which for purposes of the pro forma financial information include the incurrence of approximately $3.8 billion (net of fees) of aggregate indebtedness under the Financing Transactions, as if they had occurred on January 1, 2024, the first day of Talen’s fiscal year ended December 31, 2024. The pro forma balance sheet gives effect to the pro forma transactions as if they had occurred on September 30, 2025.
The pro forma financial information is based on and should be read in conjunction with the following historical financial statements of Talen, Moxie Freedom LLC (“Freedom”) and Guernsey Power Holdings, LLC (“Guernsey”):
•Talen’s historical audited consolidated financial statements and related notes for the year ended December 31, 2024, included in Talen’s annual report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025.
•Talen’s historical unaudited condensed consolidated financial statements and related notes for the three and nine months ended September 30, 2025, included in Talen’s quarterly report on Form 10-Q for the three and nine months ended September 30, 2025, filed with the SEC on November 5, 2025.
•Freedom’s historical audited financial statements and related notes for the year ended December 31, 2024, included in Talen’s current report on Form 8-K filed with the SEC on October 6, 2025.
•Freedom’s historical unaudited condensed financial statements and related notes for the three and nine months ended September 30, 2025, attached as .2 to the Form 8-K to which this unaudited pro forma condensed combined financial information is attached.
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•Guernsey’s historical audited consolidated financial statements and related notes for the year ended December 31, 2024, included in Talen’s current report on Form 8-K filed with the SEC on October 6, 2025.
•Guernsey’s historical unaudited condensed consolidated financial statements and related notes for the three and nine months ended September 30, 2025, attached as .4 to the Form 8-K to which this unaudited pro forma condensed combined financial information is attached.
The pro forma financial information has been prepared using the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States, referred to as GAAP, in accordance with Accounting Standards Codifications (ASC) 805, Business Combinations. Under the acquisition method of accounting, the preliminary purchase price is allocated to the underlying tangible and intangible assets to be acquired and liabilities assumed based upon their estimated fair values as of the acquisition date, with any excess purchase price allocated to goodwill. Talen has made a preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the Closing Date of the Acquisitions based on Talen’s preliminary valuation of the tangible and intangible assets to be acquired and liabilities assumed in the Purchase Agreements using information currently available. Adjustments to the preliminary amounts may be made in subsequent periods, up to one year from the Closing Date, as information necessary to complete the analysis is obtained. The final valuation of assets acquired and liabilities assumed in the Acquisitions may be materially different than the estimated values assumed in the pro forma financial information.
In accordance with Article 11 of Regulation S-X, the pro forma financial information has been prepared for illustrative and informational purposes only and is not intended to represent what Talen’s results of operations or financial position would have been had the Acquisitions occurred on the dates indicated, or what they will be for any future periods or as of any future date. The pro forma financial information does not reflect the realization of any expected cost savings or other synergies or dis-synergies that may be realized as a result of the Acquisitions.
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Unaudited Pro Forma Condensed Combined Balance Sheet
as of September 30, 2025
(Millions of Dollars, except share data)Historical Talen Energy Corporation
Historical Acquired Entities as Reclassified (a)
Acquisition Accounting AdjustmentsOther Accounting AdjustmentsPro Forma Combined
Assets
Cash and cash equivalents$497 $2 $(3,840)4(a)$3,828 5(a)$487 
Restricted cash and cash equivalents— 83 — — 83 
Accounts receivable180 44 — — 224 
Inventory, net263 5 — — 268 
Derivative instruments45 17 (16)4(d)— 46 
Other current assets63 4 — — 67 
Total current assets1,048 155 (3,856)3,828 1,175 
Property, plant and equipment, net3,075 2,029 2,421 4(e)— 7,525 
Nuclear decommissioning trust funds1,870 — — — 1,870 
Derivative instruments1 12 (12)4(d)— 1 
Other noncurrent assets103 — — — 103 
Total Assets$6,097 $2,196 $(1,447)$3,828 $10,674 
Liabilities and Equity
Long-term debt, due within one year$17 $60 $(60)4(b)$— $17 
Accrued interest53 — — — 53 
Accounts payable and other accrued liabilities192 40 34 4(f)— 266 
Derivative instruments44 31 — — 75 
Other current liabilities151 — — — 151 
Total current liabilities457 131 (26)— 562 
Long-term debt2,969 1,068 (1,068)4(b)3,828 5(a)6,797 
Derivative instruments37 7 (1)4(d)— 43 
Contract liabilities— — 667 4(g)— 667 
Postretirement benefit obligations243 — — — 243 
Asset retirement obligations and accrued environmental costs477 — — — 477 
Deferred income taxes409 — — — 409 
Other noncurrent liabilities36 5 — — 41 
Total Liabilities$4,628 $1,211 $(428)$3,828 $9,239 
Stockholders' Equity
Common stock ($0.001 par value 350,000,000 shares authorized) (b)
$— $— $— 4(h)$— $— 
Additional paid-in capital1,726 985 (985)4(h)— 1,726 
Accumulated retained earnings (deficit)(249)— (34)4(f)— (283)
Accumulated other comprehensive income (loss)(8)— — — (8)
Total Stockholders' Equity$1,469 $985 $(1,019)$— $1,435 
Total Liabilities and Stockholders' Equity$6,097 $2,196 $(1,447)$3,828 $10,674 
__________________
(a)See Note 3 to the Unaudited Pro Forma Financial Information.
