UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

Preliminary Proxy Statement

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☒

Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

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Talen Energy Corporation

(Name of Registrant as Specified in its Charter)

   

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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(1)

Title of each class of securities to which transaction applies:

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Talen Energy Corporation common stock, par value $0.001 per share

(2)

Aggregate number of securities to which transaction applies:

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128,526,720 shares of common stock, 0 shares of common stock underlying outstanding stock options with an exercise price of less than $14.00 per share, 1,925,217 restricted stock units, 876,069 performance units (assuming the target achievement of the performance goals applicable to such award, and assuming the satisfaction of all other conditions to such delivery) and 88,287.30 director stock units.

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

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In accordance with Exchange Act Rule 0-11(c), the filing fee of  $185,290.45 was determined by multiplying 0.0001007 by the aggregate merger consideration of  $1,840,024,356.20. The aggregate merger consideration was calculated as the sum of (a) 128,526,720 shares of common stock multiplied by the merger consideration of  $14.00 per share, (b) 1,925,217 shares of common stock issuable upon settlement of restricted stock units multiplied by the merger consideration of  $14.00 per share, (c) $196,250 (the amount of equity-based compensation that may be issued prior to the closing of the merger), (d) 876,069 shares of common stock issuable upon settlement of performance units multiplied by the merger consideration of  $14.00 per share (assuming the target achievement of the performance goals applicable to such award, and assuming the satisfaction of all other conditions to such delivery) and (e) 88,287.30 shares of common stock issuable upon settlement of director stock units multiplied by the merger consideration of  $14.00 per share.

(4)

Proposed maximum aggregate value of transaction:

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$1,840,024,356.20

(5)

Total fee paid:

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$185,290.45

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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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(1)

Amount Previously Paid:

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(2)

Form, Schedule or Registration Statement No.:

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(3)

Filing Party:

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(4)

Date Filed:

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Talen Energy Corporation
835 Hamilton Street, Suite 150
Allentown, Pennsylvania 18101

September 2, 2016​

Dear Stockholders:

You are invited to attend a special meeting (such meeting, including any adjournment or postponement thereof, the “Special Meeting”) of the stockholders of Talen Energy Corporation, which we refer to as the Company or Talen Energy, to be held on October 6, 2016, at 3:00 p.m. (local time) at Sheraton New York Times Square, 811 7th Avenue, New York, New York 10019.

At the Special Meeting you will be asked to approve the adoption of the Agreement and Plan of Merger, dated as of June 2, 2016 (as amended from time to time, the “Merger Agreement”) by and among RPH Parent LLC (“RPH”), SPH Parent LLC (“SPH”), CRJ Parent LLC (“CRJ” and collectively with RPH and SPH, “Parent”), RJS Merger Sub Inc., a wholly owned subsidiary of Parent (“Merger Sub”) and the Company pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger. Parent and Merger Sub are beneficially owned by affiliates of Riverstone Holdings LLC (“Riverstone”).

Your vote is very important. Whether or not you plan to attend the Special Meeting, as promptly as possible please complete, date, sign and return the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy over the Internet or by telephone. If you attend the Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.

If the Merger is completed, each outstanding share of Talen Energy’s common stock, par value $0.001 per share (a “Share” or, collectively, the “Shares”) outstanding immediately prior to the effective time of the Merger (other than (i) Shares owned by Raven Power Holdings LLC, Sapphire Power Holdings LLC and C/R Energy Jade, LLC, affiliates of Riverstone (collectively, the “Sponsor Entities”), Parent and Merger Sub, Shares owned by the Company’s direct or indirect wholly owned subsidiaries and Shares owned by the Company as treasury stock, (ii) Shares owned by stockholders who have not voted in favor of adoption of the Merger Agreement or consented thereto in writing and who have properly exercised and not withdrawn a demand for appraisal pursuant to Section 262 of the Delaware General Corporation Law (“DGCL”) with respect to such Shares, and (iii) Shares underlying the Company’s stock options and Shares that are subject to the Company’s restricted stock unit awards, the Company’s performance units and the Company’s director stock units) will be converted into the right to receive $14.00 per Share in cash, without interest, less any applicable withholding taxes.

The board of directors of the Company (the “Board”), with Ralph Alexander and Michael B. Hoffman, who are affiliated with Riverstone, recused, as more fully described in this proxy statement, evaluated the Merger in consultation with the Company’s management and legal and financial advisors. The Board (with Messrs. Alexander and Hoffman recused) has unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are fair, advisable and in the best interests of the Company and its unaffiliated stockholders, (ii) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and (iii) resolved to recommend that the holders of the Shares adopt the Merger Agreement, and directed that the Merger Agreement be submitted to the holders of Shares for their adoption. The approval of the proposal to adopt the Merger Agreement requires the affirmative vote of  (i) the holders of a majority of outstanding Shares entitled to vote at the Special Meeting and (ii) the holders of a majority of the Shares present in person or by proxy at the Special Meeting that are beneficially owned, directly or indirectly, by

the holders of the Shares other than Riverstone, Parent, Merger Sub, the Sponsor Entities and any of their respective affiliates. The Board (with Messrs. Alexander and Hoffman recused) recommends that you vote “FOR” the proposal to adopt the Merger Agreement and the transactions contemplated thereby, including the Merger.

You will also be asked to vote at the Special Meeting on (i) one or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies, which requires the affirmative vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote thereon at the Special Meeting, whether or not a quorum is present and (ii) the non-binding proposal regarding certain Merger-related executive compensation arrangements, which requires the affirmative vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote thereon at the Special Meeting. The Board (with Messrs. Alexander and Hoffman recused) recommends that you vote “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, and “FOR” the non-binding proposal regarding certain Merger-related executive compensation arrangements.

Completion of the Merger is subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement.

In connection with the Merger Agreement, on June 2, 2016, the Sponsor Entities, which collectively own approximately 35% of the issued and outstanding Shares, entered into a Support Agreement with the Company pursuant to which the Sponsor Entities have committed to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger.

The accompanying proxy statement provides you with more detailed information about the Special Meeting, the Merger Agreement and the transactions contemplated thereby, including the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement. We encourage you to carefully read the entire proxy statement and its annexes, including the Merger Agreement and the documents referred to or incorporated by reference in this proxy statement. You may also obtain additional information about the Company from other documents we have filed with the Securities and Exchange Commission (the “SEC”). In particular, you should read the “Risk Factors” section beginning on page 16 in our annual report on Form 10-K for the fiscal year ended December 31, 2015, and other risk factors detailed from time to time in the Company’s reports filed with the SEC and incorporated by reference in this proxy statement, for risks relating to our business and for a discussion of the risks you should consider in evaluating the proposed transaction and how it may affect you.

If you have any questions or need assistance voting your Shares, please call Georgeson LLC, the Company’s proxy solicitor in connection with the Special Meeting, toll-free at (866) 741-9588.

Thank you in advance for your cooperation and continued support.

The accompanying proxy statement is dated September 2, 2016, and is first being mailed to the Company’s stockholders on or about September 6, 2016.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Talen Energy Corporation
835 Hamilton Street, Suite 150
Allentown, Pennsylvania 18101

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Dear Stockholders:

You are cordially invited to attend a special meeting (such meeting, including any adjournment or postponement thereof, the “Special Meeting”) of the stockholders of Talen Energy Corporation, which we refer to as the Company or Talen Energy, to be held on October 6, 2016, at 3:00 p.m. (local time) at Sheraton New York Times Square, 811 7th Avenue, New York, New York 10019, for the following purposes:

1.

To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of June 2, 2016, as amended from time to time, which we refer to as the Merger Agreement, by and among (i) RPH Parent LLC, SPH Parent LLC and CRJ Parent LLC, which we refer to, collectively, as Parent, (ii) RJS Merger Sub Inc., a wholly owned subsidiary of Parent, which we refer to as Merger Sub, and (iii) the Company, pursuant to which Merger Sub will merge with and into the Company, which we refer to as the Merger, with the Company surviving the Merger, which we refer to as the Merger Agreement Proposal. Parent and Merger Sub are beneficially owned by affiliates of Riverstone Holdings LLC, which we refer to as Riverstone. A copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement.

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2.

To consider and vote on one or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement Proposal, which we refer to as the Adjournment Proposal.

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3.

To approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Merger, which we refer to as the Golden Parachute Proposal.

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4.

To transact any other business that may properly come before the Special Meeting, or any adjournment or postponement of the Special Meeting, by or at the direction of the Company’s board of directors, which we refer to as the Board.

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These items of business are more fully described in the proxy statement accompanying this notice.

The approval of the Merger Agreement Proposal by the affirmative vote of  (i) the holders of a majority of outstanding Shares entitled to vote at the Special Meeting and (ii) the holders of a majority of the Shares present in person or by proxy at the Special Meeting that are beneficially owned, directly or indirectly, by the holders of the shares other than (a) Riverstone, (b) Parent, (c) Merger Sub, (d) Raven Power Holdings LLC, Sapphire Power Holdings LLC and C/R Energy Jade, LLC, which we refer to collectively as the Sponsor Entities, and any of their respective affiliates (as defined under Rule 405 of the Securities Act of 1933, as amended) which in the aggregate beneficially own 44,974,658 Shares, or approximately 35% of the issued and outstanding Shares, is required to complete the Merger described in the accompanying proxy statement.

The record date for the Special Meeting is September 1, 2016. Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the Special Meeting or any adjournment or postponement thereof. Any stockholder entitled to attend and vote at the Special Meeting is entitled to appoint a proxy to attend and act on such stockholder’s behalf. Such proxy need not be a stockholder of the Company.

Your vote is very important. To ensure your representation at the Special Meeting, please complete, date, sign and return the enclosed proxy card or submit your proxy by telephone or through the Internet. Please vote promptly regardless of whether you expect to attend the Special Meeting. Submitting a proxy now will not prevent you from being able to vote in person at the Special Meeting. The Board (with Messrs. Alexander and Hoffman, who are affiliated with Riverstone, recused) has approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Golden Parachute Proposal.

Submitting your proxy over the Internet or by telephone is fast and convenient, and your proxy is immediately confirmed and tabulated. Using the Internet or telephone helps save the Company money by reducing postage and proxy tabulation costs.

By Order of the Board of Directors,

Paul M. Breme
Senior Vice President, General Counsel and
Corporate Secretary

Allentown, Pennsylvania
Dated: September 2, 2016

Table of Contents

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address briefly some commonly asked questions regarding the Merger, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, all of which you should read carefully. See “Where You Can Find More Information.”

Q.

Why am I receiving this document?

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A.

On June 2, 2016, the Company entered into the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company with the Company surviving the Merger. Parent and Merger Sub are beneficially owned by affiliates of Riverstone. A copy of the Merger Agreement is attached to this proxy statement as Annex A. Pursuant to resolutions adopted at a meeting of the Board held on June 2, 2016, the Board (with Messrs. Alexander and Hoffman recused) has unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are fair, advisable and in the best interests of the Company and its unaffiliated stockholders, (ii) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and (iii) resolved to recommend that the holders of the Shares adopt the Merger Agreement and directed that the Merger Agreement be submitted to the holders of the Shares for their adoption. In evaluating the Merger, the Board (with Messrs. Alexander and Hoffman recused) consulted with the Company’s management and legal and financial advisors and considered a number of factors.

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The Company is soliciting proxies for the Special Meeting. You are receiving this proxy statement because you own Shares. This proxy statement contains important information about the proposed transaction and the Special Meeting, and you should read it carefully. The enclosed proxy card allows you to vote your Shares without attending the Special Meeting in person.

The Company is holding the Special Meeting so that our stockholders may vote with respect to the adoption of the Merger Agreement, the proposal to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies, and the non-binding proposal regarding certain Merger-related executive compensation arrangements.

Your vote is extremely important, and we encourage you to submit your proxy as soon as possible. For more information on how to vote your Shares, please see the section of this proxy statement entitled “The Special Meeting.”

Q.

What is the proposed transaction and what effects will it have on the Company?

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A.

The proposed transaction is the merger of Merger Sub with and into the Company pursuant to the Merger Agreement. If the Merger Agreement is adopted by our stockholders and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub, a wholly owned subsidiary of Parent, will merge with and into the Company and the Company will continue as the surviving corporation. As a result of the Merger, the Company will no longer be a publicly held corporation. In addition, following the consummation of the Merger, the registration of the Shares and the Company’s reporting obligation under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, with respect to the Shares will be terminated upon application to the Securities and Exchange Commission, which we refer to as the SEC, and the Shares will no longer be listed on any exchange or quotation system, including the NYSE, and price quotations will no longer be available. Following the consummation of the Merger, your Shares will represent only the right to receive the Merger Consideration, and you will no longer have any interest in our future earnings, growth, or value.

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Q.

What happens if the Merger is not completed?

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A.

If the proposal to adopt the Merger Agreement is not approved by our stockholders or if the Merger is not completed for any other reason, our stockholders will not receive any payment for their Shares in connection with the Merger. Instead, the Company will remain a public company and our Shares will continue to be listed and traded on the NYSE, so long as the Company continues to meet the applicable listing requirements.

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Q.

When and where is the Special Meeting?

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A.

The Special Meeting of stockholders of the Company will be held on October 6, 2016, at 3:00 p.m. (local time) at Sheraton New York Times Square, 811 7th Avenue, New York, New York 10019.

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Q.

Who can vote at the Special Meeting?

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A.

Stockholders of record as of the close of business on September 1, 2016, the Record Date for the Special Meeting, are entitled to receive notice of and to attend and vote at, the Special Meeting, or any adjournment or postponement thereof. Each record holder of the Shares as of the Record Date is entitled to cast one vote on each matter properly brought before the Special Meeting for each Share that such holder owns of record as of the Record Date. If you are a stockholder of record, please be prepared to provide proper identification at the Special Meeting, such as a driver’s license. If you wish to attend the Special Meeting and your Shares are held in “street name” by your broker, bank or other nominee, you will need to provide proof of ownership, such as a recent account statement or letter from your bank, broker or other nominee, along with proper identification. “Street name” holders who wish to vote at the Special Meeting will need to obtain a proxy executed in such holder’s favor from the broker, bank or other nominee that holds their Shares of record. Seating will be limited at the Special Meeting.

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Q.

What is the difference between being a “stockholder of record” and a “beneficial owner” of shares held in “street name”?

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A.

If your Shares are registered directly in your name with our transfer agent, Wells Fargo Bank, N.A., you are considered, with respect to those Shares, the “stockholder of record.” In that case, this proxy statement and your proxy card have been sent directly to you by the Company.

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If your Shares are held through a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of the Shares held in “street name.” In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee which may be, with respect to those Shares, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee as to how to vote your Shares by following their instructions for voting.

Q.

What am I being asked to vote on at the Special Meeting?

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A.

You are being asked to consider and vote on the following:

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A proposal to adopt the Merger Agreement, a copy of which is attached to this proxy statement as Annex A, which we refer to as the Merger Agreement Proposal;

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One or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement, which we refer to as the Adjournment Proposal; and

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A non-binding proposal regarding certain Merger-related executive compensation arrangements, as disclosed in the “Potential Change-in-Control Payments to Named Executive Officers” table contained in the section captioned “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger — Golden Parachute Compensation,” which we refer to as the Golden Parachute Proposal.

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Q.

What is a quorum?

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A.

The representation of the holders of a majority of the Shares outstanding and entitled to vote, present in person or by proxy, at the Special Meeting will constitute a quorum for the purposes of the Special Meeting.

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Q.

What vote is required for the Company’s stockholders to approve the Merger Agreement Proposal?

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A.

The approval of the proposal to adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, requires the affirmative vote of  (i) the holders of a majority of outstanding Shares entitled to vote at the Special Meeting and (ii) the holders of a majority of the Shares present in person or by proxy at the Special Meeting that are beneficially owned, directly or indirectly, by Disinterested Stockholders. As of the date of the filing of this proxy statement, none of Riverstone, the Parent Group or any of their respective affiliates (as defined under Rule 405 of the Securities Act) own any Shares except that the Sponsor Entities beneficially own 44,974,658 Shares. Accordingly, as of the date of the filing of this proxy statement, all stockholders of the Company are Disinterested Stockholders other than the Sponsor Entities.

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As of September 1, 2016, which is the Record Date, there were 128,526,720 Shares outstanding.

In connection with the Merger Agreement, on June 2, 2016, the Sponsor Entities, which collectively own approximately 35% of the issued and outstanding Shares, entered into a Support Agreement with the Company pursuant to which the Sponsor Entities have committed to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger.

Q.

What vote is required for the Company’s stockholders to approve the Adjournment Proposal?

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A.

Approval of one or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies requires the affirmative vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote thereon at the Special Meeting, whether or not a quorum is present.

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Q.

What vote is required for the Company’s stockholders to approve the Golden Parachute Proposal?

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A.

Approval of the non-binding proposal regarding certain Merger-related executive compensation arrangements requires the affirmative vote of the holders of a majority of the Shares present in person or represented by proxy and entitled to vote thereon at the Special Meeting.

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Q.

How are the votes counted?

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A.

For each of the Merger Agreement Proposal, the Adjournment Proposal and the Golden Parachute Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” An abstention will have the same effect as an “AGAINST” vote for these proposals and will count for purposes of determining if a quorum is present at the Special Meeting.

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Q.

How does the Board recommend that I vote?

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A.

The Board (with Messrs. Alexander and Hoffman recused) recommends that you vote

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“FOR” the Merger Agreement Proposal,

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“FOR” the Adjournment Proposal, and

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“FOR” the Golden Parachute Proposal.

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You should read “Special Factors — Recommendation of the Board; Fairness of the Merger” for a discussion of the factors that the Board (with Messrs. Alexander and Hoffman recused) considered in deciding to recommend the approval of the Merger Agreement. See also “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger.”

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Q.

How do I vote?

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A.

If you are a stockholder of record as of the Record Date, you may vote your Shares on matters presented at the Special Meeting in any of the following ways:

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in person — you may attend the Special Meeting and cast your vote there;

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by proxy — stockholders of record have a choice of voting by proxy;

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over the Internet (the website address for Internet voting is printed on your proxy card);

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by using the toll-free telephone number noted on your proxy card; or

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by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope.

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If you are a beneficial owner of the Shares as of the Record Date, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the Special Meeting, you must have a legal proxy from your bank, brokerage firm or other nominee.

The control number located on your proxy card is designed to verify your identity and allow you to vote your Shares, and to confirm that your voting instructions have been properly recorded when submitting a proxy over the Internet or by telephone.

Please note that if you attend the Special Meeting in person, cameras, recording devices, cell phones and certain other electronic devices will not be permitted at the Special Meeting.

Q.

What is a proxy?

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A.

A proxy is your legal designation of another person to vote your Shares. This written document describing the matters to be considered and voted on at the Special Meeting is called a proxy statement. The document used to designate a proxy to vote your Shares is called a proxy card.

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Q.

If I am a stockholder of record, what happens if I do not vote or submit a proxy card?

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A.

If you fail to vote, either in person or by proxy, your Shares will not be voted at the Special Meeting and will not be counted for purposes of determining whether a quorum exists.

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Additionally, your failure to vote will (i) (a) have the effect of counting “AGAINST” the Merger Agreement Proposal with respect to the approval threshold requiring the affirmative vote of the holders of a majority of the outstanding Shares entitled to vote at the Special Meeting and (b) have no effect on the Merger Agreement Proposal with respect to the approval threshold requiring the affirmative vote of the holders of a majority of the Shares present in person or by proxy at the Special Meeting that are beneficially owned, directly or indirectly, by Disinterested Stockholders, and (ii) have no effect on the Adjournment Proposal or the Golden Parachute Proposal.

Q.

If my Shares are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my Shares for me?

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A.

Your bank, brokerage firm or other nominee will only be permitted to vote your Shares if you instruct your bank, brokerage firm or other nominee as to how to vote. You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your Shares. Under NYSE rules, absent your instructions, a bank, brokerage firm or other nominee does not have discretionary authority to vote on “non-routine” matters and all of the matters to be considered at the Special Meeting are, under the NYSE rules, “non-routine.”

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If you instruct your bank, brokerage firm or other nominee how to vote on at least one, but not all of the proposals to be considered at the Special Meeting, your Shares will be voted according to your instructions on those proposals for which you have provided instructions and will be counted as

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present for purposes of determining whether a quorum is present at the Special Meeting. In this scenario, a “broker non-vote” will occur with respect to each proposal for which you did not provide voting instructions to your bank, brokerage firm or other nominee.

A failure to provide instructions with respect to any of the proposals and a broker non-vote will have (i) the effect of an “AGAINST” vote on the Merger Agreement Proposal with respect to the approval threshold requiring the affirmative vote of the holders of a majority of the outstanding Shares entitled to vote at the Special Meeting, (ii) no effect on the Merger Agreement Proposal with respect to the approval threshold requiring the affirmative vote of the holders of a majority of the Shares present in person or by proxy at the Special Meeting that are beneficially owned, directly or indirectly, by Disinterested Stockholders and (iii) no effect on the Adjournment Proposal or the Golden Parachute Proposal.

Q.

If a stockholder gives a proxy, how are the Shares voted?

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A.

Regardless of the method you choose to submit a proxy, the individuals named on the enclosed proxy card will vote your Shares in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your Shares should be voted “FOR” or “AGAINST,” or to “ABSTAIN” from voting on, all, some or none of the specific items of business to come before the Special Meeting.

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If you properly sign your proxy card but do not mark the boxes indicating how your Shares should be voted on a matter, the Shares represented by your properly signed proxy will be voted “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Golden Parachute Proposal.

Q.

Can I change or revoke my vote?

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A.

Yes. You have the right to revoke a proxy, including any proxy you may have given whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by submitting another proxy, including a proxy card, at a later date through any of the methods available to you, by giving written notice of revocation to our Corporate Secretary, which must be filed with our Corporate Secretary by the time the Special Meeting begins, or by attending the Special Meeting and voting in person. If your Shares are held in street name by your bank, broker or other nominee, please refer to the information forwarded by your bank, broker or other nominee for procedures on changing or revoking your proxy.

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Only your last submitted proxy will be considered. Please cast your vote “FOR” each of the proposals listed in this proxy statement, following the instructions provided, as promptly as possible.

Q.

What do I do if I receive more than one proxy or set of voting instructions?

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A.

If you hold the Shares in “street name,” or through more than one bank, brokerage firm or other nominee, and also directly as a record holder or otherwise, you may receive more than one proxy or set of voting instructions relating to the Special Meeting. These should each be executed and returned separately in accordance with the instructions provided in this proxy statement in order to ensure that all of your Shares are voted.

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Q.

What happens if I sell my Shares before the Special Meeting?

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A.

The Record Date for stockholders entitled to vote at the Special Meeting is prior to both the date of the Special Meeting and the consummation of the Merger. If you transfer your Shares before the Record Date, you will not be entitled to vote at the Special Meeting and will not be entitled to receive the Merger Consideration. If you transfer your Shares after the Record Date but before the Special Meeting you will, unless special arrangements are made, retain your right to vote at the Special Meeting but will transfer the right to receive the Merger Consideration to the person to whom you transfer your Shares. Unless special arrangements are made, the person to whom you transfer your Shares after the Record Date will not have a right to vote those Shares at the Special Meeting.

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Q.

Who will solicit and pay the cost of soliciting proxies?

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A.

The Company has engaged Georgeson LLC to assist in the solicitation of proxies for the Special Meeting. The Company has agreed to pay Georgeson LLC a fee of  $12,000, and to reimburse Georgeson LLC for reasonable out-of-pocket expenses. The Company will indemnify Georgeson LLC and its affiliates against certain claims, liabilities, losses, damages and expenses. The Company also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of the Shares for their expenses in forwarding soliciting materials to beneficial owners of our Shares and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, by email, over the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

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Q.

What do I need to do now?

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A.

Even if you plan to attend the Special Meeting, after carefully reading and considering the information contained in this proxy statement, please submit your proxy promptly to ensure that your Shares are represented at the Special Meeting. If you hold your Shares in your own name as the stockholder of record, please submit your proxy for your Shares by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope, by using the telephone number printed on your proxy card or by following the Internet proxy instructions printed on your proxy card. If you decide to attend the Special Meeting and vote in person, your vote by ballot at the Special Meeting will revoke any proxy previously submitted. If you are a beneficial owner of the Shares, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you.

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Q.

What is householding and how does it affect me?

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A.

The SEC rules permit companies and intermediaries such as banks and brokers to satisfy delivery requirements with respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice of Internet availability of proxy materials addressed to those stockholders. This process is commonly referred to as “householding.” While the Company does not household, a number of brokerage firms with account holders who are the Company’s stockholders may institute householding. Once you have received notice from your bank or broker that it will be householding materials to your address, householding generally will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice of internet availability of proxy materials, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, you should contact your bank or broker.

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Q.

Am I entitled to exercise appraisal rights under the DGCL instead of receiving the Merger Consideration for my Shares?

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A.

Stockholders are entitled to appraisal rights under Section 262 of the DGCL, with respect to any or all of their Shares in connection with the Merger, provided they meet all of the conditions set forth in Section 262 of the DGCL, a copy of which is attached as Annex D to this proxy statement. This means that you are entitled to have the “fair value” of such Shares determined by the Delaware Court of Chancery and to receive payment based on that valuation. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the Merger Agreement.

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To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the Merger Agreement Proposal, you must not submit a proxy or otherwise vote in favor of the Merger Agreement Proposal and you must hold such Shares continuously through the effective time of the Merger and otherwise comply with Section 262 of the DGCL. Your failure to follow exactly the procedures specified under the DGCL will result in the loss of your appraisal rights. See “Appraisal Rights” and the text of Section 262 of the DGCL reproduced in its entirety as Annex D to this proxy statement. If you hold your Shares through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to

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determine the appropriate procedures for the making of a demand for appraisal by the nominee. In view of the complexity of Section 262 of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors prior to making any decision whether to pursue appraisal rights with respect to their Shares.

Q.

Who can help answer my other questions?

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A.

If you have additional questions about the Merger, need assistance in submitting your proxy or voting your Shares, or need additional copies of the proxy statement or the enclosed proxy card, please contact:

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Georgeson LLC
1290 Avenue of the Americas
9th Floor
New York, NY 10104
Stockholders, Banks and Brokers: Toll Free (866) 741-9588

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SPECIAL FACTORS

This discussion of the Merger is qualified by reference to the Merger Agreement, which is attached to this proxy statement as Annex A. You should read the entire Merger Agreement carefully because it is the legal document that governs the Merger.

We are asking our stockholders to vote on the adoption of the Merger Agreement. If the Merger is completed, the holders of the Shares (other than Excluded Shares) will have the right to receive the Merger Consideration, less any applicable withholding taxes.

Background of the Merger

The Company’s business was formed on June 1, 2015 pursuant to the Talen Transactions. As a result of the Talen Transactions, the Sponsor Entities collectively own approximately 35% of the outstanding Shares and are parties to a stockholders agreement, dated June 1, 2015, with the Company, which we refer to as the Stockholder Agreement. Pursuant to the Stockholder Agreement, Riverstone is entitled to designate for election three members of the Board, including one independent director who is not an officer, director or employee of Riverstone. Messrs. Alexander and Hoffman, each a Partner of Riverstone, are the Riverstone designees to the Board, with Mr. Casey serving as the independent director designee of Riverstone. For additional information regarding the material terms of the Stockholder Agreement, see “Other Important Information Regarding the Parent Group and Riverstone — Significant Past Transactions and Contracts — Stockholder Agreement.”

In late November 2015, representatives of a financial sponsor, which we refer to as Party A, contacted Paul Farr, a member of the Board and the Chief Executive Officer of the Company, to express interest in potentially exploring a transaction with the Company. Mr. Farr and Jeremy McGuire, the Chief Financial Officer of the Company, met with representatives of Party A at Party A’s offices on December 2. Topics discussed at the meeting included each party’s perspectives on the merchant power industry, possible opportunities to partner together on strategic transactions and the possibility of Party A taking the Company private. Party A did not make any proposal to the Company following these discussions.

On December 3, 2015, Mr. Hoffman communicated in a call to Stuart Graham, chairman of the Board, Riverstone’s interest in acquiring the Company’s outstanding Shares not beneficially owned by Riverstone for $11.00 per Share in cash, which represented an approximate 45% premium to the closing price of the Shares on December 2, 2015, which was followed the same day with an email communication outlining the proposal. Mr. Hoffman requested that Riverstone be provided an opportunity to present its proposal to the Board at or before its next meeting. Mr. Hoffman’s email was forwarded to the other members of the Board by Mr. Graham on the same day. Prior to December 3, 2015, none of Mr. Hoffman, Mr. Alexander, or any other representative of Riverstone or any of its affiliates had expressed to the Company any interest in Riverstone acquiring additional Shares.

On December 7, 2015, the members of the Board, other than Messrs. Alexander and Hoffman, which we refer to as the Disinterested Directors, held a telephonic meeting to discuss the proposal communicated by Mr. Hoffman and preliminary process considerations. The Disinterested Directors discussed the potential engagement of Citi as the Company’s financial advisor, citing, among other things, Citi’s familiarity with the Company and experience and reputation generally and in the merchant power generation industry specifically, and approved the engagement, subject to review of information regarding Citi’s material relationships. Representatives of Kirkland & Ellis LLP, which we refer to as Kirkland, the Company’s legal advisor, provided an overview to the Disinterested Directors regarding their fiduciary duties in considering Riverstone’s proposal and reviewed certain terms and legal aspects of the proposal, including Riverstone’s rights under the Stockholder Agreement and the terms of the standstill provision therein. Representatives of Kirkland noted that Messrs. Hoffman and Alexander, as non-independent representatives of Riverstone, should be recused from future deliberations and decision-making regarding the proposal as well as the evaluation of alternative options. Representatives of Kirkland also confirmed with Messrs. Farr and McGuire that they had not discussed potential post-transaction involvement in the management of the Company with Riverstone or any other potential acquiror. The Disinterested Directors instructed each to refrain from any such discussions without prior approval from the Disinterested Directors. Based on the foregoing and after discussion, the other Disinterested Directors decided Mr. Farr

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would not need to be recused from future deliberations and decision-making by the Disinterested Directors regarding the proposal or alternative options. Following discussion with representatives of Kirkland, the Disinterested Directors concluded that it was consistent with their fiduciary duties to consider the Riverstone proposal in order to evaluate whether it was in the best interests of the Company and the unaffiliated stockholders, and accordingly it was not necessary to further consider the standstill provision in the Stockholder Agreement (including those provisions which restricted the Sponsor Entities from acquiring additional Shares, consummating a merger or similar transactions or participating or engaging in a solicitation of proxies), which also provided an exception for any offer with respect to a transaction that is affirmatively publicly recommended by the Board. The Disinterested Directors also concluded that, subject to the receipt of acceptable independence questionnaires, the formation of a special committee of the Board was not necessary because none of the other directors, representing a majority of the Board, were conflicted from considering the transaction, provided that Messrs. Hoffman and Alexander continued to be recused from all meetings of the Board regarding the potential transaction. The Disinterested Directors concluded that they would consider the Riverstone proposal more fully on December 18, the date of the Board’s next regularly scheduled meeting, and invited representatives of Riverstone to present Riverstone’s proposal to the Disinterested Directors.

On December 11, 2015, the Company received a letter from Riverstone addressed to the Board, formally outlining the terms of the $11.00 per Share, all-cash acquisition proposal originally communicated to Mr. Graham on December 3. The proposal stated that Riverstone had retained Wachtell, Lipton, Rosen & Katz, which we refer to as Wachtell, and Vinson & Elkins LLP, which we refer to as V&E, as its legal advisors.

On December 18, 2015, at a regularly scheduled, in-person meeting of the full Board, management reviewed the long-range plan for the Company which had been prepared by management in the ordinary course of business, which we refer to as the December Business Plan. Following the meeting of the full Board, the Disinterested Directors held a separate meeting and invited representatives of Riverstone, including Mr. Hoffman, Mr. Alexander and Carl Williams, a Managing Director of Riverstone, to join that meeting. The representatives of Riverstone made a presentation regarding Riverstone’s proposal, indicating that, while Riverstone’s proposal to acquire additional Shares had not been contemplated in advance of the Talen Transactions, developments since then, including in the Company’s business and the power generation industry generally, had led to Riverstone’s interest in making a proposal. Representatives of Riverstone then outlined Riverstone’s proposal, including that Riverstone would consider including a “go-shop” provision to permit the Company to conduct a post-signing market check. Representatives of Riverstone also noted that, while markets had declined since the proposal on December 3, Riverstone would still be prepared to pay $11.00 per Share. Representatives of Riverstone then left the meeting, and the Disinterested Directors met to review and discuss the Riverstone proposal. Representatives of Kirkland made a presentation to the Disinterested Directors regarding their fiduciary duties, both generally and with respect to evaluating Riverstone’s proposal or other strategic transactions. Representatives of Kirkland also confirmed that all Disinterested Directors had returned independence questionnaires and based on such responses, the Disinterested Directors concluded that each of them (including Mr. Farr) was independent of Riverstone and other potentially interested parties with respect to the matters under consideration. Representatives of Kirkland then reviewed information received from Citi regarding its material relationships with Riverstone and certain other active participants in the merchant power generation industry. Based on the responses, the Disinterested Directors concluded that Citi had no material relationships that in the view of the Disinterested Directors would impair Citi’s ability to serve as financial advisor to the Company and, based on, among other things, Citi’s familiarity with the Company and experience and reputation generally and in the merchant power generation industry specifically, authorized the Company’s management to engage Citi as the Company’s financial advisor. Citi, which thereafter joined the meeting, then provided the Disinterested Directors with a general update on market conditions and trends impacting the merchant power generation sector, including investor and analyst perspectives on the sector and the Company, and discussed certain financial investors active in the merchant generation sector. Following discussion, the Disinterested Directors decided to consider Riverstone’s proposal further in January 2016 and instructed Citi to prepare a preliminary financial analysis for that meeting. Subsequent to the December 18 meeting, the Company executed an agreement with Citi, dated January 11, 2016, with respect to its engagement as the Company’s financial advisor in connection with a possible transaction.

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On January 11, 2016, the Disinterested Directors held a meeting to evaluate the Riverstone proposal and review a preliminary financial analysis with respect to the Company prepared by Citi based on the December Business Plan. The Disinterested Directors discussed the December Business Plan, including underlying assumptions, sensitivities and uncertainties in, and the likelihood of achieving, the forecasts reflected in the December Business Plan. The Disinterested Directors also discussed power and commodity price trends. Representatives of the Company’s management reviewed certain potential value creating options, including possible acquisitions and dispositions, changing the fuel supply for certain power plants and reducing operations and maintenance costs, and associated benefits and risks. Representatives of Kirkland reviewed the potential timeline of a transaction with Riverstone, the potential impact of Riverstone’s existing ownership stake and options for conducting a market check, including a publicly announced auction, a targeted, confidential pre-signing market check and a post-signing go-shop. Citi reviewed its preliminary financial analysis of the Company based on the December Business Plan. After further discussion with the Company’s management and advisors, the Disinterested Directors requested that the Company’s management prepare certain sensitivities regarding the potential effects of power and commodity price changes on the December Business Plan and that Citi review the impact of such sensitivities on its preliminary financial analysis. The Disinterested Directors determined to respond to the Riverstone proposal after they had an opportunity to review these sensitivities.

On January 14, 2016, the Disinterested Directors held a telephonic meeting at which the Company’s management reviewed certain power and commodity pricing sensitivities as requested at the prior meeting. Representatives of Kirkland advised the Disinterested Directors of their fiduciary duties, both generally and in the event of a potential M&A transaction, and available options with respect to the Riverstone proposal. The Disinterested Directors discussed the December Business Plan, potential value creating options that the Company could pursue and associated benefits and risks and Citi’s preliminary financial analysis taking into account certain power and commodity pricing sensitivities and consideration of possible upside and downside scenarios. After discussion and taking into account the foregoing (including the Company’s stand-alone prospects based on the December Business Plan, potential value creating options, which were discussed at the January 11 meeting, and associated benefits and risks and Citi’s preliminary financial analysis), the Disinterested Directors determined that Riverstone’s proposal of  $11.00 per Share undervalued the Company and asked Mr. Graham to communicate that decision directly to Riverstone. Following the meeting, Mr. Graham communicated the Disinterested Directors’ decision to Mr. Hoffman.

On January 19, 2016, with the approval of Mr. Graham, a representative of the Company’s management met with a representative of Riverstone at Riverstone’s offices to discuss Riverstone’s $11.00 per Share proposal. The representative of the Company’s management conveyed the reasons why the $11.00 per Share proposal was not considered acceptable.

On January 29, 2016, Mr. Hoffman and Mr. Graham spoke telephonically about the Riverstone proposal. Mr. Graham advised Mr. Hoffman that it was his sense, in light of the Disinterested Directors’ views of the Company’s stand-alone prospects based on the December Business Plan, that a meaningful price increase to $13.00 per Share would be required for the Disinterested Directors to change their conclusion and authorize further engagement. Mr. Hoffman advised Mr. Graham that he would need to discuss any price increase with Riverstone.

On January 31, 2016, the Disinterested Directors held a telephonic meeting to discuss Riverstone’s continued interest in an acquisition of the Company. Mr. Graham informed the Disinterested Directors that, based on his prior conversations with representatives of Riverstone, Riverstone may be willing to increase its proposed purchase price to as high as $13.00 per Share. The Disinterested Directors discussed a potential $13.00 per Share purchase price relative to the December Business Plan, potential value creating options and associated benefits and risks and the Company’s exposure to forward power and commodity prices. Citi provided a general update on market trends since the last meeting. In addition, the Disinterested Directors discussed with the Company’s management and advisors certain non-economic terms that would be important in any transaction, including various market check options, regulatory commitments, tax matters, due diligence and financing certainty. The Disinterested Directors and the advisors discussed the merits of conducting a pre-signing market check, using a post-signing “go-shop” process or using a combination of approaches if the Disinterested Directors determined to pursue a potential transaction with

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Riverstone. In particular, the Disinterested Directors discussed the effects that Riverstone’s existing ownership stake would have on any pre-signing market check, and, in the event a post-signing market check via a “go-shop” was utilized, the possibility of requiring Riverstone to commit to supporting a higher alternative proposal if subsequently received. The Disinterested Directors also discussed the possibility of conditioning a transaction with Riverstone on the approval by a majority vote of the non-Riverstone stockholders. Following discussion, the Disinterested Directors authorized engagement with Riverstone with respect to a proposal of  $13.00 per Share (assuming Riverstone would reach such an offer price). The Disinterested Directors asked Mr. Graham to communicate this decision directly to Riverstone and directed the Company’s management and advisors to communicate to Riverstone’s advisors the Company’s expectations with respect to the non-economic terms that had been discussed (including with respect to the market check options, regulatory commitments, tax matters, due diligence and financing certainty) and to negotiate a confidentiality agreement. The Disinterested Directors also reiterated the previous instructions to members of the Company’s management that they not discuss any potential post-transaction employment or other arrangements with Riverstone or another potential acquiror at this stage.

Following the meeting on January 31, 2016, Mr. Graham spoke with representatives of Riverstone to communicate the response of the Disinterested Directors, and representatives of Kirkland, on behalf of the Company, spoke with representatives of Wachtell to communicate the Disinterested Directors’ expectations with respect to certain non-economic terms of a transaction.

On February 3, 2016, Riverstone delivered a letter addressed to the Board, outlining its proposal to acquire all of the outstanding Shares not owned by Riverstone for $13.00 per Share in cash, which represented a premium of approximately 88% over the Company’s closing stock price on February 2, 2016. The Riverstone letter also addressed certain non-economic terms of the proposal, including that Riverstone would agree to a post-signing market check through a go-shop process.

On February 4, 2016, the Company delivered a letter to Riverstone pursuant to the authorization of the Disinterested Directors at their January 31 meeting. The Company’s letter included a draft confidentiality agreement and addressed certain previously discussed non-economic terms, including that the transaction should be conditioned on the approval by a majority vote of the non-Riverstone stockholders.

From February 4 to February 9, 2016, representatives of Kirkland, Wachtell and V&E negotiated the terms of the confidentiality agreement, which was executed by the Company and an affiliate of Riverstone on February 9.

On February 11, 2016, Riverstone delivered a letter addressed to the Board to clarify certain valuation assumptions in its February 3 letter including Riverstone’s expectation that the Company would retain cash proceeds from certain asset sales and that the Company’s capital structure not be altered.

On February 12, 2016, representatives of Riverstone notified the Company of its intention to engage in discussions with Citibank, N.A., in its capacity as the administrative agent and a lender under the Credit Agreement, with respect to obtaining lender consents necessary to waive the change of control provisions of the facility in the event of a transaction (which was a necessary pre-condition for Riverstone to be able to proceed with its proposal), which would entail paying customary fees to the lenders, including Citibank, N.A., and to Citibank, N.A. as administrative agent in the event of a transaction.

On February 18, 2016, Riverstone delivered a due diligence request list to the Company. Over the course of the next several weeks, the Company shared responsive materials with Riverstone and its advisors.

On February 25, 2016, Kirkland delivered a draft merger agreement to Wachtell and V&E.

On February 26, 2016, the Disinterested Directors held a telephonic meeting to discuss the status of the Riverstone proposal. The Company’s management reviewed for the Disinterested Directors the status of Riverstone’s due diligence process and outstanding high priority due diligence requests. Representatives of Kirkland reviewed the key non-economic requests that were included in the draft merger agreement. The Disinterested Directors also considered Riverstone’s engagement in discussions with Citibank, N.A., in its capacity as administrative agent under the Credit Agreement and a lender thereunder, to seek consents from the lenders to waive the change of control provisions under the facility (which was a necessary

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pre-condition for Riverstone to be able to proceed with its proposal). Representatives of Kirkland reviewed for the Disinterested Directors relevant considerations and their duties in connection with Riverstone’s engagement in discussions with Citibank, N.A. and summarized the possible fees payable, which in the case of the consent fee would be paid to all consenting lenders and which aggregate fees were nominal as compared to the fees that would be received by Citi from the Company in connection with a transaction with Riverstone or another party. After discussion, the Disinterested Directors concluded that Riverstone’s engagement in discussions with Citibank, N.A. was in the best interest of the Company’s stockholders and would not compromise Citi’s continued independence.