(b)45,687,828 shares issued and outstanding as of September 30, 2025.
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Unaudited Pro Forma Condensed Combined Statement of Operations
for the Nine Months Ended September 30, 2025
(Millions of Dollars, except share data)Historical Talen Energy Corporation
Historical Acquired Entities as Reclassified (a)
Acquisition Accounting AdjustmentsOther Accounting AdjustmentsPro Forma Combined
Capacity revenues$303 $78 $— $— $381 
Energy and other revenues1,552 606 — — 2,158 
Unrealized gain (loss) on derivative instruments(23)— — — (23)
Operating Revenues1,832 684 — — 2,516 
Fuel and energy purchases(677)(355)74 4(g)— (958)
Nuclear fuel amortization(71)— — — (71)
Unrealized gain (loss) on derivative instruments(31)— — — (31)
Energy Expenses(779)(355)74 — (1,060)
Operating Expenses
Operation, maintenance and development(469)(45)5 4(c)— (509)
General and administrative(113)— — — (113)
Depreciation, amortization and accretion(205)(56)56 4(i) — (295)
(90)4(i)
Other operating income (expense), net(43)— — — (43)
Operating Income (Loss)223 228 45 — 496 
Nuclear decommissioning trust funds gain (loss), net149 — — — 149 
Interest expense and other finance charges(203)(90)83 4(j)(184)5(b)(387)
7 4(d)
Gain (loss) on sale of assets, net36 — — — 36 
Other non-operating income (expense), net9 — — — 9 
Income (Loss) Before Income Taxes214 138 135 (184)303 
Income tax benefit (expense)(70)— (57)4(k)39 5(d)(88)
Net Income (Loss) Attributable to Stockholders$144 $138 $78 $(145)$215 
Per Common Share (b)
Net Income (Loss) Attributable to Stockholders - Basic$3.15 $4.71 
Net Income (Loss) Attributable to Stockholders - Diluted$2.96 $4.42 
Weighted-Average Number of Common Shares Outstanding - Basic (in thousands)45,694 45,694 
Weighted-Average Number of Common Shares Outstanding - Diluted (in thousands)48,588 48,588 
__________________
(a)See Note 3 to the Unaudited Pro Forma Financial Information.
(b)See note 4(l) to the Unaudited Pro Forma Financial Information.