On March 9, 2016, representatives of Wachtell and V&E had a conference call with representatives of Kirkland to discuss the draft merger agreement. Representatives of Wachtell and V&E raised certain preliminary points regarding the terms of the agreement proposed by the Company, which were discussed. Representatives of Wachtell and V&E informed representatives of Kirkland that Riverstone intended to propose a minimum liquidity closing condition. Representatives of Kirkland indicated that if such provision was included, then in order to evaluate such a provision it would be important for Riverstone to provide a sources and uses calculation and specify the amount of required liquidity with its response to the draft merger agreement. Representatives of Wachtell and V&E confirmed that they would respond with a revised draft of the merger agreement.

On March 15, 2016, Kirkland delivered a draft support agreement to Wachtell and V&E, which, among other things, would require each of the Sponsor Entities to vote in favor of the merger agreement, if a transaction with Riverstone was finalized. Later that day, Wachtell delivered a revised draft of the merger agreement to Kirkland.

On March 18, 2016, representatives of the Company, Riverstone, Wachtell, Kirkland and V&E had a conference call to discuss the revised draft of the merger agreement. Representatives of the Company’s management and Kirkland outlined certain issues raised by the revised draft of the merger agreement, including the removal of the requirement that the transaction be approved by a majority of the non-Riverstone stockholders, the absence of an equity commitment letter, the identity of the guarantors for purposes of the limited guarantee as the Sponsor Entities rather than a Riverstone fund to secure the payment of the reverse termination fee, the absence of a requirement to support a superior proposal recommended by the Board and the inclusion of a minimum liquidity closing condition.

Later on March 18, 2016, the Disinterested Directors held a telephonic meeting to discuss the status of the Riverstone proposal. Representatives of Kirkland outlined the most material revisions in the draft merger agreement prepared by Riverstone and related issues. The Disinterested Directors discussed Riverstone’s proposed financing structure and minimum liquidity closing condition and determined that closing certainty with respect to financing was a threshold issue to be resolved prior to further negotiation. The Disinterested Directors also determined that in light of Riverstone’s failure to provide a sources and uses calculation, lack of specificity on the amount of the required minimum liquidity closing condition, and absence of an equity commitment letter backstop, no decision could be made with respect to Riverstone’s proposed financing structure until Riverstone specified its sources and uses and the amount of liquidity that would be required. The Disinterested Directors instructed the Company’s management and advisors to request an indicative sources and uses calculation from Riverstone, and to communicate that other material issues existed in the markup. Following the meeting, representatives of Kirkland accordingly communicated such message to Wachtell that prior to further engagement on other remaining issues, the threshold issues to be resolved included the minimum liquidity closing condition, together with the identity of the guarantors for purposes of the limited guarantee as the Sponsor Entities rather than a Riverstone fund to secure the payment of the reverse termination fee, the absence of requirements for approval by a majority of the non-Riverstone stockholders and Riverstone’s willingness to support a superior proposal recommended by the Board.

During the week of March 21, 2016, Riverstone communicated a proposed liquidity requirement of $500 million at the Company upon closing of the transaction. The Company provided to Riverstone an overview of the Company’s projected liquidity upon closing of a potential transaction, together with potential risk factors and various stress scenarios. Representatives of the Company also conveyed concerns with respect to the closing risk implied by a $500 million liquidity closing condition and indicated that a

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lower amount would be more appropriate or, alternatively, that Riverstone should provide an equity commitment letter to backstop a portion thereof.

On March 28, 2016, representatives of Party A called Mr. Farr to express interest in a potential acquisition of the Company. Mr. Farr indicated he would convey to the Board any credible proposals to acquire the Company.

On March 29, 2016, representatives of the Company, Riverstone, Kirkland, Citi and Wachtell held an in-person meeting to discuss Riverstone’s proposed financing structure and sources and uses schedule, including the $500 million minimum liquidity closing condition proposed by Riverstone. Representatives of Riverstone reviewed an overview they had prepared of the Company’s cash and revolver availability, expected transaction sources and uses of funds and the expected cushion available to the Company under Riverstone’s proposed condition. Representatives of Riverstone indicated that Riverstone would agree to incur a further $250 million of debt financing that could be used to assist the Company in meeting its minimum liquidity closing condition. Representatives of the Company again indicated that if a minimum liquidity condition were to be agreed, the required amount would need to provide the Company with sufficient closing certainty, and reiterated their request that at a minimum Riverstone should provide a limited guarantee from a creditworthy Riverstone fund to backstop the reverse termination fee in the merger agreement.

Later that same day, Mr. Farr consulted with Mr. Graham and they mutually concluded that Mr. Farr should respond to Party A’s March 28 inquiry and indicate a willingness to explore a potential proposal from Party A. Mr. Farr subsequently informed each of the other Disinterested Directors of Mr. Graham’s recommended response to Party A, and they supported that approach. On the evening of March 29, 2016, Mr. Farr advised Party A that the Company would be prepared to execute a confidentiality agreement with Party A to permit it to conduct preliminary due diligence. On March 30, 2016, the Company provided Party A with a draft confidentiality agreement, which was executed on March 31, 2016.

On April 1, 2016, SparkSpread, a publication that covers U.S. and European energy markets, published an article that identified the Company as the target of at least one buyout approach. The closing price of the Shares on March 31, 2016, the trading day prior to the publication of the SparkSpread report, was $9.00 per Share, which we refer to as the unaffected Share price.

Also on April 1, 2016, representatives of the Company’s management spoke with representatives of Riverstone to discuss the minimum liquidity closing condition. Representatives of the Company requested that Riverstone provide an incremental $150 million of committed financing (in addition to the $250 million proposed on March 29, which would have the effect of reducing the minimum liquidity amount to $350 million) and representatives of Riverstone discussed the possibility of agreeing to such request.

On April 2, 2016, the Company sent Riverstone a list of material issues based on the March 15 Riverstone draft merger agreement, which also was separately communicated by Kirkland to Wachtell and V&E. The issues list set forth the Company’s counterproposals with respect to, among others, the minimum liquidity closing condition, the non-Riverstone stockholder approval requirement, the provision of a guarantee from a Riverstone fund, regulatory efforts, termination fees and Riverstone’s support of a superior proposal recommended by the Board. The issues list also stated that, in addition to the matters set forth, numerous other issues remained subject to negotiation.

Between April 3 and April 8, 2016, representatives of the Company, Kirkland, Riverstone, Wachtell and V&E had conference calls to discuss open issues in the draft merger agreement and Wachtell communicated that Riverstone would respond to the April 2 issues list after receiving a revised draft merger agreement.

On April 6, 2016, representatives of the Company’s management and Party A met in person to discuss preliminary financial information regarding the Company that had been requested by Party A in connection with its consideration of a potential acquisition of the Company.

Over the course of the next several weeks, representatives of each of Riverstone and Party A continued their engagement with the Company with respect to their respective due diligence efforts.

On April 8, 2016, Kirkland delivered a revised draft of the merger agreement to Wachtell and V&E.

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On April 13, 2016, Party A delivered a letter to the Company outlining a non-binding expression of interest to acquire the Company at an indicative purchase price range of  $13.50 to $14.00 per Share in cash, which represented a premium of approximately 24% to 29% over the market price of the Shares on April 12 and a premium of approximately 78% to 85% over the trailing 30-day volume-weighted average market price of the Shares ending on March 31, 2016, the trading day prior to the publication of the SparkSpread report. In its letter, Party A stated that its proposal was not subject to a financing contingency, would contain a customary financial sponsor financing and reverse termination fee structure and requested a five-week exclusivity period.

On April 15, 2016, the Disinterested Directors held a telephonic meeting and reviewed Party A’s April 13 proposal and discussed the status of Riverstone’s proposal. Representatives of Kirkland and Citi summarized Party A’s proposal and reviewed the status of open points under the Riverstone proposal. The Disinterested Directors noted the material terms of the merger agreement that remained to be negotiated with Riverstone, and the potential benefits of establishing a competitive dynamic between Party A and Riverstone with respect to price and terms. Representatives of Kirkland recommended that both potential bidders be put on a level playing field and that exclusivity for Party A was not appropriate in light of the respective proposals. After discussion, the Disinterested Directors determined that neither proposal warranted exclusivity at that time. The Disinterested Directors also discussed the fact that Party A had requested permission to discuss its proposal directly with Riverstone, but agreed with management’s advice and recommendation not to permit such a discussion at that time. The Disinterested Directors further discussed whether to contact other potential bidders.

Representatives of Citi informed the Disinterested Directors that they had been contacted by representatives of a financial sponsor, which we refer to as Party B, within a few weeks of the publication of the SparkSpread report and that Party B had indicated that it was undertaking preliminary diligence on the basis of publicly available information and would follow up with Citi if Party B was interested in conducting further due diligence or making a proposal. Representatives of Party B subsequently informed Citi that Party B had decided not to conduct further due diligence or make a proposal in respect of a transaction with the Company and Citi communicated this to the Company’s management. Thereafter, Party B did not engage in discussions with Citi in respect of a transaction involving the Company. Citi also discussed with the Disinterested Directors other potential strategic acquirors and financial sponsors and their potential interest level in a transaction with the Company, noting that, in its view, other interested parties likely would have approached the Company following the SparkSpread report given the general knowledge of the potential transaction in the marketplace, as was the case with Party B. After discussion, the Disinterested Directors determined that at this time it was not necessary or desirable to contact other potential bidders in light of the offers already received and Citi’s expectation, among other things, that other interested parties likely would have approached the Company, as Party B had done. The Disinterested Directors determined to explore the two proposals that had been received and to remain open to other inbound proposals, and directed the Company’s management and advisors to prepare a timeline for both proposals, send a process letter to each party and distribute a draft merger agreement to Party A on the basis of the latest draft delivered to Riverstone, with appropriate modifications to reflect Party A’s proposed financing structure. In light of the proposal from Party A, the Disinterested Directors also discussed the role of the Disinterested Directors and the Company’s management and advisors in the process and potential conflicts. Mr. Farr and Mr. McGuire confirmed that neither had, and that they would not without the Disinterested Directors’ approval have, discussions with Party A or Riverstone with respect to post-transaction involvement, as previously discussed. Following discussion, the Disinterested Directors concluded that no change to the process was warranted.

On April 19, 2016, a process letter was sent to representatives of each of Party A and Riverstone, and a draft merger agreement prepared by Kirkland was attached to Party A’s process letter, and Riverstone’s process letter referenced the prior version of the draft merger agreement exchanged by the parties. Each process letter requested that a markup to the draft merger agreement and any outstanding due diligence requests be submitted by May 13, 2016 and that binding bids be submitted by May 20, 2016.

On April 26, 2016, Riverstone delivered a letter addressed to the Board in response to the April 19 process letter. In its April 26 letter, Riverstone reaffirmed its previously communicated $13.00 per Share proposal, which represented a premium of approximately 44% to the Company’s unaffected Share price.

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The letter included executed debt commitment papers and communicated additional progress with respect to Riverstone’s proposed financing of a transaction. Riverstone’s letter also included a revised draft of the merger agreement and noted that, in Riverstone’s view, the agreement contained significant concessions with respect to regulatory, financing and liquidity matters (including by accepting the Company’s proposal for the minimum liquidity closing condition of  $350 million) and the provision of a limited guarantee from certain unspecified Riverstone funds. In the letter, Riverstone also informed the Board that it did not at such time need to, nor did it have any intent to, sell its 35% stake in the Company, including by supporting an alternative proposal from a third party.

Between April 26 and April 29, 2016, representatives of Kirkland and the Company clarified with representatives of Riverstone and Wachtell the terms of the revised proposal.

On April 29, 2016, the Disinterested Directors held a telephonic meeting to discuss Riverstone’s April 26 letter and the status of the Party A proposal. Representatives of the Company’s management informed the Disinterested Directors that Party A was still undertaking due diligence efforts and seeking to obtain committed financing. Representatives of Kirkland provided an overview of the material terms of the revised Riverstone proposal, including with respect to the minimum liquidity closing condition, the Riverstone fund guarantee, the amount of the termination fees, support of a superior proposal recommended by the Board and the stockholder approval condition. Representatives of Kirkland and Citi noted for the Disinterested Directors that Riverstone was not likely to commit to support a superior proposal recommended by the Board based on statements set forth in Riverstone’s April 26 letter. The Disinterested Directors determined that this provision was potentially less important in light of press reports and the Disinterested Directors’ belief that interested parties had the opportunity to approach the Company prior to any potential transaction with Riverstone. After discussion, the Disinterested Directors instructed Kirkland to continue to seek a guarantee from a Riverstone fund with sufficient undrawn capital and a closing condition tied to the approval of non-Riverstone stockholders, and that the commitment to support a superior proposal should remain an open point for later resolution. The Disinterested Directors also discussed the revised financing and liquidity requirements with the Company’s management and advisors and directed them to continue to negotiate for more favorable terms in the draft merger agreement, including a more favorable minimum liquidity closing condition. The Disinterested Directors concluded that the Company should continue to proceed with both Riverstone and Party A pursuant to the April 19 process letter, and the Company’s management and advisors should discuss the open issues in the draft merger agreement with Riverstone in the interim. The Disinterested Directors also determined to respond with a letter back to Riverstone.

On May 3, 2016, Mr. Graham delivered a letter to representatives of Riverstone in response to the April 26 Riverstone letter communicating the Disinterested Directors’ conclusions from the April 29 meeting and highlighting material open issues in the Riverstone markup of the draft merger agreement, including the minimum liquidity closing condition, and requested that Riverstone proceed in accordance with the April 19 process letter.

On May 3 and May 9, 2016, representatives of the Company, Kirkland, Citi, Riverstone, V&E, Wachtell and Goldman Sachs & Co., which we refer to as Goldman, financial advisor to Riverstone, had a conference call to discuss Riverstone’s proposed financing structure, specifically the minimum liquidity closing condition. The parties discussed various options for such a condition and compared their respective analyses for base and stress case scenarios.

On May 6, 2016, representatives of Kirkland, Citi, V&E, Wachtell and Goldman had a conference call to discuss open issues in the draft merger agreement. In the subsequent two weeks, the parties had various additional conference calls to discuss the draft merger agreement, including provisions regarding the go-shop, no-shop, termination fee triggers, interim operating covenants, energy marketing and trading activities and regulatory matters as well as other open issues.

On May 11 and May 12, 2016, Messrs. Farr and McGuire spoke separately with each of the Disinterested Directors to determine if it was the appropriate time to permit Party A to speak directly with Riverstone with respect to Party A’s proposal given that Party A had indicated it was not in a position to proceed absent such a conversation. The Disinterested Directors concurred that these conversations should be permitted, and following these discussions, representatives of Party A were informed on May 12 that the Company would permit such communication.

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On May 13, 2016, Riverstone delivered a letter addressed to the Board to provide additional information with respect to certain open issues in the draft merger agreement. The letter confirmed Riverstone’s concession of reducing the minimum liquidity closing condition from $500 million to $350 million, and that $250 million of this amount would be provided by the committed debt financing obtained by Riverstone. The letter also stated that Riverstone was willing to provide a fund-level guarantee of payment of the reverse termination fee from its largest private equity fund, which had sufficient undrawn committed capital to pay the reverse termination fee in the event of, among other things, a financing failure.

On May 15, 2016, representatives of Kirkland had a conference call with representatives of Skadden, Arps, Slate, Meagher & Flom LLP, legal advisor to Party A, to discuss the process outlined in the Company’s April 19 process letter and preliminary feedback on the draft merger agreement.

On May 16, 2016, the Disinterested Directors held a telephonic meeting to discuss the status of the transaction process. Management provided a liquidity overview of the Company and expressed its belief that Riverstone’s most recent proposed condition requiring a minimum liquidity amount at closing of  $350 million, together with the debt financing to be provided pursuant to Riverstone’s committed financing sources, implied sufficient closing certainty and an acceptable level of risk, and further indicated its belief that Riverstone was not prepared to consummate a transaction without such a condition. The Disinterested Directors discussed certain other points in the Riverstone draft of the merger agreement, including the closing condition tied to approval by non-Riverstone stockholders, amounts of the termination fees, Riverstone’s support of a superior proposal recommended by the Board (again observing that this had become less important in light of press reports regarding the transaction) and related matters. The Company’s advisors next indicated that they had been informed that Riverstone and Party A had spoken on May 12 as previously consented to by the Company, and that Riverstone had indicated to Party A that it was not interested in selling the Sponsor Entities’ stake in the Company in an acquisition by Party A or otherwise supporting Party A in a transaction. The Disinterested Directors also noted that, notwithstanding the Company’s request in the April 19, 2016 process letter, Party A had not provided a markup of the proposed merger agreement, although it had orally indicated to representatives of Citi and Kirkland that it remained interested in a transaction near the top end of its previously communicated range of  $13.50 to $14.00 per Share. Citi provided the Disinterested Directors a general market update, including an overview of the Company’s Share price performance. Representatives of Kirkland reviewed with the Disinterested Directors their fiduciary duties, both generally and in the event of a potential M&A transaction.

On May 23, 2016, the Disinterested Directors held an in-person meeting to review the status of the Riverstone and Party A proposals in light of the Company’s request in its process letters for final bids on May 20. Representatives of the Company’s management first presented updated forecasts with respect to the Company’s long-range plan, which we refer to as the May Forecasts. The May Forecasts were prepared for purposes of assisting the Disinterested Directors in evaluating potential strategic initiatives for the Company with the assistance of the Company’s management and advisors and in light of the passage of time since the December Business Plan. The Disinterested Directors also considered certain strategic initiatives, including possible dispositions, changing the fuel supply for certain power plants and reducing operations and maintenance costs, and potential acquisition opportunities in the market, including potential acquisition of power generation assets, and associated potential valuation enhancement estimates. Citi provided an overview of the premiums implied by Riverstone’s and Party A’s proposals and an updated preliminary financial analysis taking into account the May Forecasts. Representatives of Kirkland discussed the status of the Riverstone draft of the merger agreement, and noted that the same points discussed with the Disinterested Directors at the May 16 meeting remained open, including the closing condition tied to approval by non-Riverstone stockholders. Representatives of Kirkland also reviewed for the Disinterested Directors their fiduciary duties, both generally and in the event of a potential M&A transaction. After discussion, the Disinterested Directors determined that, in light of the factors discussed, Riverstone’s proposed price of  $13.00 per Share undervalued the Company. The Disinterested Directors requested that Mr. Graham communicate to Riverstone that its proposed price was insufficient and that the current draft of the merger agreement was also not acceptable to the Company, but that the Company remained open to an improved proposal. The Disinterested Directors also agreed that because Party A had not yet made a definitive proposal or provided a contract markup, no response to Party A was warranted at that time.

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On May 24, 2016, PJM Interconnection, L.L.C., which we refer to as PJM, released the results of the 2019/2020 planning year capacity auction, which we refer to as the PJM Auction, which were materially lower than industry and research analysts’ expectations and the assumptions underlying the Company’s long-term business plan for the affected years.

On May 26, 2016, Riverstone delivered a letter to the Company, and Wachtell delivered a revised draft of the merger agreement to Kirkland. In its May 26 letter, Riverstone stated that it remained prepared to pursue a transaction at a price of  $13.00 per Share notwithstanding the negative results of the PJM Auction. In its revised draft merger agreement, Riverstone agreed to condition the transaction on the approval by a majority vote of the non-Riverstone stockholders and also agreed to the termination fee amounts previously proposed by the Company, but did not commit to support a superior proposal recommended by the Board.

On May 27, 2016, in accordance with the directives of the Disinterested Directors, representatives of Kirkland and Citi separately had conference calls with representatives of Party A to discuss the status of its indication of interest. Representatives of Party A communicated that Party A remained interested in a transaction consistent with its initial proposal and believed it would still be close to a purchase price of $14.00 per Share, but that it would not proceed without Riverstone’s decision as a stockholder to support a transaction. Representatives of Kirkland and Citi encouraged Party A to submit a definitive proposal to the Disinterested Directors if Party A desired to pursue a transaction.

On May 28, 2016, the Disinterested Directors held a telephonic meeting to discuss Riverstone’s May 26 letter in light of the impact of the PJM Auction results on the Company and its future stand-alone prospects. Representatives of the Company’s management provided an overview of the results of the PJM Auction and discussed their impact on the May Forecasts. The Company’s management explained that the PJM Auction results reflected capacity pricing of  $100/megawatt-day, which was lower than the Company’s forecasts of  $131/megawatt-day which had been presented to the Disinterested Directors in the May Forecasts. The Company’s management further explained that the PJM Auction had resulted in less megawatt capacity sold by the Company than anticipated and that these results could lead to a reduction in the Company’s revenues for calendar years 2019 and 2020, respectively. The Company’s management noted for the Disinterested Directors that one potential mitigating factor was the Company’s ability to sell additional megawatt capacity into the market in future capacity auctions or through bilateral agreements with prospective counterparties. The Disinterested Directors discussed the revised projections and the impact of the PJM auction results, including underlying assumptions, sensitivities and uncertainties. Citi then reviewed for the Disinterested Directors the effect of the PJM Auction results, taking into account management’s assessment of their impact on the May Forecasts, on Citi’s preliminary financial analysis. Representatives of Kirkland provided an overview of the material terms in the revised draft merger agreement, noting the concessions made by Riverstone in agreeing to the non-Riverstone stockholder approval condition and the termination fee amounts, but also indicating that there remained key open issues, including with respect to Riverstone’s proposed restrictions on the Company’s ordinary course operations during the pre-closing period with respect to liquidity management, marketing and trading activities and employee matters. Representatives of Kirkland and Citi also noted for the Disinterested Directors Riverstone’s position that it would not agree to support a superior proposal recommended by the Board. The Disinterested Directors noted that, as previously discussed, this request had become less important in light of the expectation that any interested party would likely approach the Company following the SparkSpread report, as was the case with Party B. Representatives of Citi then provided an update on Party A, noting that Party A had not submitted a merger agreement markup or secured financing and had not pursued its prior proposal. After discussion, the Disinterested Directors determined that, in light of the factors discussed (including, among other things, the Company’s stand-alone prospects based on the May Forecasts taking into account the results of the PJM Auction, as well as potential value creating options and associated benefits and risks and Citi’s preliminary financial analysis taking into account the Company’s stand-alone prospects) and notwithstanding the PJM Auction results, Riverstone’s proposed purchase price of  $13.00 per Share remained insufficient and that the draft merger agreement proposed by Riverstone was not acceptable. In addition, the Disinterested Directors noted that a purchase price of  $14.00 per Share, in light of the factors discussed (including, among other things, the Company’s stand-alone prospects based on the May Forecasts taking into account the results of the PJM Auction, as well as potential value creating options and associated benefits and risks and Citi’s preliminary financial

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analysis taking into account the Company’s stand-alone prospects) and noting also that $14.00 per Share represented an attractive premium over the closing price of Shares on March 31, 2016, the last trading day before the first public reports of a potential sale of the Company, and equaled the highest proposal received by the Company, would be acceptable if coupled with an acceptable contract. The Disinterested Directors asked Mr. Graham to communicate this conclusion to Riverstone, and instructed Kirkland to send to Wachtell and V&E a markup of the draft merger agreement reflecting the terms the Company would consider acceptable.

Following the meeting of the Disinterested Directors, on May 28, 2016, Mr. Graham had a telephone conversation with representatives of Riverstone to communicate the Disinterested Directors’ determination and that the Company was not prepared to enter into a transaction at a price below $14.00 per Share.

On May 29, 2016, Kirkland delivered a revised draft of the merger agreement to Wachtell and V&E.

On May 30, 2016, representatives of Riverstone conveyed to Mr. Graham through a call and simultaneous email communication that Riverstone may be prepared to increase its price to $14.00 per Share, but that certain issues remained open in the draft merger agreement and that Riverstone expected the terms of the merger agreement to be closer to those last proposed by Riverstone. Mr. Graham and Mr. Hoffman agreed that the most advisable course of action for all parties was to meet in person to assess whether a mutually acceptable form of merger agreement could be negotiated.

On May 30, 2016, representatives of the Company’s management updated the Disinterested Directors in an email communication with respect to developments since the last meeting, including that Kirkland had delivered a revised merger agreement to Wachtell and V&E, Riverstone’s preliminary response on price and to the merger agreement, and that an in-person meeting was scheduled for May 31.

On May 31, 2016, Mr. Graham, representatives of the Company’s management, Kirkland, Citi, Riverstone, Wachtell, V&E and Goldman held an in-person meeting to negotiate open points in the draft merger agreement, including matters related to the appropriate minimum liquidity closing condition, regulatory approvals and operations during the pre-closing period with respect to liquidity management, marketing and trading activities and employee matters. At the conclusion of the meeting, Riverstone confirmed the deal price of  $14.00 per Share. Over the next two days, the parties continued to negotiate the terms of the proposed merger agreement, support agreement and limited guarantee and exchanged drafts of such agreements. On June 2, 2016, the parties finalized the transaction documents.

On June 2, 2016, the Disinterested Directors held a telephonic meeting to discuss the outcome of negotiations with Riverstone and the terms of the proposed transaction. Representatives of Kirkland reviewed with the Disinterested Directors their fiduciary duties, including in connection with the consideration of the proposed transaction with Riverstone and provided an overview of the Disinterested Directors’ process in reviewing the Riverstone proposal and alternative options. Representatives of Kirkland described, and the Disinterested Directors discussed, the terms of the final merger agreement, support agreement and limited guarantee. Citi reviewed its financial analysis of the Merger Consideration and rendered an oral opinion, confirmed by delivery of a written opinion dated June 2, 2016, to the Disinterested Directors to the effect that, as of such date and based on and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken described in such opinion, the Merger Consideration to be received by Disinterested Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Following discussion, and after considering the foregoing and the factors described under “Special Factors — Recommendation of the Board; Fairness of the Merger,” the Disinterested Directors unanimously adopted resolutions (i) determining that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were fair, advisable and in the best interests of the Company and the unaffiliated stockholders, (ii) approving the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and (iii) resolving to recommend that the holders of the Shares adopt the Merger Agreement, and direct that the Merger Agreement be submitted to the holders of Shares for their adoption.

In the evening on June 2, 2016, the Company, Parent and Merger Sub executed the Merger Agreement. On June 3, 2016, the Company and Riverstone issued a joint press release announcing the execution of the Merger Agreement. Contemporaneously with the execution of the Merger Agreement, the Sponsor Entities

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and the Company executed the Support Agreement and Parent and Riverstone Global Energy and Power Fund V (FT), L.P. entered into the Guarantee.

Subsequent Events

Under the terms of the Merger Agreement, the Company and its advisors were permitted to actively solicit and negotiate Alternative Proposals from third parties during a “go-shop” period that began on June 3, 2016 and expired at 11:59 p.m. Eastern time on July 12, 2016. See “The Merger Agreement —  Solicitation of Acquisition Proposals.” During the “go-shop” period, Citi, under the direction of the Disinterested Directors, undertook a broad solicitation effort, contacting 20 potential acquirors, comprising nine strategic parties and 11 financial parties, including the financial investors active in the merchant generation sector that were discussed at the December 18, 2015 meeting of the Board. However, none of the prospective buyers contacted during the “go-shop” period submitted an Alternative Proposal and no other person made an unsolicited Alternative Proposal.

Accordingly, no third party qualified as an Excluded Party for purposes of the Merger Agreement. The Company is now subject to customary “non-solicitation” provisions that, subject to limited exceptions, prohibit it from soliciting, encouraging, discussing or negotiating Alternative Proposals from third parties or providing non-public information to third parties. See “The Merger Agreement — Solicitation of Acquisition Proposals.”

Recommendation of the Board; Fairness of the Merger

At its meeting on June 2, 2016, the Disinterested Directors (including a majority of the Company’s directors who are not employees of the Company) unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are fair, advisable and in the best interests of the Company and the unaffiliated stockholders, (ii) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and (iii) resolved to recommend that the holders of the Shares adopt the Merger Agreement and directed that the Merger Agreement be submitted to the holders of Shares for their adoption. The Disinterested Directors believe that the Merger is fair to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act.

In evaluating the Merger, the Disinterested Directors consulted with the Company’s management team, as well as the Company’s legal and financial advisors, and considered the following potentially positive factors, which are not intended to be exhaustive and are not presented in any relative order of importance:

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the Merger Consideration of  $14.00 per Share represented a premium of  (i) 85% over the closing price of Shares on December 2, 2015, the day on which the acquisition proposal was first communicated to Mr. Graham, the chairman of the Board, (ii) 56% over the closing price of Shares on March 31, 2016, the last trading day before the first public reports of a potential sale of the Company and (iii) 17% over the closing price of Shares on June 2, 2016, the last trading day before the announcement of the Merger;

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the current and historical market prices of the Company’s common stock, including those set forth in the table under “Other Important Information Regarding the Company — Market Price of Common Stock and Dividends,” taking into account the market performance of the Company’s common stock relative to the common stock of other participants in the industry in which the Company operates and general market indices, and the fact that the trading price of the Company’s common stock had declined since the initial public offering of the Company, which decline the Disinterested Directors believed reflected increasing uncertainty as to the prospects for the power generation industry in general and specific challenges faced by the Company;

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information with respect to the Company’s business, operations, financial condition, earnings and prospects, the Company’s long-range plans, and the risk in achieving those prospects and plans, as well as industry, economic and market conditions and trends, including the Disinterested Director’s evaluation of the Company’s exposure to commodity and energy price changes, the impact on the Company of general, macro-economic developments and other risks and uncertainties discussed in the Company’s public filings with the SEC as evidenced by the results of the PJM Auction;

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•

Riverstone’s representation to the Company that the $14.00 per Share Merger Consideration was its best offer, that such offer represented a premium of approximately 27% over Riverstone’s initial proposal of  $11.00 per Share and a premium of approximately 8% over Riverstone’s proposal of $13.00 per Share prior to the negative results of the PJM Auction, and the conclusion reached by the Disinterested Directors, after discussions with the Company’s management and advisors and negotiations with Riverstone, that the per Share Merger Consideration of  $14.00 was likely the highest price per Share that Riverstone was willing to pay and that the combination of Riverstone’s agreement to pay that price and the “go-shop” process (as more fully described under “The Merger Agreement”) would likely result in a sale of the Company at the highest price per Share that was reasonably attainable;

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the Disinterested Director’s belief that the $14.00 per Share Merger Consideration at least equaled the highest proposal received by the Company, including the top of the indicative purchase price range proposed by Party A prior to the PJM Auction results, the only other proposal received by the Company;

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that the per Share Merger Consideration consists solely of cash, providing the Company’s stockholders with certainty of value and liquidity;

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the knowledge that the Company’s valuation, measured as a multiple of enterprise value to earnings before income, taxes, depreciation and amortization (the principal valuation metric for the competitive power generation sector), has historically traded at a discount relative to other participants in the independent power producer sector in which the Company operates;

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that, although SparkSpread had reported on April 1, 2016 that the Company was a potential target for a leveraged buyout and the Board had received interest from multiple potential bidders, including Party B, no potential acquiror other than Riverstone and Party A made a proposal to acquire the Company before the Merger Agreement was executed on June 2, 2016, and the Disinterested Directors’ belief that potential acquirors would have approached the Company after the SparkSpread report and that interested third parties would still have the opportunity to make a proposal during and after the “go-shop” period (as more fully described under “The Merger Agreement”);

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the financial and other terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Merger, resulting from extensive negotiations conducted at the direction of the Disinterested Directors, with the assistance of experienced legal and financial advisors, during a process that resulted in, among other things, an approximately 27% increase in the Merger Consideration from Riverstone’s initial proposal from Riverstone of  $11.00 per Share on December 11, 2015 to its final offer of  $14.00 per Share;

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the strategic review and discussion undertaken by the Disinterested Directors with the assistance of the Company’s management and advisors, which involved the evaluation of multiple options, including the Company’s stand-alone business plan, potential value creating options, and a review of potentially available acquisition targets in the market, the consideration by the Disinterested Directors of multiple potential acquirors, negotiation with certain of such acquirors, the fact that Party A did not make any definitive proposal and Party B did not make any indicative proposal, together supporting the Disinterested Directors’ belief that the Merger Agreement and the transactions contemplated thereby, including the Merger, were more favorable to the Company and the unaffiliated stockholders, when compared with other strategic initiatives reasonably available to the Company taking into account the Company’s stand-alone business plan and certain potential value enhancement opportunities, including possible acquisitions and dispositions, changing the fuel supply for certain power plants and reducing operations and maintenance costs, and their associated benefits and risks (as more fully described under “Special Factors — Background of the Merger”);

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the financial presentation and opinion of Citi, dated June 2, 2016, to the Disinterested Directors as to the fairness, from a financial point of view and as of the date of the opinion, of the Merger Consideration to be received by Disinterested Stockholders pursuant to the Merger Agreement,

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which opinion was based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken (as more fully described under “Special Factors — Opinion of Citigroup Global Markets Inc.”);

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the likelihood of the Merger being completed, based on, among other matters:

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Parent having obtained committed debt financing in connection with the transaction, the reputation of the financing sources and the obligation of Parent to use reasonable best efforts to obtain the debt financing;

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the absence of a financing condition in the Merger Agreement;

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the Company’s ability, under circumstances specified in the Merger Agreement, to seek specific performance of Parent’s obligation to cause the Merger to occur;

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the requirement that, in the event of a failure of the Merger to be consummated under certain circumstances, Parent pay the Company a termination fee of  $85 million, and the commitment with respect to such payment obligation by Riverstone (as more fully described under “The Merger Agreement — Termination — Termination Fees”);

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the requirement that Parent use reasonable best efforts to obtain the regulatory approvals required to consummate the Merger, including effecting divestitures and providing additional financial support from the Company and its subsidiaries, unless such action would have certain burdensome consequences specified in the Merger Agreement;

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the likelihood and anticipated timing of completing the proposed Merger in light of the scope of the conditions to completion, including that there were no anticipated substantive issues expected in connection with the required regulatory approvals; and

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the likelihood of satisfaction of the condition requiring the Company to have available liquidity (unrestricted cash and unutilized Credit Facility capacity) of at least $350 million at the consummation of the Merger;

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the terms and conditions of the Merger Agreement, including:

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the Company’s right to solicit offers with respect to alternative acquisition proposals during a 40-day “go-shop” period and to continue discussions with certain excluded “parties” that make acquisition proposals during the go-shop period for an additional 20-day period and, notwithstanding the fact that the Sponsor Entities have not agreed to vote their Shares in favor of a “Superior Proposal,” the Disinterested Directors’ view that the go-shop period would invite additional parties to make proposals and could lead to a “Superior Proposal” if another party were interested;

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the Company’s right, from the end of the “go-shop” period and prior to the time the Company’s stockholders approve the proposal to adopt the Merger Agreement, subject to certain conditions and requirements, to consider and respond to unsolicited acquisition proposals or engage in discussions or negotiations with third parties making such acquisition proposal and to terminate the Merger Agreement to accept a “superior proposal”, and pay Parent a termination fee of  $50 million, or $25 million if the termination is in connection with the Company’s entry into a definitive agreement with an “excluded party” (as more fully described under “The Merger Agreement — Termination — Termination Fees”);

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the belief of the Disinterested Directors that the Company’s termination fees were reasonable in light of, among other matters, the benefit of the Merger to the Company’s stockholders, the size of such termination fees in similar transactions and the enterprise value of the Company;

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the terms of the Merger Agreement providing the Company sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement; and

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•

the ability of the Company to seek specific performance to prevent certain breaches of the Merger Agreement by Parent and Merger Sub;

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that the Sponsor Entities agreed in the Support Agreement to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger (as more fully described under “Support Agreement”);

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the Guarantee, provided by an affiliate of Riverstone, guaranteeing Parent’s obligations under the Merger Agreement with respect to payment of the Parent termination fee and certain reimbursement obligations;

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the Disinterested Directors’ belief that they were fully informed about the extent to which the interests of Riverstone in the Merger differ from those of the Company’s other stockholders; and

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that management did not negotiate or enter into any contracts (including as to post-closing employment) with Riverstone or its affiliates in connection with the execution of the Merger Agreement or during the course of the Company’s negotiations with Riverstone.

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The Disinterested Directors believe that sufficient procedural safeguards were and are present to ensure the fairness of the Merger and to permit the Disinterested Directors to represent effectively the interests of the unaffiliated stockholders, and in light of such procedural safeguards the Disinterested Directors did not consider it necessary to retain an unaffiliated representative to act solely on behalf of our unaffiliated stockholders for purposes of negotiating the terms of the Merger Agreement or preparing a report concerning the fairness of the Merger Agreement and the Merger. These procedural safeguards include the following:

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that each of the Disinterested Directors (representing a majority of the Board) were disinterested in Riverstone’s proposal to acquire the Company;

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that from December 7, 2015 (the date of the first Disinterested Directors meeting following Riverstone’s submission of a proposal for the acquisition of the Company), the members of the Board who were partners or employees of Riverstone were excluded from all deliberations with respect to the negotiation, evaluation or approval of the Merger Agreement and the Merger and the consideration of other strategic alternatives, deferring all decisions relating to the Merger and the Company’s potential strategic alternatives to the Disinterested Directors;

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that the Disinterested Directors, as a majority of the Board, had the power to negotiate, and terminate at any time negotiations relating to, a potential transaction;

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that the Disinterested Directors, other than Mr. Farr, are not officers or employees of the Company and the Disinterested Directors (including Mr. Farr) are not representatives of Riverstone, and are not expected to have, an economic interest in the Company or the surviving corporation following the completion of the Merger;

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that the Disinterested Directors received the advice and assistance of experienced legal and financial advisors;

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that, at the direction of the Disinterested Directors, with the assistance of legal and financial advisors, extensive negotiations occurred with Riverstone regarding the Merger Consideration, that resulted in an increase in the Merger Consideration from $11.00 to $14.00 per Share, and the other terms of the Merger and the Merger Agreement, including the operating covenants, the amount of the termination fees, and the requirement that the proposal to adopt the Merger Agreement be approved by the affirmative vote of Disinterested Stockholders;

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that the Disinterested Directors met at least 13 times during the course of approximately six months to review potential transactions and other options, including the proposal from and negotiations with Riverstone, the proposal from Party A, and other options (including the stand-alone business plan) potentially available to the Company;

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•

that the consummation of the Merger requires the affirmative vote of not only the holders of a majority of outstanding Shares entitled to vote at the Special Meeting, but also Disinterested Stockholders;

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the various terms of the Merger Agreement, including that the Merger Agreement contains “go-shop” provisions and the ability of the Company to terminate the Merger Agreement under certain circumstances to accept a “superior proposal” (each as more fully described under “The Merger Agreement”), that are intended to help ensure that the Company’s stockholders receive the highest price per Share reasonably available;

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that the Disinterested Directors made their evaluation of the Merger Agreement and the Merger based upon the factors discussed in this proxy statement and with the full knowledge of the interests of Riverstone in the Merger;

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the ability of the Disinterested Directors, under certain circumstances, to change, qualify, withhold, withdraw or modify their recommendation that stockholders vote to adopt the Merger Agreement;

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that the Disinterested Directors, at a meeting held on December 7, 2015, considered the terms of the Stockholder Agreement when evaluating whether the Merger was fair to and in the best interests of the unaffiliated stockholders, as more fully described on page 17 of this proxy statement (for additional information regarding the Stockholder Agreement, see “Other Important Information Regarding the Parent Group and Riverstone — Significant Past Transactions and Contracts — Stockholder Agreement”); and

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the availability to the stockholders of the Company who do not vote in favor of the adoption of the Merger Agreement of appraisal rights under Delaware law.

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The Disinterested Directors also considered the following uncertainties, risks and potentially negative factors in their deliberations concerning the Merger, which are not intended to be exhaustive and are not presented in any relative order of importance:

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that, following the completion of the Merger, the Company will no longer exist as an independent public company and that the consummation of the Merger and receipt of the Merger Consideration, while providing relative certainty of value, will not allow the Company’s stockholders to participate in potential further growth in the Company’s assets, future earnings growth, future appreciation in value of the Shares or any future dividends after the Merger;

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the risk that the transactions contemplated by the Merger Agreement, including the Merger, and the financing for the transaction, may not be consummated in a timely manner or at all, and the consequences thereof, including (i) the potential loss of value to the Company’s stockholders, (ii) the potential negative impact on the operations and prospects of the Company, including the risk of loss of key personnel, and (iii) the market’s perception of the Company’s prospects could be adversely affected if such transactions were delayed or were not consummated;

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the possible effects of the pendency or consummation of the transactions contemplated by the Merger Agreement, including the potential for suits, actions or proceedings in respect of the Merger Agreement or the transactions contemplated by the Merger Agreement, the risk of any loss or change in the relationship of the Company and its subsidiaries with their respective employees, agents, customers and other business relationships, and any possible effect on the Company’s ability to attract and retain key employees, including that certain key members of senior management might choose not to remain employed with the Company prior to the completion of the Merger;

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the risks and potentially negative factors described in “Special Factors — Certain Effects of the Merger” and “Special Factors — Certain Effects on the Company if the Merger is not Completed,” respectively;

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that the Company’s directors, officers and employees have expended and will expend extensive efforts attempting to complete the transactions contemplated by the Merger Agreement and such

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persons have experienced and will experience significant distractions from their work during the pendency of such transactions and that the Company has incurred and will incur substantial costs in connection with such transactions, even if such transactions are not consummated;

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that the receipt of the Merger Consideration in exchange for Shares pursuant to the Merger Agreement will be a taxable transaction for U.S. federal income tax purposes;

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the restrictions imposed by the Merger Agreement on the Company’s solicitation of acquisition proposals from third parties after the “go-shop” period, and that prospective bidders may perceive Parent’s right under the Merger Agreement to negotiate with the Company to match the terms of any “superior proposal” prior to the Company being able to terminate the Merger Agreement and accept a “superior proposal” to be a deterrent to making alternative proposals;

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that the Sponsor Entities’ ownership interest in the Company would likely be taken into account by third parties considering whether to make alternative proposals during the “go-shop” period;

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the possibility that the Company may be required to pay Parent (or its designee) a termination fee of  $50 million or $25 million (as more fully described under “The Merger Agreement —  Termination — Termination Fees”), under certain circumstances, including to accept a “superior proposal”;

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that the Company’s remedy in the event of the failure of the Merger to close as a result of a financing failure is limited to receipt of an $85 million termination fee payable by Parent;

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that Parent and Merger Sub are newly formed entities with essentially no assets and the Guarantee, provided by an affiliate of Riverstone, guarantees Parent’s obligations under the Merger Agreement only with respect to payment of the Parent termination fee and certain reimbursement obligations, and is subject to a cap of  $90 million;

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that, if the Merger Agreement is terminated in connection with the Company’s entry into a definitive agreement with respect to a “superior proposal”, the Sponsor Entities have not agreed to vote their Shares in favor of such “superior proposal”;

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the understanding that some of the Company’s directors and executive officers have other interests in the Merger in addition to their interests as stockholders of the Company, including the manner in which they would be affected by the Merger (as discussed under “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger”);

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the condition to the Merger that the Company must have liquidity and undrawn capacity of at least $350 million at the consummation of the Merger;

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the condition to the Merger relating to the receipt of a tax opinion in connection with the transactions;

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the condition to the Merger that no specified event of default shall have occurred or be continuing under the Company’s revolving credit agreement immediately prior to giving effect to the consummation of the Merger; and

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the restrictions placed on the conduct of the Company’s business prior to the completion of the Merger pursuant to the terms of the Merger Agreement, which could delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company absent the pending completion of the Merger.