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Unaudited Pro Forma Condensed Combined Statement of Operations
for the Year Ended December 31, 2024
(Millions of Dollars, except share data)Historical Talen Energy Corporation
Historical Acquired Entities as Reclassified (a)
Acquisition Accounting AdjustmentsOther Accounting AdjustmentsPro Forma Combined
Capacity revenues$192 $35 $— $— $227 
Energy and other revenues1,881 594 — — 2,475 
Unrealized gain (loss) on derivative instruments42 (40)— — 2 
Operating Revenues2,115 589 — — 2,704 
Fuel and energy purchases(694)(331)96 4(g)— (929)
Nuclear fuel amortization(123)— — — (123)
Unrealized gain (loss) on derivative instruments20 — — — 20 
Energy Expenses(797)(331)96 — (1,032)
Operating Expenses
Operation, maintenance and development(592)(64)7 4(c)— (649)
General and administrative(163)— — — (163)
Depreciation, amortization and accretion(298)(76)76 4(i)— (419)
(121)4(i)— 
Impairments(1)— — — (1)
Other operating income (expense), net(38)— (34)4(f)— (72)
Operating Income (Loss)226 118 24 — 368 
Nuclear decommissioning trust funds gain (loss), net178 — — — 178 
Interest expense and other finance charges(238)(101)128 4(j)(246)5(b)(503)
(27)4(d)(19)5(c)
Gain (loss) on sale of assets, net884 — — — 884 
Other non-operating income (expense), net61 1 — — 62 
Income (Loss) Before Income Taxes1,111 18 125 (265)989 
Income tax benefit (expense)(98)— (30)4(k)56 5(d)(72)
Net Income (Loss) $1,013 $18 $95 $(209)$917 
Less: Net income (loss) attributable to noncontrolling interest15 — — — 15 
Net Income (Loss) Attributable to Stockholders$998 $18 $95 $(209)$902 
Per Common Share (b)
Net Income (Loss) Attributable to Stockholders - Basic$18.40 $16.63 
Net Income (Loss) Attributable to Stockholders - Diluted$17.67 $15.97 
Weighted-Average Number of Common Shares Outstanding - Basic (in thousands)54,254 54,254 
Weighted-Average Number of Common Shares Outstanding - Diluted (in thousands)56,486 56,486 
__________________
(a)See Note 3 to the Unaudited Pro Forma Financial Information.
(b)See note 4(l) to the Unaudited Pro Forma Financial Information.
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Notes to the Unaudited Pro Forma Financial Information
1.Basis of Presentation
The pro forma financial information has been prepared in accordance with Article 11 of SEC Regulation S-X. The Acquisitions are being accounted for as a business combination using the acquisition method of accounting under U.S. GAAP, in accordance with the provisions of ASC 805, Business Combinations, which requires assets acquired and liabilities assumed to be recorded at their acquisition date fair value. ASC 820, Fair Value Measurements, defines the term “fair value” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective, and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates based on the same facts and circumstances.
Talen has completed preliminary detailed valuation studies necessary to determine the fair value of the Freedom and Guernsey assets to be acquired and liabilities to be assumed and the related allocations of purchase price. Therefore, the allocation of the purchase price as reflected in the unaudited pro forma condensed combined financial information is based upon management's preliminary estimates of the fair value of the assets acquired and liabilities assumed. The final allocation of the purchase price will be completed following the Closing Date as information necessary to complete the analysis is obtained. Any adjustments to the preliminary estimated fair value amounts could have a significant impact on the pro forma financial information and Talen’s future results of operations and financial position. There can be no assurance that such final allocation of the purchase price will not result in material changes.
The historical financial statements of Freedom and Guernsey (together, the “Acquired Entities”), and TEC were each prepared in accordance with U.S. GAAP. As discussed in Note 3, certain reclassifications have been made to align Talen and the Acquired Entities’ financial statement presentations for purposes of preparing the pro forma financial information. However, the Company believes it has identified all material adjustments necessary to conform the Acquired Entities’ accounting policies to those of Talen. Subsequent to the Closing Date, as more information to complete the analysis is obtained, Talen will perform additional assessment on accounting policies as required. As a result of such assessments, Talen may identify differences between the accounting policies of the companies, requiring conforming adjustments which could have a material impact on the pro forma financial information.
There were no material intercompany transactions or balances between Talen and the Acquired Entities as of and for the nine months ended September 30, 2025, and for the year ended December 31, 2024. Dollars are in millions, unless otherwise noted.
2.Preliminary Purchase Price Allocation
The table below represents the consideration transferred to acquire Freedom and Guernsey. The historical long-term debt of the Acquired Entities is not part of the net assets to be acquired by Talen, and as such is not included as part of consideration transferred.