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The Disinterested Directors concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were outweighed by the potential benefits.

In the course of reaching its decision to approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, the Disinterested Directors did not consider the liquidation value of the Company because (i) it considered the Company to be a viable, going concern, (ii) it believes that liquidation sales generally result in proceeds substantially less than sales of going concerns, (iii) it considered determining a liquidation value to be impracticable given the significant

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execution risk involved in any breakup of the Company and (iv) the Company will continue to operate its business following the Merger. For the foregoing reasons, the Disinterested Directors did not consider liquidation value to be a relevant methodology. Further, the Disinterested Directors did not consider net book value, which is an accounting concept, as a factor because it believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates or the business risks inherent in that industry. The Disinterested Directors did not seek to determine a pre-Merger going concern value for the Common Stock to determine the fairness of the Merger Consideration to the Company’s unaffiliated stockholders. The Disinterested Directors believe that the trading price of the Common Stock at any given time represents the best available indicator of the Company’s going concern value at that time so long as the trading price at that time is not impacted by speculation regarding the likelihood of a potential transaction. The Disinterested Directors were not aware of any firm offer for a merger, sale of all or a substantial part of the Company’s assets, or a purchase of a controlling amount of the Company securities having been received by the Company from anyone other than a person disclosing its offer or purchase in reports filed with the SEC in the two years preceding the signing of the Merger Agreement. The Disinterested Directors adopted Citi’s opinion and analyses. Although the reference to Disinterested Stockholders in Citi’s opinion did not exclude the Company’s directors and officers (other than those affiliated with the Riverstone Filing Parties) notwithstanding that such persons are deemed affiliates of the Company, such reference did not affect the Disinterested Directors’ determination in respect of the Merger Agreement and the transactions contemplated thereby, including the Merger, because such directors and officers will receive the same Merger Consideration as unaffiliated stockholders.

The foregoing discussion is not exhaustive, but is intended to summarize the material information and factors considered by the Disinterested Directors in their consideration of the transactions contemplated by the Merger Agreement, including the Merger. The Disinterested Directors reached the unanimous decision to approve the entry into the Merger Agreement and recommend its adoption by the Company’s stockholders in light of the factors described above and other factors that each member of the Disinterested Directors believed were appropriate. In view of the variety of factors and the quality and amount of information considered, the Disinterested Directors did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching their determinations. In addition, each individual Disinterested Director may have given different weight to different factors. The Disinterested Directors conducted an overall review of the factors described above, including through discussions with the Company’s management and legal and financial advisors, and considered the factors overall to be favorable to, and to support, its determinations. It should be noted that this explanation of the reasoning of the Disinterested Directors and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “Cautionary Statement Concerning Forward-Looking Information.”

Position of the Riverstone Filing Parties as to the Fairness of the Merger

Under the SEC rules governing “going private” transactions, each of the Riverstone Filing Parties is an affiliate of the Company that is engaged in the “going private” transaction and, therefore, is required to express its position as to the fairness of the proposed Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The Riverstone Filing Parties are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The “Riverstone Filing Parties” means (a) RPH Parent LLC, SPH Parent LLC and CRJ Parent LLC (collectively, “Parent”), (b) RJS Merger Sub, Inc. (“Merger Sub”), (c) Riverstone Holdings LLC (“Riverstone”), (d) Raven Power Holdings LLC, Sapphire Power Holdings LLC and C/R Energy Jade, LLC (collectively the “Sponsor Entities”) and (e) R/C Sapphire Power IP, L.P., Riverstone/Carlyle Energy Partners II, L.P., R/C Renewable Energy GP II, LLC, Carlyle/Riverstone Global Energy and Power Fund III, L.P., Carlyle/Riverstone Energy Partners III, L.P., C/R Energy GP III, LLC, Riverstone V Raven Holdings, L.P., Riverstone Energy Partners V, L.P., Riverstone Energy GP V, LLC, Riverstone Energy GP V Corp., Pierre F. Lapeyre, Jr. and David M. Leuschen (collectively, “Their Controlling Affiliates”).

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The Riverstone Filing Parties believe that the Merger (which is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement was filed with the SEC) is fair to the Company’s unaffiliated stockholders on the basis of the factors described in “Special Factors — Purpose and Reasons of the Riverstone Filing Parties for the Merger” and the additional factors described below.

The Riverstone Filing Parties did not participate in the deliberations of the Disinterested Directors regarding, or received advice from the Company’s legal or financial advisors as to, the fairness of the proposed Merger. The Riverstone Filing Parties have not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purpose of assessing the fairness of the Merger to the Company’s unaffiliated stockholders. Based on the knowledge and analysis by the Riverstone Filing Parties of available information regarding the Company, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and the analysis and resulting conclusions of, the Board discussed in this proxy statement in “Special Factors — Purpose and Reasons of the Company for the Merger,” the Riverstone Filing Parties believe that the Merger is substantively and procedurally fair to the Company’s unaffiliated stockholders. In particular, the Riverstone Filing Parties believe that the proposed Merger is both procedurally and substantively fair to the unaffiliated stockholders of the Company based on their consideration of the following factors, among others, which are not presented in any relative order of importance:

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that the Merger Consideration represents a premium of 56% above the closing price of the Shares on March 31, 2016, the last trading day before the first public reports of a potential sale of the Company, a premium of 101% over the volume-weighted average price of the Shares during the 60 calendar days that ended on March 31, 2016, and a premium of 17% over the closing price of the Shares on June 2, 2016, the last trading day before the announcement of the Merger;

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that the Merger Consideration is all cash, which provides certainty of value and liquidity to the unaffiliated stockholders;

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that consummation of the Merger will allow the unaffiliated stockholders not to be exposed to risks and uncertainties relating to the prospects of the Company following completion of the Merger;

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that the Merger Consideration resulted from lengthy negotiations between the Disinterested Directors and Riverstone both before and after the Company attempted to institute a competitive bidding process involving Party A;

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that the Merger Agreement and the transactions contemplated thereby were negotiated and unanimously approved by members of the Board (other than Messrs. Alexander and Hoffman, who are affiliated with Riverstone, and accordingly recused themselves from the vote and deliberations) and the fact that, the members of the Board who approved the Merger Agreement and transactions contemplated thereby consisted solely of the Disinterested Directors who have no economic interest or expectancy of an economic interest in the Parent Group, Riverstone or their affiliates following the Merger;

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that the Merger is conditioned on approval by Disinterested Stockholders, present in person or by proxy at the Special Meeting, in addition to approval by the Company stockholders representing a majority of outstanding Shares entitled to vote at the Special Meeting;

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that the Merger Agreement provides for a 40-day post-signing Go-Shop Period, during which the Company — with the assistance of its legal and financial advisors — may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer Alternative Proposals;

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that the Company is permitted to continue discussions with certain parties that make a qualifying offer during the Go-Shop Period for an additional 20 days following the end of the Go-Shop Period and, subject to customary requirements included in the Merger Agreement, enter into or recommend a transaction with a person or group that makes a Superior Proposal;

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that after the No-Shop Period Start Date, the Merger Agreement further permits the Company to provide information and participate in negotiations with respect to unsolicited acquisition

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proposals in circumstances described in the Merger Agreement and to terminate the Merger Agreement to accept a Superior Proposal;

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that if the Company accepts a Superior Proposal made during the Go-Shop Period, the termination fee that the Company is required to pay is reduced from $50 million to $25 million;

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the requirement that in the event of a failure of the Merger to be consummated under certain circumstances, Parent must pay the Company a Parent termination fee of  $85 million without the Company being required to establish any damages, which payment obligation is guaranteed by the Guarantor (as defined below in “The Merger Agreement — Guarantee”);

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the fact that the Disinterested Directors received an opinion of Citi, dated June 2, 2016, to the Disinterested Directors as to the fairness, from a financial point of view and as of the date of the opinion, of the Merger Consideration to be received by Disinterested Stockholders pursuant to the Merger Agreement, which opinion was based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken (as more fully described under “Special Factors — Opinion of Citigroup Global Markets Inc.”);

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that the Merger and the Merger Agreement were unanimously approved by the Board and that the Board unanimously determined (in each case, with Messrs. Alexander and Hoffman, who are affiliated with Riverstone, recused) that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were fair, advisable and in the best interests of the Company and its unaffiliated stockholders; and

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that under Delaware law, the stockholders of the Company have the right to dissent to the Merger and to seek payment of the fair value of their Shares in accordance with the procedures provided under Delaware law if the proposed Merger is effected.

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In their consideration of the fairness of the proposed Merger, the Riverstone Filing Parties did not find it practicable to, and did not, appraise the assets of the Company to determine the liquidation value for the Company’s unaffiliated stockholders (i) because of the impracticability of determining a liquidation value given the significant execution risk involved in any breakup, (ii) because the Riverstone Filing Parties considered the Company to be a viable going concern and (iii) because the Company will continue to operate its business following the Merger. The Riverstone Filing Parties did not consider net book value, which is an accounting concept, for purposes of determining the fairness of the per Share Merger Consideration to the Company’s unaffiliated stockholders because, in the Riverstone Filing Parties’ view, net book value is neither indicative of the Company’s market value nor its value as a going concern, but rather is an indicator of historical costs. The Riverstone Filing Parties did not seek to establish a pre-Merger going concern value for the Company’s Shares to determine the fairness of the Merger Consideration to the unaffiliated stockholders because following the Merger, the Company will have a different capital structure, cost profile and operating strategy, among other things. However, to the extent that the closing price for the Company’s Shares on the NYSE on March 31, 2016, the last trading day before first public reports of a potential sale of the Company, and June 2, 2016, the last trading day before the announcement of the Merger, represented the per Share going concern value of the Company, the Merger Consideration represented a premium of approximately 56% and 17%, respectively, to the going concern value of the Company.

The foregoing discussion of the information and factors considered and weight given by the Riverstone Filing Parties in connection with their evaluation of the fairness to the Company’s unaffiliated stockholders of the Merger is not intended to be exhaustive but is believed to include all material factors considered. The Riverstone Filing Parties did not find it practicable to assign, nor did they assign, relative weight to the individual factors considered in reaching their conclusions as to fairness. The Riverstone Filing Parties believe that these factors provide a reasonable basis for their belief that the proposed Merger is fair to the Company’s unaffiliated stockholders. This belief should not, however, be construed as a recommendation to any of the Company’s stockholders to approve the Merger Agreement. The Riverstone Filing Parties do not make any recommendation as to how stockholders of the Company should vote their Shares on the Merger Agreement Proposal.

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Opinion of Citigroup Global Markets Inc.

The Company has engaged Citi as its financial advisor in connection with the proposed Merger. In connection with this engagement, the Company requested that Citi evaluate the fairness, from a financial point of view, of the Merger Consideration to be received by Disinterested Stockholders pursuant to the Merger Agreement. On June 2, 2016, at a meeting of the Disinterested Directors held to evaluate the Merger, Citi rendered an oral opinion, confirmed by delivery of a written opinion dated June 2, 2016, to the Disinterested Directors to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications described in its opinion, the Merger Consideration to be received by Disinterested Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of Citi’s written opinion, dated June 2, 2016, to the Disinterested Directors, which describes the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken, is attached as Annex C to this proxy statement and should be read carefully in its entirety. The description of Citi’s opinion set forth below is qualified in its entirety by reference to the full text of Citi’s opinion. Citi’s financial advisory services and opinion were provided for the information of the Disinterested Directors (in their capacity as such) in connection with their evaluation of the Merger Consideration from a financial point of view and did not address any other terms, aspects or implications of the Merger. Citi expressed no view as to, and its opinion did not address, the underlying business decision of the Company to effect or enter into the Merger, the relative merits of the Merger as compared to any alternative business strategies that might exist for the Company or the effect of any other transaction in which the Company might engage or consider. Citi’s opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matters relating to the proposed Merger or otherwise.

In arriving at its opinion, Citi:

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reviewed a draft, dated June 2, 2016, of the Merger Agreement;

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held discussions with certain senior officers, directors and other representatives and advisors of the Company concerning the businesses, operations and prospects of the Company;

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reviewed certain publicly available and other business and financial information relating to the Company, including certain internal financial forecasts and other information and data relating to the Company provided to or discussed with Citi by the Company’s management;

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reviewed the financial terms of the Merger as set forth in the Merger Agreement in relation to, among other things, current and historical market prices of the Shares, the historical and projected earnings and other operating data of the Company, and the capitalization and financial condition of the Company;

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analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations Citi considered relevant in evaluating those of the Company;

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considered, to the extent publicly available, the financial terms of certain other transactions which Citi considered relevant in evaluating the Merger; and

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conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as Citi deemed appropriate in arriving at its opinion.

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In rendering its opinion, Citi assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with Citi and upon the assurances of the management and other representatives of the Company that they were not aware of any relevant information that was omitted or that remained undisclosed to Citi. With respect to financial forecasts and other information and data relating to the Company that Citi was directed to utilize in its analyses, Citi was advised by the Company’s

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management, and Citi assumed, with the Company’s consent, that such financial forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the Company’s management as to the future financial performance of the Company and the other matters covered thereby.

Citi relied, at the Company’s direction, upon the assessments of the Company’s management as to, among other things, (i) matters relating to the separation of Talen Energy Holdings, Inc., the former parent company of the Company, which we refer to as Holdco, and Talen Energy Supply, from PPL Corporation, which we refer to as PPL, consummated in 2015, which we refer to as the “separation,” and certain tax indemnities, opinions and other arrangements contemplated in connection with the separation, (ii) the potential impact on the Company of certain market, competitive, cyclical and other trends and developments in and prospects for, and governmental, regulatory and legislative matters relating to or otherwise affecting, the merchant power generation industry, including assumptions of the Company’s management as to, among other things, future commodity, capacity markets, wholesale and retail energy prices, operational, maintenance and production costs, transmission capacity and demand for energy commodities reflected in the financial forecasts and other information and data utilized in Citi’s analyses or otherwise relevant for purposes of Citi’s opinion, which are subject to significant volatility and which, if different than as assumed, could have a material impact on Citi’s analyses and opinion and (iii) existing and future commercial relationships, agreements and arrangements of the Company. Citi assumed, with the Company’s consent, that there would be no developments with respect to any such matters that would have an adverse effect on the Company or the Merger or that otherwise would be meaningful in any respect to Citi’s analyses or opinion.

Citi did not make and was not provided with an independent evaluation or appraisal of the assets or liabilities (contingent, off-balance sheet, derivative or otherwise) of the Company or any other entity and Citi did not make any physical inspection of the properties or assets of the Company or any other entity. Citi assumed, with the Company’s consent, that the Merger would be consummated in accordance with its terms and in compliance with all applicable laws, documents and other requirements, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory or third party approvals, consents, releases, waivers and agreements for the Merger, no delay, limitation, restriction or condition, including any divestiture requirements, amendments or modifications, would be imposed or occur that would have an adverse effect on the Company or the Merger or that otherwise would be meaningful in any respect to Citi’s analyses or opinion. Representatives of the Company advised Citi, and Citi also assumed, that the final terms of the Merger Agreement would not vary materially from those set forth in the draft Citi reviewed. Citi did not express any view or opinion as to the prices at which the Shares (or any other securities of or relating to the Company) may trade or otherwise be transferable at any time. Citi also did not express any view or opinion with respect to any tax (including, without limitation, tax consequences resulting from the separation, the Merger or otherwise), accounting, regulatory, legal or similar matters and Citi relied, with the Company’s consent, upon the assessments of representatives of the Company as to such matters. In connection with Citi’s engagement, Citi was not requested to, and Citi did not, undertake a third-party solicitation process on behalf of the Company; however, Citi held discussions on behalf of the Company with certain third parties that had made inbound inquiries regarding a possible acquisition of the Company and Citi was requested, following public announcement of the Merger, to undertake on behalf of the Company a go-shop process, as contemplated by the provisions of the Merger Agreement and subject to certain limitations, to solicit third-party indications of interest in the acquisition of the Company.

Citi’s opinion addressed only the fairness, from a financial point of view and as of the date of the opinion, of the Merger Consideration (to the extent expressly specified in the opinion) to Disinterested Stockholders. Citi’s opinion did not address any other terms, aspects or implications of the Merger, including, without limitation, the form or structure of the Merger, any guarantee, support agreement or any other agreement, arrangement or understanding to be entered into in connection with or contemplated by the Merger or otherwise. Citi expressed no view as to, and its opinion did not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation or other payments to any officers, directors or employees of any parties to the Merger, or any class of such persons, relative to the Merger Consideration or otherwise. Citi’s opinion was necessarily based upon information available, and financial, stock market and other conditions and circumstances existing and disclosed, to Citi as of the date

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of its opinion. Although subsequent developments may affect Citi’s opinion, Citi has no obligation to update, revise or reaffirm its opinion. As the Disinterested Directors were aware, the credit, financial and stock markets, and the industries in which the Company operates, have experienced and continue to experience volatility and Citi expressed no opinion or view as to any potential effects of such volatility on the Company or the Merger. The issuance of Citi’s opinion was authorized by Citi’s fairness opinion committee.

In preparing its opinion, Citi performed a variety of financial and comparative analyses, including those described below. The summary of the analyses below is not a complete description of Citi’s opinion or the analyses underlying, and factors considered in connection with, Citi’s opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. Citi arrived at its ultimate opinion based on the results of all analyses undertaken by it and factors assessed as a whole, and it did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis. Accordingly, Citi believes that the analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying such analyses and its opinion.

In its analyses, Citi considered industry performance, general business, economic, market and financial conditions and other matters existing as of the date of its opinion, many of which are beyond the control of the Company. No company, business or transaction reviewed is identical or directly comparable to the Company, its businesses or the Merger and an evaluation of these analyses is not entirely mathematical; rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics or other factors that could affect the public trading, acquisition or other values of the companies, business segments or transactions reviewed and may not necessarily reflect all companies or business segments, transactions or other information deemed relevant for purposes of Citi’s analyses.

The estimates contained in Citi’s analyses and the valuation ranges resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by such analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the results derived from, Citi’s analyses are inherently subject to substantial uncertainty.

Citi was not requested to, and it did not, recommend or determine the specific consideration payable in the Merger. The type and amount of consideration payable in the Merger were determined through negotiations between the Company and Riverstone and the decision to enter into the Merger Agreement was solely that of the Disinterested Directors. Citi’s opinion was only one of many factors considered by the Disinterested Directors in their evaluation of the Merger and should not be viewed as determinative of the views of such directors or the Company’s management with respect to the Merger or the Merger Consideration.