FreedomGuernseyTotal
Base purchase price$1,473 $2,367 $3,840 
Total consideration transferred$3,840 
Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Freedom and Guernsey are measured and recognized at fair value. The allocation is dependent upon certain valuations and other studies that have not yet been completed. Accordingly, the pro forma purchase price allocation is subject to change as additional information becomes available and detailed analyses and final valuation are completed, and any such changes could be material.
The table below represents a preliminary allocation of the consideration transferred to acquire Freedom and Guernsey’s identified tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values as of the Closing Date.
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The preliminary purchase price allocation is as follows:
Estimated Fair Value
Preliminary purchase price allocation
Freedom
Guernsey
Total
Assets acquired:
Cash and cash equivalents
$22 $63 $85 
Accounts receivable14 30 44 
Inventory4 1 5 
Derivative instruments, current
1 — 1 
Other current assets1 3 4 
Property, plant, and equipment, net1,514 2,936 4,450 
Total assets acquired$1,556 $3,033 $4,589 
Liabilities assumed:
Accounts payable and other accrued liabilities$13 $27 $40 
Derivative instruments, current
9 22 31 
Derivative instruments, noncurrent
2 4 6 
Contract liabilities59 608 667 
Other noncurrent liabilities— 5 5 
Total liabilities assumed$83 $666 $749 
Net assets$1,473 $2,367 $3,840 
3.Reclassification Adjustments
The historical consolidated financial statements of Freedom and Guernsey are prepared in accordance with U.S. GAAP. In connection with the preparation of the pro forma financial information, the Company performed a preliminary analysis on the financial information associated with each Freedom and Guernsey to identify accounting policy and financial statement presentation differences between the Company and Freedom and Guernsey. At the time of the preparation of the pro forma financial information, Talen believes it has identified all material adjustments necessary to conform Freedom’s and Guernsey’s accounting and financial statement presentation policies to Talen’s. The adjustments described below represent Talen’s best estimates based upon the information currently available to Talen and could be subject to change once more detailed information is available.
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The following table presents a summary of reclassification adjustments made to present Freedom and Guernsey’s condensed consolidated balance sheets as of September 30, 2025 in conformity with that of Talen:
Presentation in Unaudited Pro Forma Condensed Combined Financial StatementsHistorical Freedom Before ReclassificationHistorical Guernsey Before ReclassificationTotal ReclassificationsHistorical Acquired Entities as Reclassified
Assets
Cash and cash equivalents$1 $1 $— $2 
Restricted cash and cash equivalents21 62 — 83 
Accounts receivable14 30 — 44 
Inventory, net4 — 1 (a)5 
Derivative instruments1 16 — 17 
Other current assets1 4 (1)(a)4 
Total Current Assets42 113 — 155 
Property, plant, and equipment, net607 1,344 32 (b)2,029 
46 
(c)
Derivative instruments— 12 — 12 
Land9 23 (32)(b)— 
Other noncurrent assets24 22 (46)
(c)
— 
Total Assets$682 $1,514 $— $2,196 
Liabilities and Equity
Long-term debt, due within one year$4 $56 $— $60 
Accounts payable and other accrued liabilities13 27 — 40 
Derivative instruments9 22 — 31 
Total Current Liabilities26 105 — 131 
Long-term debt335 733 — 1,068 
Derivative instruments3 4 — 7 
Other noncurrent liabilities— 5 — 5 
Total Liabilities$364 $847 $— $1,211 
Stockholders' Equity
Additional Paid in Capital$318 $667 $— $985 
Total Stockholders' Equity$318 $667 $— $985 
Total Liabilities and Equity$682 $1,514 $— $2,196 
__________________
(a)Reclassification of Guernsey materials and supplies from “Other current assets" to "Inventory, net."
(b)Reclassification of land from “Land" to "Property, plant, and equipment, net" comprised of $9 million for Freedom and $23 million for Guernsey.
(c)Reclassification of certain spare parts inventory associated with long-term service agreements from “Other noncurrent assets” to “Property, plant, and equipment, net” comprised of $24 million for Freedom and $22 million for Guernsey.