The following is a summary of the material financial analyses presented to the Disinterested Directors in connection with Citi’s opinion, dated June 2, 2016. The summary set forth below does not purport to be a complete description of the financial analyses performed by, and underlying the opinion of, Citi, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Citi. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary as the tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the financial analyses, could create a misleading or incomplete view of such financial analyses. None of the Company, Riverstone, Citi or any other person assumes responsibility if future results are different from those described, whether or not any such difference is material. For purposes of the financial analyses described below, (i) the term “adjusted EBITDA” means net income (loss) before interest, income taxes, depreciation and amortization, which we

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refer to as “EBITDA,” adjusted for certain non-cash and other items that the Company’s management believes are not indicative of ongoing operations, including, but not limited to, unrealized gains and losses on derivative contracts, stock-based compensation expense, asset retirement obligation accretion, gains and losses on securities in the nuclear decommissioning trust fund, impairments, gains or losses on sales, dispositions or retirements of assets, debt extinguishments, and transition, transaction and restructuring costs, (ii) the term “adjusted free cash flow” means cash from operations less capital expenditures, excluding growth-related capital expenditures, adjusted for changes in counterparty collateral and further adjusted for after-tax transaction and restructuring costs, and certain other after-tax cash items that the Company’s management believes are not indicative of ongoing operations, (iii) other than in the case of the selected public companies analysis in respect of free cash flow yield, the Company’s total debt was adjusted for the Company’s cash, pro forma for certain assets sold in 2016 (as so adjusted and pro forma for certain assets sold in 2016, “adjusted net debt”), and (iv) in the case of the discounted cash flow analysis described below, unlevered cash taxes were based on a specified tax rate and taxes as provided by the Company’s management, and included the benefits expected by the Company’s management to result from the utilization of the Company’s net operating losses and bonus depreciation during the five-year period ending December 31, 2020.

June 2, 2016 Financial Presentation

The financial presentation provided to the Disinterested Directors in connection with Citi’s opinion, dated June 2, 2016, to such directors, which we refer to as the June 2, 2016 financial presentation, included the following material financial analyses:

Discounted Cash Flow Analysis.   Citi performed a discounted cash flow analysis of the Company by calculating the estimated present value (as of March 31, 2016) of the unlevered free cash flows that the Company was forecasted to generate during the last three quarters of the fiscal year ending December 31, 2016 through the full fiscal year ending December 31, 2019 based on internal financial forecasts and estimates of the Company’s management, as more fully described by the Company under “— Prospective Financial Information — Post-PJM Auction Forecasts.” Citi calculated the implied terminal value of the Company by applying to the Company’s fiscal year 2020 estimated adjusted EBITDA a selected range of EBITDA multiples of 7.5x to 8.5x derived based on Citi’s professional judgment and taking into account, among other factors, the calendar year 2017 estimated mean EBITDA multiple observed for the selected companies. The present values (as of March 31, 2016) of the Company’s cash flows and terminal values were then calculated using a selected range of discount rates of 5.9% to 6.6% derived from a weighted average cost of capital calculation. This analysis indicated the following approximate implied per Share equity value reference range for the Company, as compared to the Merger Consideration:

Selected Public Companies Analysis.   Citi performed a selected public companies analysis of the Company in which Citi reviewed certain financial and stock market information of two selected companies, as noted below, that Citi considered relevant as publicly traded independent power producer companies with business, financial and operating characteristics generally similar to those of the Company, which we collectively refer to as the selected companies.

Citi reviewed, among other information, enterprise values (calculated as fully diluted equity values based on closing stock prices on May 31, 2016 plus total debt, preferred stock and non-controlling interests (as applicable) and less cash and cash equivalents and investments in unconsolidated affiliates (as applicable)), as a multiple of calendar year 2017 and calendar year 2018 estimated EBITDA. Citi also reviewed, among other information, calendar year 2016 estimated free cash flow yields. Financial data of the selected companies were based on public filings, Wall Street research analysts’ consensus estimates and other publicly available information and, in the case of Dynegy Inc.’s calendar year 2017 and calendar year 2018 estimated EBITDA and calendar year 2016 estimated free cash flow yield, was pro forma for its pending acquisition of the U.S. fossil portfolio of Engie SA. Financial data of the Company were based on internal financial forecasts and estimates of the Company’s management.

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As derived from the data in the following table, the overall low to high (i) equity values and enterprise values observed for the selected companies were approximately $2,257 million to $5,235 million (with a mean of  $3,746 million and a median of  $3,746 million) and approximately $10,523 million to $24,967 million (with a mean of  $17,745 million and a median of  $17,745 million), respectively, (ii) calendar year 2017 and calendar year 2018 estimated EBITDA multiples observed for the selected companies were 7.2x to 8.8x (with a mean of 8.0x and a median of 8.0x) and 6.6x to 8.3x (with a mean of 7.4x and a median of 7.4x), respectively, and (iii) calendar year 2016 estimated free cash flow yields observed for the selected companies were 14.7% to 21.0% (with a mean of 17.9% and a median of 17.9%):

Based on Citi’s professional judgment and taking into account, among other factors, the calendar year 2017 and calendar year 2018 estimated EBITDA multiples observed for the selected companies, Citi then applied selected ranges of calendar year 2017 and calendar year 2018 estimated EBITDA multiples of 7.2x to 8.8x and 6.6x to 8.3x, respectively, derived from the selected companies to the Company’s calendar year 2017 and calendar year 2018 estimated adjusted EBITDA, respectively. Based on Citi’s professional judgment and taking into account, among other factors, the calendar year 2016 estimated free cash flow yields observed for the selected companies, Citi also applied a selected range of calendar year 2016 estimated free cash flow yields of 14.7% to 21.0% derived from the selected companies to the Company’s calendar year 2016 estimated adjusted free cash flow. Approximate implied per share equity values for the Company derived from such selected estimated EBITDA multiples were calculated as total implied enterprise value less adjusted net debt as of March 31, 2016 divided by the total number of fully diluted Shares estimated by the Company’s management to be outstanding as of December 31, 2016. Approximate implied per share equity values for the Company derived from such selected estimated free cash flow yields were calculated as total implied equity value divided by the total number of fully diluted Shares estimated by the Company’s management to be outstanding as of December 31, 2016. This analysis indicated the following approximate implied per Share equity value reference ranges for the Company, as compared to the Merger Consideration:

Selected Precedent Transactions Analysis.   Citi performed a selected precedent transactions analysis of the Company in which Citi reviewed financial data relating to 13 selected transactions, as noted below, that Citi considered relevant involving target companies, assets or asset portfolios with business, financial and operating characteristics generally similar to those of the Company, which we collectively refer to as the selected transactions.

Citi reviewed, among other information, transaction values of the selected transactions (which transaction values ranged from approximately $660 million to $32 billion), calculated as the purchase prices paid for the assets or asset portfolios or fully diluted equity values of the target companies, as applicable, based on closing stock prices as of the announcement dates of the relevant transactions plus total debt plus preferred stock and non-controlling interests (as applicable) and less cash and cash equivalents and investments in unconsolidated affiliates (as applicable), as a multiple of next fiscal year estimated EBITDA. Financial data of the selected transactions were based on public filings and other publicly available information. Financial data of the Company were based on internal financial forecasts and estimates of the Company’s management.

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As derived from the data in the following table, the overall low to high next fiscal year estimated EBITDA multiples observed for the selected transactions were 6.2x to 9.8x (with a mean of 7.7x and a median of 7.3x):

Based on Citi’s professional judgment and taking into account, among other factors, the next fiscal year estimated mean EBITDA multiple observed for the selected transactions, Citi then applied a selected range of next fiscal year estimated EBITDA multiples of 7.2x to 8.2x derived from the selected transactions to the Company’s calendar year 2017 estimated adjusted EBITDA. Approximate implied per share equity values for the Company derived from such selected estimated EBITDA multiples were calculated as total implied enterprise value less adjusted net debt as of March 31, 2016 divided by the total number of fully diluted Shares estimated by the Company’s management to be outstanding as of December 31, 2016. This analysis indicated the following approximate implied per Share equity value reference range for the Company, as compared to the Merger Consideration:

Sum-of-the-Parts Selected Precedent Transactions Analysis.   Citi performed a sum-of-the-parts selected precedent transactions analysis of the Company on an asset-by-asset basis, categorized by power production technology, fuel type and independent system operator. In evaluating the Company’s asset portfolio, Citi reviewed certain financial terms of 15 selected transactions, as noted below, that Citi deemed relevant as transactions involving technologies, fuel types and/or independent system operators, consisting of three selected transactions involving PJM-CCGT, which we refer to as the selected PJM-CCGT transactions, one selected transaction involving ERCOT-CCGT, which we refer to as the selected ERCOT-CCGT transaction, two selected transactions involving ISO-NE-CCGT, which we refer to as the selected ISO-NE-CCGT transactions, four selected transactions involving cogeneration, which we refer to as the selected cogeneration transactions, four selected transactions involving peaker power plants, which we refer to as the selected peaker power transactions, and one selected transaction involving coal, which we refer to as the selected coal transaction and, together with the selected PJM-CCGT transactions, the

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selected ERCOT-CCGT transaction, the selected ISO-NE-CCGT transactions, the selected cogeneration transactions and the selected peaker power transactions, which we collectively refer to as the selected sum-of-the-parts transactions.

Citi reviewed, among other things, transaction values of the selected sum-of-the-parts transactions (which transaction values ranged from approximately $80 million to $1.3 billion), calculated as the purchase prices paid for the target companies, assets or portfolios, as applicable, as a multiple of the capacity (which capacities ranged from approximately 205 to 2,988 megawatts) of such target companies, assets or portfolios. Financial data of the selected sum-of-the-parts transactions were based on Wall Street research analysts’ estimates and other publicly available information. Financial data of the Company were based on public filings and internal financial forecasts and estimates of the Company’s management.

As derived from the data in the following table, the overall low to high dollars per kilowatt multiples observed for the selected sum-of-the-parts transactions were $151 to $929, with overall low to high (as applicable) dollars per kilowatt multiples observed for the selected PJM-CCGT transactions of  $535 to $929 (with an average of  $793), the selected ERCOT-CCGT transaction of  $438, selected ISO-NE-CCGT transactions of  $671 to $840 (with an average of  $756), the selected cogeneration transactions of  $211 to $477 (with an average of  $367), the selected peaker power transactions of  $328 to $398 (with an average of $366) and the selected coal transaction of  $151:

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Citi then applied multiples within a selected range of dollars per kilowatt of  $150 to $750 to the Company’s capacity (measured by megawatts) based on Citi’s professional judgment and taking into account, among other things, available information, including the selected sum-of-the-parts transactions and, in the case of nuclear assets, a dollars per kilowatt multiple of  $500 derived from a Wall Street research analyst estimate, and other asset values derived from the Company’s public filings and internal estimates of the Company’s management in the case of certain combined cycle gas plant and renewable energy assets. Approximate implied per share equity values for the Company derived from such multiples and asset values were calculated as total implied enterprise value (determined on an asset-by-asset basis) less adjusted net debt as of March 31, 2016 divided by the total number of fully diluted Shares estimated by the Company’s management to be outstanding as of December 31, 2016. This analysis indicated the following approximate implied per Share equity value reference range for the Company, as compared to the Merger Consideration:

Other Information

Citi observed certain additional information that was not considered part of its financial analyses for its opinion but was noted for informational purposes, including the following:

•

stock price targets for the Shares as reflected in selected publicly available Wall Street research analysts’ reports and other publicly available information, which indicated an overall low to high target stock price range for the Company of  $7.00 to $15.00 per Share (with a consensus target stock price of  $11.63 per Share);

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•

historical trading prices of the Shares during the period from June 2, 2015 through May 31, 2016, which indicated low to high closing prices for the Shares during such period of approximately $5.76 to $19.80 per Share;

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•

utilizing publicly available information and public filings, the implied premiums paid (to the extent publicly available) in eight selected precedent all-cash U.S. mergers and acquisitions transactions announced from February 12, 2015 to March 14, 2016 and completed within the latest 12 months with transaction values of  $1.0 billion to $2.0 billion, which indicated (i) overall low to high implied premiums in such transactions based on the closing stock prices of the target companies involved in such transactions one trading day prior to announcement of such transactions of approximately 17% to 50% (with 25th to 75th percentile premiums of 30.3% to 45.9%, respectively), and (ii) after applying a selected range of implied premiums of 30.3% to 45.9% to the closing price of the Shares of  $9.00 per Share on March 31, 2016 (the last trading day prior to a news report regarding a potential sale of the Company), indicated an approximate implied per Share equity value reference range for the Shares of  $11.72 to $13.13 per Share;

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•

based on public filings, Wall Street research analysts’ consensus estimates and other publicly available information, the calendar year 2017 and calendar year 2018 estimated EBITDA multiples and calendar year 2016 estimated free cash flow yield for Calpine Corporation, an independent power producer with a significant natural gas portfolio, which indicated calendar year 2017 and calendar year 2018 estimated EBITDA multiples of 8.5x and 7.9x, respectively, and a calendar year 2016 estimated free cash flow yield of 14.5%; and

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•

based on internal financial forecasts and estimates of the Company’s management and the preliminary discounted cash flow analysis described above (assuming a discount rate of 6.3%), an illustrative sensitivities overview of the potential impact on the Company’s approximate implied per Share equity value assuming calendar year 2020 estimated adjusted EBITDA for the Company of  $502 million to $702 million and next fiscal year estimated EBITDA multiples of 6.0x to 9.0x, which indicated an illustrative approximate implied per Share equity value reference range of $0.54 to $20.57 per Share.

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Other Materials

In addition to the June 2, 2016 financial presentation summarized above, Citi also provided preliminary discussion materials to the Disinterested Directors dated (i) December 18, 2015 (utilized for purposes of a meeting of the Disinterested Directors held on that date), which we refer to as the December 18, 2015 preliminary discussion materials, (ii) January 11, 2016 (utilized for purposes of a meeting of the Disinterested Directors held on that date), which we refer to as the January 11, 2016 preliminary discussion materials, (iii) January 14, 2016 (utilized for purposes of a meeting of the Disinterested Directors held on that date), which we refer to as the January 14, 2016 preliminary discussion materials, (iv) April 29, 2016 (utilized for purposes of a meeting of the Disinterested Directors held on that date), which we refer to as the April 29, 2016 preliminary discussion materials, (v) May 13, 2016 (utilized for purposes of a meeting of the Disinterested Directors held on May 16, 2016), which we refer to as the May 13, 2016 preliminary discussion materials, (vi) May 23, 2016 (utilized for purposes of a meeting of the Disinterested Directors held on that date), which we refer to as the May 23, 2016 preliminary discussion materials, and (vii) May 27, 2016 (utilized for purposes of a meeting of the Disinterested Directors held on May 28, 2016), which we refer to as the May 27, 2016 preliminary discussion materials. We refer to these preliminary discussion materials collectively as the preliminary discussion materials.

The preliminary financial considerations and other information in the preliminary discussion materials reflected market data as of dates proximate to such materials and were based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to Citi as of, the date of such materials. Accordingly, the results of such preliminary financial considerations and other information may have differed from the June 2, 2016 financial presentation as a result of, among other things, changes in the Company’s internal forecasts and estimates, such financial, economic, monetary, market and other conditions and circumstances and other information. Citi also continued to refine various aspects of such preliminary financial considerations and other information.

None of the preliminary discussion materials constituted an opinion of, or recommendation by, Citi with respect to a possible transaction or otherwise.

December 18, 2015 Preliminary Discussion Materials.   The December 18, 2015 preliminary discussion materials referenced, for informational purposes, among other things, (i) an overview of U.S. equity market performance from December 31, 2014 to December 15, 2015, which included comparisons of the performance of the S&P 500 index, the S&P 500 Energy Sector and an index of independent power producers comprised of Calpine Corporation, Dynegy Inc., NRG Energy, Inc. and the Company and comparisons of the performance of various U.S. equity market sectors during 2014 and 2015 (to December 15, 2015), including the energy and independent power producer sectors, (ii) the relative Share price performance of the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation during the period June 2, 2015 to December 15, 2015, as compared to the performance of the S&P 500 index and certain commodities, and related observations, (iii) selected Wall Street research analysts’ views as to the Company and independent power producers generally, (iv) declines, based on public filings and other publicly available information, during the period June 2, 2015 to December 15, 2015 in the next fiscal year estimated EBITDA multiples of the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation

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relative to the average historical next fiscal year EBITDA multiple of Dynegy Inc., NRG Energy, Inc. and Calpine Corporation and related observations, (v) observations regarding implications for independent power producers of changes in the methodologies used to evaluate independent power producers, investor sentiment regarding independent power producers’ leverage and liquidity levels and commodities exposure and supply and demand fundamentals, (vi) an overview of the credit profiles of the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, (vii) an overview of adverse changes in bond and term loan bid prices and yields during the latest 12 months ended December 15, 2015 and (viii) an overview of certain financial investors active in the merchant generation sector.

January 11, 2016 Preliminary Discussion Materials.   The January 11, 2016 preliminary discussion materials primarily focused on the types of analyses summarized above for the June 2, 2016 financial presentation, utilizing procedures that were generally consistent with those contained in the June 2, 2016 financial presentation.

The January 11, 2016 preliminary discussion materials contained the following preliminary financial analyses:

•

a preliminary discounted cash flow analysis of the Company, which generally used a similar methodology as described above under “— June 2, 2016 Financial Presentation — Discounted Cash Flow Analysis,” except that, among other things, the estimated present value of the unlevered free cash flows that the Company was forecasted to generate during the fiscal years ending December 31, 2016 through December 31, 2019 based on internal financial forecasts and estimates of the Company’s management was calculated as of December 31, 2015, an implied terminal value of the Company was calculated by applying to the Company’s fiscal year 2020 estimated adjusted EBITDA a selected range of EBITDA multiples of 6.8x to 7.8x, and the present values (as of December 31, 2015) of the Company’s cash flows and terminal values were calculated using a selected range of discount rates of 6.7% to 7.3%; this preliminary analysis indicated an approximate implied per Share equity value reference range for the Company of  $7.92 to $12.67 per Share;

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•

a preliminary selected public companies analysis of the Company, which generally used a similar methodology as described above under “— June 2, 2016 Financial Presentation — Selected Public Companies Analysis,” except that, among other things, the observed overall low to high calendar year 2017 estimated EBITDA multiples were 6.5x to 8.1x (with a mean of 7.3x and a median of 7.3x) and overall low to high calendar year 2016 estimated free cash flow yields were 23.6% to 26.2% (with a mean of 24.9% and a median of 24.9%) for the selected companies; applying these selected ranges of calendar year 2017 estimated EBITDA multiples and calendar year 2016 estimated free cash flow yields derived from the selected companies to the Company’s calendar year 2017 estimated adjusted EBITDA and the Company’s calendar year 2016 estimated adjusted free cash flow, respectively, indicated approximate implied per Share equity value reference ranges for the Company of  $9.75 to $18.42 per Share (based on the Company’s calendar year 2017 estimated adjusted EBITDA) and $8.14 to $9.03 per Share (based on the Company’s calendar year 2016 estimated adjusted free cash flow), utilizing internal estimates of the Company’s management;

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•

a preliminary selected precedent transactions analysis of the Company, which generally used a similar methodology as described above under “— June 2, 2016 Financial Presentation — Selected Precedent Transactions Analysis,” except that, among other things, observed overall low to high next fiscal year estimated EBITDA multiples observed for the selected transactions (other than Dynegy Inc./Energy Capital Partners acquisition of Engie SA (U.S. fossil portfolio), which was announced on February 25, 2016) were 6.2x to 9.8x (with a mean of 7.7x and a median of 7.4x); applying a selected range of next fiscal year estimated EBITDA multiples of 7.2x to 8.2x derived from the selected precedent transactions to the Company’s calendar year 2017 estimated adjusted EBITDA utilizing internal estimates of the Company’s management indicated an approximate implied per Share equity value reference range for the Company of  $13.79 to $19.35 per Share;

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•

a preliminary sum-of-the-parts selected precedent transactions analysis of the Company, which generally used the same methodology as described above under “— June 2, 2016 Financial Presentation — Sum-of-the-Parts Precedent Transactions Analysis,” and reflected an approximate implied per Share equity value reference range for the Company of  $10.78 to $16.65 per Share.

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The January 11, 2016 preliminary discussion materials also referenced, for informational purposes, among other things, (i) stock price targets for the Shares as reflected in selected publicly available Wall Street research analysts’ reports and other publicly available information, (ii) historical trading prices of the Shares during the period from June 2, 2015 to January 7, 2016 and (iii) utilizing publicly available information and public filings, the implied premiums paid (to the extent publicly available) in 12 selected precedent all-cash U.S. mergers and acquisitions transactions announced from January 12, 2015 to November 11, 2015 and completed within the latest 12 months (as of January 7, 2016) with transaction values of  $0.5 million to $1.0 billion, which indicated overall low to high implied premiums based on the closing stock prices of the target companies involved in such transactions one trading day prior to announcement of such transactions of approximately 8% to 109% (with 25th to 75th percentile premiums of 14% to 63%, respectively); applying a selected range of premiums of 14% to 63% to the closing price of the Shares of  $6.32 per Share on January 7, 2016 indicated an approximate implied per Share equity value reference range for the Shares of  $7.21 to $10.31 per Share.