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The following table presents a summary of reclassification adjustments made to present Freedom and Guernsey’s condensed consolidated statements of operations for the nine months ended September 30, 2025 in conformity with that of Talen:
Presentation in Unaudited Pro Forma Condensed Combined Financial StatementsHistorical Freedom Before ReclassificationHistorical Guernsey Before ReclassificationTotal ReclassificationsTotal Accounting Policy AdjustmentHistorical Acquired Entities as reclassified with aligned policies
Capacity revenues$— $— $78 (a)$— $78 
Energy and other revenues247 437 (78)
(a)
— 606 
Operating Revenues247 437 — — 684 
Fuel and energy purchases(120)(242)2 
(b)
5 
(e)
(355)
Energy Expenses(120)(242)2 5 (355)
Operating Expenses
Operation, maintenance and development(22)(23)(7)
(c)
9 
(e)
(45)
(2)
(b)
— 
General and administrative(3)(4)7 
(c)
— — 
Depreciation, amortization and accretion(20)(36)— — (56)
Operating Income (Loss)82 132 — 14 228 
Interest expense and other finance charges(27)(56)(7)
(d)
— (90)
Deferred financing cost amortization expense(3)(4)7 
(d)
— — 
Income (Loss) Before Income Taxes$52 $72 $— $14 $138 
__________________
(a)Reclassification of capacity revenues from "Energy and other revenues” to "Capacity revenues" comprised of $32 million for Freedom and $46 million for Guernsey.
(b)Reclassification to present certain consumables from “Fuel and energy purchases” to "Operation, maintenance and development” comprised of $1 million for Freedom and $1 million for Guernsey.
(c)Reclassification of certain generation facility expenses from "General and administrative” to "Operation, maintenance and development" comprised of $3 million for Freedom and $4 million for Guernsey.
(d)Reclassification of deferred finance cost amortization expenses from "Deferred financing cost amortization expense" to "Interest expense and other finance charges" comprised of $3 million for Freedom and $4 million for Guernsey.
(e)Adjustment to capitalize certain long-term service agreement expenditures within "Property, plant, and equipment, net" in conformity with Talen’s accounting policies. Such amounts were comprised of $9 million for Freedom presented as "Operation, maintenance and development" and $5 million for Guernsey presented as "Fuel and energy purchases."
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The following table presents a summary of reclassification adjustments made to present Freedom and Guernsey’s consolidated statements of operations for the year ended December 31, 2024 in conformity with that of Talen:
Presentation in Unaudited Pro Forma Condensed Combined Financial StatementsHistorical Freedom Before ReclassificationHistorical Guernsey Before ReclassificationTotal ReclassificationsTotal Accounting Policy AdjustmentHistorical Acquired Entities as Reclassified with Aligned Policies
Capacity revenues$— $— $35 (a)$— $35 
Energy and other revenues225 364 5 (a)
(b)		— 594 
Unrealized gain (loss) on derivative instruments— — (40)(b)— (40)
Operating Revenues225 364 — — 589 
Fuel and energy purchases(131)(208)1 (c)7 (f)(331)
Energy Expenses(131)(208)1 7 (331)
Operating Expenses
Operation, maintenance and development(26)(39)(1)(c)10 (f)(64)
(8)(d)— 
General and administrative(3)(5)8 (d)— — 
Depreciation, amortization and accretion(27)(49)— — (76)
Operating Income (Loss)38 63 (1)17 118 
Interest expense and other finance charges(32)(60)(9)(e)— (101)
Deferred financing cost amortization expense(4)(5)9 (e)— — 
Other non-operating income (expense), net— 1 — — 1 
Income (Loss) Before Income Taxes$2 $(1)$— $17 $18 
__________________
(a)Reclassification of capacity revenues from "Energy and other revenues" to "Capacity revenues" comprised of $17 million for Freedom and $18 million for Guernsey.
(b)Reclassification of net unrealized mark-to-market gains and losses on commodity derivatives from "Energy and other revenues" to "Unrealized gain (loss) on derivative instruments" comprised of $14 million for Freedom and $26 million for Guernsey.
(c)Reclassification of certain Guernsey variable operating costs from “Fuel and energy purchases” to "Operation, maintenance and development."
(d)Reclassification of certain generation facility expenses from "General and administrative" to "Operation, maintenance and development" comprised of $3 million for Freedom and $5 million for Guernsey.
(e)Reclassification of deferred finance cost amortization expenses from "Deferred financing cost amortization expense" to "Interest expense and other finance charges" comprised of $4 million for Freedom and $5 million for Guernsey.