In the January 11, 2016 preliminary discussion materials, Citi also observed, for informational purposes:

•

the potential impact on the discounted cash flow analysis described above of additional cash flows that the Company was forecasted to generate during the fiscal years ending December 31, 2016 through December 31, 2020 based on the Company’s management’s preliminary plan to execute certain priority strategic and operational initiatives, which indicated that such additional cash flows could result in an additional approximate implied per Share equity value for the Company of $8.17 to $8.98 per Share;

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•

based on public filings, Wall Street research analysts’ consensus estimates and other publicly available information, the calendar year 2017 estimated EBITDA multiple and calendar year 2016 estimated free cash flow yield for Calpine Corporation, which indicated for Calpine Corporation a calendar year 2017 estimated EBITDA multiple of 8.3x and a calendar year 2016 estimated free cash flow yield of 15.1%; and

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•

utilizing public filings, Wall Street research analysts’ estimates and other publicly available information, calendar year 2016 estimated EBITDA multiples for Calpine Corporation, Dynegy Inc. and NRG Energy, Inc. after adjusting for the net present value of net operating loss carryforwards, which indicated calendar year 2016 estimated EBITDA multiples for Calpine Corporation, Dynegy Inc. and NRG Energy, Inc. of 8.3x, 6.3x and 7.2x, respectively (with an average of 7.3x), as compared to such companies’ unadjusted calendar year 2016 estimated EBITDA multiples of 8.9x, 6.7x and 7.5x, respectively.

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The January 11, 2016 preliminary discussion materials also referenced, for informational purposes, among other things, (i) the relative Share price performance of the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation during the period June 2, 2015 to January 7, 2016, as compared to the performance of the S&P 500 index and certain commodities, and related observations, (ii) a comparison of certain financial and trading metrics and data and the respective asset mixes of the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation and related observations, (iii) declines, based on public filings and other publicly available information, during the period from June 2, 2015 to January 7, 2016 in the next fiscal year estimated EBITDA multiples of the Company, Dynegy Inc. NRG Energy, Inc. and Calpine Corporation relative to the average historical next fiscal year EBITDA multiple of Dynegy Inc. NRG Energy, Inc. and Calpine Corporation, increases during such period in such companies’ free cash flow yields relative to the average historical next fiscal year free cash flow yield of Dynegy Inc., NRG Energy, Inc. and Calpine Corporation and related observations, (iv) certain strategic considerations in connection with a potential sale of the Company and (v) an overview of the Company’s assets.

January 14, 2016 Preliminary Discussion Materials.   The January 14, 2016 preliminary discussion materials contained an illustrative sensitivities overview based on internal financial forecasts and estimates

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of the Company’s management of the potential impact of power and commodity price changes on the Company’s approximate implied per Share equity value, as calculated pursuant to preliminary discounted cash flow analyses, which generally used the same methodology as described above under “— January 11, 2016 Preliminary Discussion Materials,” except that gas and power prices were assumed to decline by 20% and 10%, respectively, in a “downside” case and to increase by 20% and 10%, respectively, in an “upside” case. This overview indicated overall illustrative approximate implied per Share equity value reference ranges for the Company of  $7.92 to $12.68 per Share under the base case without taking into account changes in gas and power prices, $4.23 to $8.49 per Share under the downside case and $14.77 to $20.40 per Share under the upside case.

April 29, 2016 Preliminary Discussion Materials.   The April 29, 2016 preliminary discussion materials referenced, for informational purposes, among other things, (i) certain Share price information for the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, including the companies’ relative stock price performance from March 31, 2016 to April 28, 2016, (ii) based on internal financial forecasts and estimates of the Company’s management, public filings and other publicly available information, improvements from January 7, 2016 to April 28, 2016 in the companies’ respective next fiscal year estimated EBITDA multiples and free cash flow yields and (iii) premiums implied if the Company were acquired for $13.00 or $14.00 per Share in cash, noting that the Company’s closing stock prices of  $9.00 per Share on March 31, 2016, $10.04 per Share on April 1, 2016 and $11.81 per Share on April 28, 2016 implied premiums of approximately 44.4%, 29.5% and 10.1%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 39.4% and 18.5%, respectively, based on a $14.00 per Share purchase price and further noting that the Company’s implied stock prices of  $9.00 per Share on March 31, 2016, $9.08 per Share on April 1, 2016 and $9.86 per Share on April 28, 2016 assuming the Company’s stock price performed consistently with the stock prices of its peers implied premiums of approximately 44.4%, 43.1% and 31.8%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 54.1% and 41.9%, respectively, based on a $14.00 per Share purchase price.

May 13, 2016 Preliminary Discussion Materials.   The May 13, 2016 preliminary discussion materials referenced, for informational purposes, (i) certain Share price information for the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, including the companies’ relative stock price performance from March 31, 2016 to May 13, 2016 and (ii) premiums implied if the Company were acquired for $13.00 or $14.00 per Share in cash, noting that the Company’s closing stock prices of  $9.00 per Share on March 31, 2016, $10.04 per Share on April 1, 2016 and $13.07 per Share on May 13, 2016 implied premiums of approximately 44.4%, 29.5% and (0.5%), respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 39.4% and 7.1%, respectively, based on a $14.00 per Share purchase price and further noting that the Company’s implied stock prices of  $9.00 per Share on March 31, 2016, $9.11 per Share on April 1, 2016 and $10.28 per Share on May 13, 2016 assuming the Company’s stock price performed consistently with the stock prices of its peers implied premiums of approximately 44.4%, 42.7% and 26.4%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 53.7% and 36.2%, respectively, based on a $14.00 per Share purchase price.

May 23, 2016 Preliminary Discussion Materials.   The May 23, 2016 preliminary discussion materials primarily focused on the types of analyses summarized above for the June 2, 2016 financial presentation, utilizing procedures that were generally consistent with those contained in the June 2, 2016 financial presentation.

The May 23, 2016 preliminary discussion materials contained the following preliminary financial analyses:

•

a preliminary discounted cash flow analysis of the Company, which generally used the same methodology as described above under “— June 2, 2016 Financial Presentation — Discounted Cash Flow Analysis,” except that, among other things, the implied terminal value of the Company was calculated by applying to the Company’s fiscal year 2020 estimated adjusted EBITDA a selected range of next fiscal year estimated EBITDA multiples of 7.4x to 8.4x and the present values (as of March 31, 2016) of the Company’s cash flows and terminal values were calculated using a selected range of discount rates of 6.0% to 6.7%, which indicated an approximate implied per Share equity value reference range for the Company of  $10.97 to $15.68 per Share;

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•

a preliminary selected public companies analysis of the Company, which generally used the same methodology as described above under “— June 2, 2016 Financial Presentation — Selected Public Companies Analysis,” except that, among other things, the observed overall low to high calendar year 2017 and calendar year 2018 estimated EBITDA multiples were 7.1x to 8.6x (with a mean of 7.9x and a median of 7.9x) and 6.5x to 8.2x (with a mean of 7.4x and a median of 7.4x), respectively, and overall low to high calendar year 2016 estimated free cash flow yields were 15.3% to 22.2% (with a mean of 18.7% and a median of 18.7%) for the selected companies; applying these selected ranges of calendar year 2017 and calendar year 2018 estimated EBITDA multiples and calendar year 2016 estimated free cash flow yields derived from the selected companies to the Company’s calendar year 2017 and calendar year 2018 estimated adjusted EBITDA and the Company’s calendar year 2016 estimated adjusted free cash flow, respectively, indicated approximate implied per Share equity value reference ranges for the Company of  $13.02 to $20.94 per Share (based on the Company’s calendar year 2017 estimated adjusted EBITDA), $10.17 to $19.41 per Share (based on the Company’s calendar year 2018 estimated adjusted EBITDA) and $12.66 to $18.42 per Share (based on the Company’s calendar year 2016 estimated adjusted free cash flow), utilizing internal estimates of the Company’s management;

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•

a preliminary selected precedent transactions analysis of the Company, which generally used the same methodology and reflected the same approximate implied per Share equity value reference range for the Company as described above under “— June 2, 2016 Financial Presentation —  Selected Precedent Transactions Analysis;” and

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•

a preliminary sum-of-the-parts selected precedent transactions analysis of the Company, which generally used the same methodology and reflected the same approximate implied per Share equity value reference range for the Company as described above under “— June 2, 2016 Financial Presentation —  Sum-of-the-Parts Selected Precedent Transactions Analysis.”

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The May 23, 2016 preliminary discussion materials also contained an illustrative sensitivities overview based on internal financial forecasts and estimates of the Company’s management and the preliminary discounted cash flow analysis described above (assuming a discount rate of 6.3%) of the potential impact on the Company’s approximate implied per Share equity value assuming calendar year 2020 estimated adjusted EBITDA for the Company of  $597 million to $697 million and next fiscal year estimated EBITDA multiples of 6.0x to 9.0x, which indicated an illustrative approximate implied per Share equity value reference range for the Company of  $4.15 to $20.40 per Share.

The May 23, 2016 preliminary discussion materials also referenced, for informational purposes, among other things, (i) stock price targets for the Shares as reflected in selected publicly available Wall Street research analysts’ reports and other publicly available information, (ii) historical trading prices of the Shares during the period from June 2, 2015 to May 19, 2016 and (iii) utilizing publicly available information and public filings, the implied premiums paid (to the extent publicly available) in nine selected precedent all-cash U.S. mergers and acquisitions transactions announced from February 12, 2015 to March 14, 2016 and completed within the latest 12 months (as of May 19, 2016) with transaction values of  $1.0 billion to $2.0 billion, which indicated overall low to high implied premiums based on the closing stock prices of the target companies involved in such transactions one trading day prior to announcement of such transactions of approximately 17% to 50% (with 25th to 75th percentile premiums of 31.0% to 44.5%, respectively); applying a selected range of premiums of 31.0% to 44.5% to the closing price of the Shares of  $9.00 per Share on March 31, 2016 (the last trading day prior to the publishing of a news report regarding a potential acquisition of the Company) indicated an approximate implied per Share equity value reference range for the Company common stock of  $11.79 to $13.01 per Share.

In the May 23, 2016 preliminary discussion materials, Citi also observed, for informational purposes:

•

based on public filings, Wall Street research analysts’ consensus estimates and other publicly available information, the calendar year 2017 and calendar year 2018 estimated EBITDA multiples and calendar year 2016 estimated free cash flow yield for Calpine Corporation, which indicated for Calpine Corporation calendar year 2017 and calendar year 2018 estimated EBITDA multiples of 8.5x and 7.8x, respectively, and a calendar year 2016 estimated free cash flow yield of 14.8%; and

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•

utilizing public filings, Wall Street research analysts’ estimates and other publicly available information, quarterly historical next fiscal year estimated EBITDA multiples for Dynegy Inc., NRG Energy, Inc. and Calpine Corporation for the period beginning December 31, 2009 through May 19, 2016, which indicated 10th to 90th percentile next fiscal year estimated EBITDA multiples for such companies of 6.7x to 10.1x; applying this range of EBITDA multiples to the calendar year 2017 estimated adjusted EBITDA of the Company based on internal financial forecasts and estimates of the Company’s management indicated an approximate implied per Share equity value reference range for the Shares of  $10.47 to $29.10 per Share.

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The May 23, 2016 preliminary discussion materials also referenced, for informational purposes, (i) a general timeline and overview of the transaction process, (ii) certain Share price information for the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, including such companies’ relative stock price performance during the period from March 31, 2016 to May 19, 2016, (iii) based on internal financial forecasts and estimates of the Company’s management, public filings and other publicly available information, improvements during the period from January 7, 2016 to May 19, 2016 in the next fiscal year estimated EBITDA multiples of the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, the discount to the Company’s next fiscal year estimated adjusted EBITDA trading multiple relative to the next fiscal year estimated EBITDA multiples of Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, improvements during such period in the Company’s and such other companies’ free cash flow yields and in the Company’s weighted average cost of capital and related observations, and (iv) premiums implied if the Company were acquired for $13.00 or $14.00 per Share in cash, noting that the Company’s closing stock prices of  $9.00 per Share on March 31, 2016, $10.04 per Share on April 1, 2016 and $12.49 per Share on May 19, 2016 implied premiums of approximately 44.4%, 29.5% and 4.1%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 39.4% and 12.1%, respectively, based on a $14.00 per Share purchase price and further noting that the Company’s implied stock prices of  $9.00 per Share on March 31, 2016, $9.11 per Share on April 1, 2016 and $10.24 per Share on May 19, 2016 assuming the Company’s stock price performed consistently with the stock prices of its peers implied premiums of approximately 44.4%, 42.7% and 26.9%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 53.7% and 36.7%, respectively, based on a $14.00 per Share purchase price.

May 27, 2016 Preliminary Discussion Materials.   The May 27, 2016 preliminary discussion materials primarily focused on the types of analyses summarized above for the June 2, 2016 financial presentation, utilizing procedures that were generally consistent with those contained in the June 2, 2016 financial presentation.

The May 27, 2016 preliminary discussion materials contained the following preliminary financial analyses:

•

a preliminary discounted cash flow analysis of the Company, which generally used the same methodology as described above under “— June 2, 2016 Financial Presentation — Discounted Cash Flow Analysis,” except that, among other things, the implied terminal value of the Company was calculated by applying to the Company’s fiscal year 2020 estimated adjusted EBITDA a selected range of next fiscal year estimated EBITDA multiples of 7.4x to 8.4x and the present values (as of March 31, 2016) of the Company’s cash flows and terminal values were calculated using a selected range of discount rates of 6.0% to 6.6%; this preliminary analysis indicated an approximate implied per Share equity value reference range for the Company of  $8.82 to $13.21 per Share;

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•

a preliminary selected public companies analysis of the Company, which generally used the same methodology as described above under “— June 2, 2016 Financial Presentation — Selected Public Companies Analysis,” except that, among other things, the observed overall low to high calendar year 2017 and calendar 2018 estimated EBITDA multiples were 7.1x to 8.7x (with a mean of 7.9x and a median of 7.9x) and 6.5x to 8.3x (with a mean of 7.4x and a median of 7.4x), respectively, and overall low to high calendar year 2016 estimated free cash flow yields were 15.7% to 21.7% (with a mean of 18.7% and a median of 18.7%) for the selected companies; applying these selected ranges of calendar year 2017 and calendar year 2018 estimated EBITDA multiples and calendar year 2016 estimated free cash flow yields derived from the selected companies to the Company’s

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calendar year 2017 and calendar year 2018 estimated adjusted EBITDA and the Company’s calendar year 2016 estimated adjusted free cash flow, respectively, indicated approximate implied per Share equity value reference ranges for the Company of  $12.80 to $21.15 per Share (based on the Company’s calendar year 2017 estimated adjusted EBITDA), $9.97 to $19.62 per Share (based on the Company’s calendar year 2018 estimated adjusted EBITDA) and $12.95 to $17.92 per Share (based on the Company’s calendar year 2016 estimated adjusted free cash flow), utilizing internal estimates of the Company’s management;

•

a preliminary selected precedent transactions analysis of the Company, which generally used the same methodology and reflected the same approximate implied per Share equity value reference range for the Company as described above under “— June 2, 2016 Financial Presentation —  Selected Precedent Transactions Analysis;” and

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•

a preliminary sum-of-the-parts selected precedent transactions analysis of the Company, which generally used the same methodology and reflected the same approximate implied per Share equity value reference range for the Company as described above under “— June 2, 2016 Financial Presentation — Sum-of-the-Parts Selected Precedent Transactions Analysis.”

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The May 27, 2016 preliminary discussion materials also contained an illustrative sensitivities overview based on internal financial forecasts and estimates of the Company’s management and the preliminary discounted cash flow analysis described above (assuming a discount rate of 6.3%) of the potential impact on the Company’s approximate implied per Share equity value assuming calendar year 2020 estimated adjusted EBITDA for the Company ranging from $502 million to $702 million and next fiscal year estimated EBITDA multiples ranging from 6.0x to 9.0x, which indicated an illustrative approximate implied per Share equity value reference range for the Company of  $0.52 to $20.53 per Share.

The May 27, 2016 preliminary discussion materials also referenced, for informational purposes, among other things, (i) stock price targets for the Shares as reflected in selected publicly available Wall Street research analysts’ reports and other publicly available information, (ii) historical trading prices of the Shares during the period from June 2, 2015 to May 25, 2016 and (iii) utilizing publicly available information and public filings, the implied premiums paid (to the extent publicly available) in nine selected precedent all-cash U.S. mergers and acquisitions transactions announced from February 12, 2015 to March 14, 2016 and completed within the latest 12 months with transaction values of  $1.0 billion to $2.0 billion, which indicated overall low to high implied premiums based on the closing stock prices of the target companies involved in such transactions one trading day prior to announcement of such transactions of approximately 17% to 50% (with 25th to 75th percentile premiums of 31.0% to 44.5%, respectively); applying a selected range of premiums of 31.0% to 44.5% to the closing price of the Shares of  $9.00 per Share on March 31, 2016 (the last trading day prior to the publishing of a news report relating to a potential acquisition of the Company) indicated an approximate implied per Share equity value reference range for the Shares of  $11.79 to $13.01 per Share.

In the May 27, 2016 preliminary discussion materials, Citi also observed, for informational purposes:

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based on public filings, Wall Street research analysts’ consensus estimates and other publicly available information, the calendar year 2017 and calendar year 2018 estimated EBITDA multiples and calendar year 2016 estimated free cash flow yield for Calpine Corporation, which indicated for Calpine Corporation observed calendar year 2017 and calendar year 2018 estimated EBITDA multiples of 8.5x and 7.8x, respectively, and a calendar year 2016 estimated free cash flow yield of 14.8%; and

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•

utilizing public filings, Wall Street research analysts’ estimates and other publicly available information, quarterly historical next fiscal year estimated EBITDA multiples for Dynegy Inc., NRG Energy, Inc. and Calpine Corporation for the period beginning December 31, 2009 through May 25, 2016, which indicated 10th to 90th percentile next fiscal year estimated EBITDA multiples of 6.7x to 10.1x; applying these EBITDA multiples to the calendar year 2017 estimated adjusted EBITDA of the Company based on internal financial forecasts and estimates of the Company’s management indicated an approximate implied per Share equity value reference range for the Shares of  $10.47 to $29.10 per Share.

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The May 27, 2016 preliminary discussion materials also referenced, for informational purposes, certain other information, including (i) a general timeline and overview of the transaction process, (ii) certain Share price information for the Company, Dynegy Inc., NRG Energy, Inc. and Calpine Corporation, including the companies’ relative stock price performance during the period from March 31, 2016 to May 25, 2016, and stock price declines following the May 24, 2016 announcement of PJM Auction results as compared to an increase in the S&P 500 index, (iii) based on internal financial forecasts and estimates of the Company’s management, public filings and other publicly available information, improvements during the period from January 7, 2016 to May 25, 2016 in the next fiscal year estimated EBITDA multiples of the Company, Dynegy Inc., NRG Energy and Calpine Corporation, the discount to the Company’s next fiscal year estimated adjusted EBITDA multiple relative to the next fiscal year estimated EBITDA multiples of Dynegy Inc., NRG Energy and Calpine Corporation, improvements during such period in the Company’s and such other companies’ free cash flow yields and in the Company’s weighted average cost of capital and related observations, and (iv) premiums implied if the Company were acquired for $13.00 or $14.00 per Share in cash, noting that the Company’s closing stock prices of  $9.00 per Share on March 31, 2016, $10.04 per Share on April 1, 2016 and $11.11 per Share on May 25, 2016 implied premiums of approximately 44.4%, 29.5% and 17.0%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 39.4% and 26.0%, respectively, based on a $14.00 per Share purchase price and further noting that the Company’s implied stock prices of  $9.00 per Share on March 31, 2016, $9.11 per Share on April 1, 2016 and $10.22 per Share on May 25, 2016 assuming the Company’s stock price performed consistently with the stock prices of its peers implied premiums of approximately 44.4%, 42.7% and 27.2%, respectively, based on a $13.00 per Share purchase price and approximately 55.6%, 53.7% and 37.0%, respectively, based on a $14.00 per Share purchase price.

Miscellaneous

The Company has agreed to pay Citi for its services in connection with the proposed Merger an aggregate fee of  $25 million, a portion of which was payable during the course of Citi’s engagement, a portion of which was payable upon delivery of Citi’s opinion, a portion of which is payable in connection with the go-shop process and approximately $14 million is payable contingent upon consummation of the Merger. In addition, the Company has agreed to reimburse Citi for Citi’s expenses, including fees and expenses of counsel, and to indemnify Citi and related parties against certain liabilities, including liabilities under federal securities laws, arising out of Citi’s engagement.