(f)Adjustment to capitalize certain long-term service agreement expenditures within "Property, plant, and equipment, net" in conformity with Talen’s accounting policies. Such amounts were comprised of $10 million for Freedom presented as "Operation, maintenance and development" and $7 million for Guernsey presented as “Fuel and energy purchases.”
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4.Acquisition Pro Forma Adjustments and Assumptions
The acquisition and pro forma adjustments reflect:
(a)the cash consideration paid in connection with the Acquisitions. See Note 2.
(b)the elimination of Freedom’s and Guernsey’s historical debt as such debt agreements were not assumed under the Purchase Agreements.
September 30, 2025
FreedomGuernseyTotal
Long-term debt, due within one year
$4 $56 $60 
Long-term debt
335 733 1,068 
(c)the elimination of costs associated with asset management service agreements between Freedom and Guernsey and their affiliate as such service agreements were not assumed under the Purchase Agreements.
Nine Months Ended September 30, 2025Year Ended December 31, 2024
FreedomGuernseyTotalFreedomGuernseyTotal
Asset management agreements
$2 $3 $5 $3 $4 $7 
(d)adjustments to eliminate the carrying value and the net unrealized and realized gains and losses associated with interest rate swaps such agreements were not assumed by Talen under the Purchase Agreements.
September 30, 2025
Derivative instrumentsFreedomGuernseyTotal
Current assets$— $16 $16 
Non-current assets— 12 12 
Non-current liabilities(1)— (1)
Interest rate swapsNine Months Ended September 30, 2025Year Ended December 31, 2024
FreedomGuernseyTotalFreedomGuernseyTotal
Unrealized gain (loss) on derivative instruments$(5)$(21)$(26)$1 $(9)$(8)
Interest expense and other finance charges2 17 19 5 30 35 
Total$(7)$27 
(e)adjustments necessary to increase the historical carrying value of property, plant, and equipment acquired by Talen to fair value.
September 30, 2025
Property, plant, and equipment, netFreedomGuernseyTotal
Fair value$1,514 $2,936 $4,450 
Less: Historical value640 1,389 2,029 
Step-up$874 $1,547 $2,421 
Useful lives and fair values assigned to the components of property, plant and equipment were:
September 30, 2025
Property, plant and equipment, netEstimated Useful Life (years)Preliminary Fair Value
FreedomGuernseyTotal
Electric generation
33 - 38$1,469 $2,895 $4,364 
Construction work in progress
N/A
45 41 86 
Total$1,514 $2,936 $4,450 
(f)the estimated acquisition-related transaction costs yet to be expensed or accrued in the historical financial statements through September 30, 2025, which include bank, advisory, legal, valuation, and other professional fees. The aggregate estimated acquisition-related transaction costs are $43 million with $9 million expensed to date resulting in a net pro forma adjustment of $34 million. Such amounts are equally attributable to Freedom and Guernsey, and will not affect the combined statement of operations beyond twelve months after the closing date of the Acquisitions.
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(g)the recognition of: (i) certain natural gas supply contracts at fair value that were assumed by Talen under the Purchase Agreements, and (ii) the periodic amortization, which reduces the carrying value of these liabilities, that is expected to occur in future periods through contract expiry.
Freedom and Guernsey are each party to a long-term natural gas purchase agreement with third parties. Under the terms of the arrangements, the suppliers each provide a significant amount of the natural gas required to generate power at the facilities and expire in July 2028 for Freedom and February 2033 for Guernsey. The price paid for natural gas under each contract is variable based on changes to their respective market prices earned for electric generation. Accordingly, as the wholesale price of power at each facility increases or decreases, the price paid for fuel under the long-term contracts result in corresponding changes. As the acquired fuel supply arrangements meet executory contract accounting requirements, their acquisition fair values were measured as of the Closing Date and presented as long-term liability. Such liabilities are amortized as reductions to fuel expense through expiry. As the fair value of each fuel supply contract resulted in a Closing Date liability, it reflects favorable long term wholesale market power prices for electric generation at each facility.
Assumed fuel supply contracts (a)
Remaining Contact Term (years)Preliminary Fair Value
FreedomGuernseyTotal
Acquired fuel supply contract liabilities
2 - 8$59 $608 $667 
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(a) Preliminary fair value as of the Closing Date.
Fuel supply contracts amortization
Nine Months Ended September 30, 2025Year Ended December 31, 2024
FreedomGuernseyTotalFreedomGuernseyTotal
Fuel and energy purchases
$13 $61 $74 $16 $80 $96 
(h)the elimination of the historical Freedom and Guernsey equity.
(i)the elimination of the historical Freedom and Guernsey depreciation of property, plant and equipment.
Nine Months Ended September 30, 2025Year Ended December 31, 2024
FreedomGuernseyTotalFreedomGuernseyTotal
Depreciation, amortization and accretion$20 $36 $56 $27 $49 $76 
the estimated periodic depreciation measured at the estimated fair value allocated to such assets.
DepreciationNine Months Ended September 30, 2025Year Ended December 31, 2024
FreedomGuernseyTotalFreedomGuernseyTotal
Electric generation
$33 $57 $90 $45 $76 $121 
(j)the elimination of the historical Freedom and Guernsey interest expense and debt financing costs as the debt agreements were not assumed under the Purchase Agreements.
Interest expense and other finance chargesNine Months Ended September 30, 2025Year Ended December 31, 2024
FreedomGuernseyTotalFreedomGuernseyTotal
Interest expense$24 $52 $76 $38 $81 $119 
Amortization of deferred financing costs3 4 7 4 5 9 
Total$83 $128 
(k)the adjustments to the income tax expense (benefit) related to the historical income (loss) before income taxes and the resulting pro forma acquisition adjustments, which were tax effected using a statutory rate of 21%.
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(l)the effect of the cumulative pro forma acquisition adjustments on Talen’s ordinary shares and earnings per share:
Pro forma earnings per share
Nine Months Ended September 30, 2025
Year Ended December 31, 2024
Pro forma net income attributable to Talen $215 $902 
  
Basic: 
Historical weighted average of Talen common shares outstanding (in thousands) 45,694 54,254 
Pro forma earnings per share - basic $4.71 $16.63 
  
Diluted: 
Historical weighted average of Talen common shares outstanding (in thousands) 48,588 56,486 
Pro forma earnings per share - diluted $4.42 $15.97 
5.Other Accounting Pro Forma Adjustments and Assumptions
(a)The Financing Transactions consummated by Talen to complete the Acquisitions are presented as long-term debt, net of deferred finance costs.
September 30, 2025
Long-term debt
Interest Rate (a)
Long-Term Debt
Fees (b)
Total (Net of Debt)
New TLB-3
5.67 %$1,200  $23 $1,177 
New Unsecured Notes due 2034
6.25 %1,400 20 1,380 
New Unsecured Notes due 2036
6.50 %1,290 19 1,271 
Pro forma adjustment to long-term debt$3,890 $62 $3,828 
__________________
(a) Representative interest rate as of the Closing Date.
(b) Deferred finance costs and original issue discounts.
(b)The Financing Transactions consummated by Talen to complete the Acquisitions reflect a pro forma adjustment to interest expense utilizing the interest rates presented in 5(a) above. Additionally, it is assumed that borrowings occur on January 1, 2024 and remain outstanding throughout the periods presented.
Interest expense
 Nine Months Ended September 30, 2025Year Ended December 31, 2024
Interest expense associated with Financing Transactions $179 $239 
Amortization of new deferred finance costs and original issue discounts
 5 7 
Pro forma adjustment to interest expense$184 $246 

The following table represents the effect on pro forma interest expense from the results of a hypothetical change to assumed interest rates on variable interest debt (the new TLB-3).
Increase (decrease) in interest expense Nine Months Ended September 30, 2025Year Ended December 31, 2024
0.125% increase in interest rate $1 $2 
0.125% decrease in interest rate (2)(3)
(c)As a result of consummating the Financing Transactions, Talen terminated a bridge loan commitment. Such adjustment reflects the write-off of the remaining $19 million of unamortized commitment fees associated with such commitment.
(d)Represents the pro forma adjustments to income tax expense (benefit) related to the income (loss) before income taxes resulting from the other accounting pro forma adjustments at an estimated statutory rate of 21%.


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