As the Disinterested Directors were aware, Citi and its affiliates in the past have provided, currently are providing and in the future may provide investment banking, commercial banking and other similar financial services to the Company and its affiliates unrelated to the proposed Merger, for which services Citi and its affiliates have received and expect to receive compensation, including, during the two-year period prior to the date of Citi’s opinion, having acted or acting as (i) financial advisor in connection with the separation and related transactions and as financial advisor to the Company in connection with its acquisition of MACH Gen, LLC, (ii) remarketing agent for a repurchase of senior notes of the Company and as lead or joint bookrunning manager for certain debt offerings of certain affiliates of the Company and (iii) lead arranger, administrative agent and collateral trustee for, and/or as a lender or letter of credit issuer under, credit facilities of certain affiliates of the Company, for which services described in clauses (i) through (iii) above Citi and its affiliates received during such two-year period aggregate fees of approximately $30 million. In addition, a consent fee of approximately $695,000 was payable to Citi’s affiliate, Citibank, N.A., as a lender in respect of the waiver of change of control provisions under the Credit Agreement in connection with the Merger. As the Disinterested Directors also were aware, Citi and its affiliates in the past have provided, currently are providing and in the future may provide investment banking, commercial banking and other similar financial services to Riverstone and/or certain of its affiliates and portfolio companies, for which services Citi and its affiliates have received and expect to receive compensation, including, during the two-year period prior to the date of Citi’s opinion, having acted or acting as (i) joint bookrunning manager for certain equity and debt offerings of certain affiliates and/or portfolio companies of Riverstone and (ii) arranger and/or bookrunner for, and/or as a lender under, credit facilities, term loans, construction loans and/or letters of credit of certain affiliates and/or portfolio companies of Riverstone, for which services described in clauses (i) and (ii) above Citi and its affiliates received during such two-year period aggregate fees of approximately $20 million. In the ordinary course of

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business, Citi and its affiliates may actively trade or hold the securities of the Company, Riverstone and their respective affiliates and/or portfolio companies for their own account or for the account of their customers and, accordingly, may at any time hold a long or short position in such securities. In addition, Citi and its affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with the Company, Riverstone and their respective affiliates and/or portfolio companies.

The Company selected Citi as its financial advisor in connection with the proposed Merger based on Citi’s reputation, experience and familiarity with the Company and its business. Citi is an internationally recognized investment banking firm that regularly engages in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.

Purpose and Reasons of the Company for the Merger

The Company’s purpose for engaging in the Merger is to enable its stockholders to receive the Merger Consideration, which Merger Consideration represents a premium of  (i) 85% over the closing price of the Shares on December 2, 2015, the day on which the acquisition proposal was first communicated to the chairman of the Board, (ii) 56% over the closing price of the Shares on March 31, 2016, the last trading day before the first public reports of a potential sale of the Company and (iii) 17% over the closing price of the Shares on June 2, 2016, the last trading day before the announcement of the Merger. The Company believes that the Merger provides the best opportunity to maximize stockholder value. The Company has determined to undertake the Merger at this time based on the analyses, determinations and conclusions of the Disinterested Directors described in detail above under “Special Factors — Recommendation of the Board; Fairness of the Merger.”

Purpose and Reasons of the Riverstone Filing Parties for the Merger

Under the SEC rules governing “going private” transactions, each of the Riverstone Filing Parties is an affiliate of the Company that is engaged in the “going private” transaction and, therefore, each is required to express its purposes and reasons for the Merger to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. The Riverstone Filing Parties are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

If the Merger is completed, the Company will become a subsidiary of the Sponsor Entities. For the Riverstone Filing Parties, the purpose of the Merger is to effectuate the transactions contemplated by the Merger Agreement and to bear the rewards and risks of such ownership after the Shares cease to be publicly traded. The Riverstone Filing Parties did not consider any alternatives for achieving these purposes.

Although Talen Energy has only been a public company since June 2015, the Riverstone Filing Parties also believe that as a private company, Talen Energy could operate more efficiently and effectively. Operating as a public company entails substantial expense. The Riverstone Filing Parties believe that other improvements to the Company’s cost structure and strategic direction could be achieved, free of the market pressures imposed on a publicly traded company with regard to operating results. In addition, the Riverstone Filing Parties considered what they believed were competitive advantages of the Company ceasing to be a public company, including less transparency to competitors and greater access to capital resources to capitalize on market opportunities, if any. Further, absent the reporting and other substantial burdens placed on public companies, the Riverstone Filing Parties believe that the management and employees of the Company will be able to better execute on the Company’s future strategic plans due to increased time and narrowed focus.

Riverstone was aware of the increased costs and burdens associated with public company status at the time of the Talen Transactions, but at that time it believed that those costs could be managed and that they would be outweighed by the potential synergies created by the Talen Transactions. Riverstone believed that these potential synergies, among other things, would allow it to realize a greater return by selling its Shares of Talen Energy than it could have obtained by selling RJS to a third party.

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However, unanticipated and meaningful declines in natural gas and wholesale power prices combined with an increasingly negative view of the merchant power industry in the fall of 2015, resulted in the trading price of the Shares declining from $20.06 per Share on the close of business on the date of consummation of the Talen Transactions to $7.20 per share at the close of business on December 3, 2015. Due to these changing circumstances, Riverstone decided that the best manner in which to derive value from its investment in Talen Energy would be to invest in, manage and operate the business privately, without the burdens and constraints associated with public company status, and, accordingly, it no longer felt that the costs associated with being a public company were justifiable.

The Riverstone Filing Parties have undertaken to pursue the Merger at this time for the reasons described above.

Although the Riverstone Filing Parties believe that there will be significant opportunities associated with their investment in the Company, the Riverstone Filing Parties realize that there are also substantial risks (including the risks and uncertainties relating to the prospects of the Company) and that such opportunities may never be fully realized.

The Riverstone Filing Parties believe that structuring the transaction as a merger transaction is preferable to other transaction structures because (i) it will enable the Parent Group to acquire all of the outstanding Shares at the same time and (ii) it represents an opportunity for the Company’s stockholders (except the Sponsor Entities) to receive a compelling premium for their Shares in the form of the Merger Consideration. Further, the Riverstone Filing Parties believe that structuring the transaction as a merger transaction provides a prompt and orderly transfer of ownership of the Company in a single step, without the necessity of financing separate purchases of the Shares in a tender offer and implementing a second-step merger to acquire any Shares not tendered into any such tender offer, and without incurring any additional transaction costs associated with such activities.

Plans for the Company After the Merger

At the effective time of the Merger, Parent anticipates that the Company will generally continue its current operations, but will cease to be an independent public company. If the Merger is consummated, the Shares will be delisted from the NYSE and will cease to be registered under the Exchange Act (via termination of registration pursuant to Section 12(g) of the Exchange Act). At the effective time of the Merger, the directors of Merger Sub immediately prior to the effective time will become the directors of the Company, and the officers of the Company immediately prior to the effective time will remain the officers of the Company, in each case until their successor is elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be.

Certain Effects of the Merger

If the Merger Agreement is adopted by the requisite votes of the Company’s stockholders and all other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will merge with and into the Company, with the Company surviving the Merger.

Treatment of the Shares

At the effective time of the Merger, each Share outstanding immediately prior to the effective time of the Merger (other than Excluded Shares and the Shares underlying the Company’s stock options and the Shares that are subject to the Company’s restricted stock unit awards, the Company’s performance units and the Company’s director stock units) will be converted into the right to receive the Merger Consideration, less applicable withholding taxes, upon the terms and subject to the conditions set forth in the Merger Agreement, whereupon all such Shares will be automatically canceled, will cease to be outstanding, and will cease to exist, and the holders of such Shares will cease to have any rights with respect thereto, other than the right to receive the Merger Consideration.

Treatment of Stock Options and Other Equity-Based Awards

Stock Options.   At the effective time of the Merger, outstanding stock options, whether vested or unvested, will be cancelled in exchange for a cash payment, payable as soon as practicable following the effective time of the Merger, equal to the product of  (i) the total number of the Shares subject to the stock

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option immediately prior to the effective time of the Merger multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per Share of the stock option, without interest and less applicable taxes required to be withheld, which will be paid as promptly as practicable following the effective time of the Merger. Any outstanding stock option that has an exercise price per Share equal to or in excess of the Merger Consideration will be canceled at the effective time of the Merger for no consideration.

Restricted Stock Units.   At the effective time of the Merger, outstanding restricted stock units will be cancelled in exchange for the RSU Cash Payment. For restricted stock units granted prior to June 2, 2016, the RSU Cash Payment will be paid as promptly as practicable following the effective time of the Merger. For restricted stock units granted between June 2, 2016 and the effective time of the Merger, the RSU Cash Payment will be paid following the effective time of the Merger subject to the same vesting schedule and other vesting terms and conditions applicable to the underlying restricted stock units as of the effective time of the Merger (including conditions governing certain terminations of employment).

Performance Units.   At the effective time of the Merger, outstanding performance units, other than those held by Messrs. Farr, McGuire, Hopf and Rausch will be cancelled in exchange for a cash payment, payable as promptly as practicable following the effective time of the Merger, equal to the product of  (i) the Merger Consideration multiplied by (ii) the total number of the Shares underlying the cancelled performance units assuming the target achievement of applicable performance goals and the satisfaction of all other conditions of delivery, without interest and less applicable taxes required to be withheld. A pro rata portion of the performance units held by Messrs. Farr, McGuire, Hopf and Rausch (determined based on the relative portion of the applicable performance period that has elapsed as of the effective time of the Merger) will be treated in the same manner as the performance units held by all other employees of the Company, and the remaining performance units held by Messrs. Farr, McGuire, Hopf and Rausch will be converted into the right to receive a cash payment in an amount equal to the product of  (x)(a) the total number of the Shares that would be delivered to the executive officer assuming the target achievement of the performance goals applicable to such performance unit, minus (b) the total number of the Shares that would be delivered to the executive officer upon a “change in control” under the terms of the applicable performance unit award agreement and (y) the Merger Consideration, which cash amount will be subject to the service-based (but not the performance-based) vesting terms and conditions applicable to the underlying performance unit as of the effective time of the Merger (including conditions governing certain terminations of employment).

Director Stock Units.   At the effective time of the Merger, each outstanding director stock unit will be converted into cash payment, without interest, equal to the product of  (i) the Merger Consideration multiplied by (ii) the total number of the Shares represented by that director stock unit, with such amount payable or distributed in accordance with the terms of the Directors Deferred Compensation Plan (and any applicable deferral election).

Benefits of the Merger for the Company’s Unaffiliated Stockholders

The primary benefit of the Merger to the unaffiliated stockholders will be their right to receive the Merger Consideration, less applicable withholding taxes, for each Share held by such stockholders as described above, representing a premium of 56% above the closing price of Shares on March 31, 2016, the last trading day before the first public reports of a potential sale of the Company, a premium of 101% over the volume-weighted average price of Shares during the 60 calendar days that ended on March 31, 2016, and a premium of 17% over the closing price of Shares on June 2, 2016, the last day before the announcement of the Merger. Additionally, such stockholders will avoid the risk after the Merger of any possible decrease in our future earnings, growth or value.

Detriments of the Merger to the Company’s Unaffiliated Stockholders

The primary detriments of the Merger to our unaffiliated stockholders include the lack of an interest of such stockholders in the potential future earnings, growth, or value realized by the Company after the Merger.

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Certain Effects of the Merger for Riverstone and the Sponsor Entities

Following the Merger, it is contemplated that all of the equity interests in the Company will be owned by the Sponsor Entities. If the Merger is completed, these equity investors, and Riverstone by virtue of its control of the Sponsor Entities, will be the sole beneficiaries of our future earnings, growth and value, if any, and such equity investors will be the only ones entitled to vote on corporate matters affecting the Company.

Additionally, following the Merger, the Company will be a private company, wholly owned by the Sponsor Entities and any additional investors permitted by the Sponsor Entities, and, as such, will be relieved of the burdens on companies having publicly traded equity securities, including the pressure to meet analyst forecasts and the requirements and restrictions on trading that our directors, officers and beneficial owners of more than 10% of the Shares face as a result of the provisions of Section 16 of the Exchange Act. In addition, registration of the Shares under the Exchange Act will be terminated, which will reduce the information required to be furnished by the Company to our stockholders and the SEC. Talen Energy Supply files periodic reports with the SEC under the Exchange Act as a voluntary filer because it has debt that is publicly tradable, and it may choose to continue to do so following the Merger. The Company currently estimates that the amount of any regulatory compliance cost savings will be approximately $1.5 million per year, excluding any decision regarding future filings of Talen Energy Supply. The Sponsor Entities, and Riverstone by virtue of its control of the Sponsor Entities, will benefit from any regulatory compliance cost savings realized by the Company after it becomes a private company.

As of December 31, 2015, the Company recorded deferred tax assets of  (i) $110 million in respect of accrued federal net operating loss carryforwards, and (ii) $19 million in respect of accrued state net operating loss carryforwards, that the Company expected (on a more likely than not basis) to be able to utilize to offset future tax liabilities prior to the expiration of such net operating loss carryforwards. After the completion of the Merger, the Company again will evaluate the facts and circumstances to determine the extent (if any) to which such asset may be utilizable. Because utilization of the net operating losses after the Merger will depend on the income and other deductions of the Company after the Merger, which cannot be determined in advance, no assurance can be given as to when, or the extent to which (if at all), such utilization will occur after the Merger. As a result of the Sponsor Entities’ ownership interests in the Company following the completion of the Merger, the Sponsor Entities, and Riverstone by virtue of its control of the Sponsor Entities, will become the beneficiaries of any such utilization.

The primary detriments of the Merger to the Sponsor Entities include the fact that all of the risk of any possible decrease in the earnings, growth or value of the Company following the Merger will be borne by the Sponsor Entities and any additional permitted investors. Additionally, the equity investment of the Sponsor Entities and any additional investors permitted by them in the Company will be illiquid, with no public trading market for such securities.

The directors of Merger Sub immediately prior to the effective time of the Merger will be the directors of the surviving corporation and the officers of the Company immediately prior to the effective time of the Merger will be the officers of the surviving corporation, in each case until their successor is elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be. The certificate of incorporation of the surviving corporation will be amended and restated in its entirety to be in the form of the certificate of incorporation attached as Exhibit A to the Merger Agreement. The bylaws of the Merger Sub immediately prior to the effective time of the Merger will be the bylaws of the surviving corporation.

The Sponsor Entities beneficially own approximately 35% of the issued and outstanding Shares. Following consummation of the Merger, the Sponsor Entities will own 100% of the Shares and will have a corresponding interest in our net book value and net earnings or losses. Each stockholder of the Sponsor Entities will have an indirect interest in our net book value and net earnings or losses in proportion to such stockholder’s ownership interest in the Sponsor Entities. Our net loss for the fiscal year ended December 31, 2015 was approximately $341 million and our net book value as of December 31, 2015 was approximately $4.303 billion. Our net income for the six months ended June 30, 2016 was approximately $148 million and our net book value as of June 30, 2016 was approximately $4.465 billion. The table below sets forth the

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direct and indirect interests in the Company’s net book value and net earnings of the Sponsor Entities before the Merger and the Sponsor Entities immediately after the Merger, based on the net book value at December 31, 2015 and June 30, 2016 and net income (loss) for the fiscal year ended December 31, 2015 and the six months ended June 30, 2016.

Certain Effects on the Company if the Merger is not Completed

If the Merger Agreement is not adopted by the Company’s stockholders or if the Merger is not completed for any other reason, Talen Energy’s stockholders will not receive any payment for their Shares in connection with the Merger. Instead, Talen Energy will remain an independent public company, and the Shares will continue to be quoted on the NYSE, for so long as it continues to meet eligibility listing standards. In addition, if the Merger is not completed, the Company expects that management will operate Talen Energy’s business in a manner similar to that in which it is being operated today and that Talen Energy’s stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the power generation industry in which Talen Energy operates and adverse economic conditions.

Failure to complete the Merger could negatively impact our business and the market price of the Shares.

Furthermore, if the Merger is not completed, and depending on the circumstances that would have caused the Merger not to be completed, the price of the Shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the Shares would return to the price at which the Shares trade as of the date of this proxy statement. Accordingly, if the Merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your Shares. If the Merger is not completed, the Board will continue to evaluate and review the Company’s business operations, properties, dividend policy, share repurchase policy and capitalization, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance stockholder value. If the Merger Agreement is not adopted by the Company’s stockholders or if the Merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to Talen Energy will be offered or that Talen Energy’s business, prospects or results of operation will not be adversely impacted.

If the Merger is not completed for any reason, we will be subject to a number of material risks, including the disruption to our business resulting from the announcement of the signing of the Merger Agreement, the diversion of management’s attention from our day-to-day business and the substantial restrictions imposed by the Merger Agreement on the operation of our business during the period before the completion of the Merger may make it difficult for us to achieve our business goals if the Merger does not occur.

Failure to complete the Merger could trigger the payment of a termination fee.

If the Merger Agreement is terminated, under specified conditions, Talen Energy would be required to pay Parent a termination fee in an amount equal to $50 million. If the Merger Agreement had been terminated in connection with a Superior Proposal with an Excluded Party, the Company would have been required to pay Parent a termination fee of  $25 million.

Upon termination of the Merger Agreement by the Company or Parent under specified conditions, Parent will be required to pay the Company a termination fee of  $85 million. See “The Merger Agreement — Termination — Termination Fees.”

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Prospective Financial Information

The Company does not generally make public projections as to future performance or earnings beyond the current fiscal year and is especially cautious of making projections for extended periods due to the unpredictability of its business and the markets in which it operates. However, financial projections prepared by management were made available to the Board in connection with its consideration of the Company’s stand-alone prospects and potential strategic transactions available to the Company. Certain of these financial projections and forecasts (or certain information contained therein) also were made available to the Company’s financial advisor, including the financial projections and forecasts reflected below under “— Post-PJM Auction Forecasts” that were provided to the Company’s financial advisor for its use and reliance in connection with its opinion and related analyses as described in “Special Factors — Opinion of Citigroup Global Markets Inc.,” the Company’s legal advisors and to Riverstone and the Sponsor Entities.

These financial projections and forecasts are included in this proxy statement not to influence your decision whether to vote for or against the proposal to adopt the Merger Agreement, but because these financial projections and forecasts were made available to the Board, as well as, in the case of certain of these financial projections and forecasts (or certain information contained therein), to the Company’s financial and legal advisors and to Riverstone and the Sponsor Entities. The inclusion of this information should not be regarded as an indication that the Company, the Board, the Company’s financial or legal advisors, Riverstone, the Sponsor Entities or any other recipient of this information considered, or now considers, such financial projections or forecasts to be necessarily predictive of actual future results. No person has made or makes any representation to any stockholder regarding the information included in these financial projections or forecasts.

The prospective financial information is subjective in many respects and reflects numerous judgments, estimates and assumptions that are inherently uncertain, many of which are difficult to predict or cannot be predicted, are subject to significant economic and competitive uncertainties and are beyond the Company’s control, including estimates and assumptions regarding industry performance, general business, economic, regulatory, market and financial conditions, future commodity, capacity markets, wholesale and retail energy prices, operational, maintenance and production costs, transmission capacity and demand for energy commodities, as well as other future events. Important factors may cause actual results to differ from the prospective financial information, including the factors described under “Cautionary Statement Concerning Forward-Looking Information,” the section entitled “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2015 and other risk factors detailed from time to time in the Company’s other reports filed with the SEC, including those that are incorporated by reference in this proxy statement. In addition, since the financial projections and forecasts cover multiple years, such information by its nature becomes less reliable with each successive year. As a result, there can be no assurance that the projected results, and underlying estimates and assumptions made in preparing the financial projections and forecasts will be realized or that actual results will not be significantly higher or lower than projected.

Except as otherwise discussed below, the financial projections and forecasts do not take into account any circumstances or events occurring after the date they were prepared. Except as may be required in order to comply with applicable securities laws, the Company does not intend to update, or otherwise revise, the financial projections or forecasts, or the specific portions presented, to reflect circumstances existing after the date the financial projections and forecasts were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error. In addition, the financial projections and forecasts assume that the Company will remain a publicly traded company.

The financial projections and forecasts were not prepared with a view toward public disclosure, soliciting proxies or complying with Generally Accepted Accounting Principles, which we refer to as GAAP, the published guidelines of the SEC regarding financial projections and forecasts or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial projections and forecasts. Neither Ernst & Young LLP, the Company’s independent registered public accounting firm, nor any other independent registered public accounting firm has examined, compiled or performed any procedures with respect to the accompanying financial projections and forecasts, and, accordingly, neither Ernst & Young LLP nor any other public accounting firm expresses an opinion or any other form of assurance with respect to such projections and forecasts. The Ernst & Young LLP reports incorporated by reference into this proxy statement relate to the Company’s historical financial information. They do not extend to the financial projections and forecasts and should not be read to do so.

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The financial projections and forecasts include non-GAAP financial measures, and they were presented because management believed they could be useful indicators of the Company’s projected future operating performance and cash flow. The Company prepared the financial projections and forecasts on a non-GAAP basis. The financial projections and forecasts included in this proxy statement should not be considered in isolation or in lieu of the Company’s operating and other financial information determined in accordance with GAAP (see “Other Important Information Regarding the Company — Selected Historical Consolidated Financial Data”). In addition, because non-GAAP financial measures are not determined consistently by all companies, the non-GAAP measures presented in these financial projections and forecasts may not be comparable to similarly titled measures of other companies.

For the foregoing reasons, as well as the bases and assumptions on which the financial projections and forecasts were compiled, the inclusion of specific portions of the financial projections and forecasts in this proxy statement should not be regarded as an indication that the Company considers such financial projections or forecasts to be necessarily predictive of actual future events, and the financial projections and forecasts should not be relied on as such an indication. No one has made any representation to any stockholder of the Company or anyone else regarding the ultimate performance of the Company as reflected in the financial projections and forecasts discussed below.

December Business Plan

Set forth below is prospective financial information based on the information contained in the Company’s long-range plan, which had been prepared by the Company’s management for review by the Board in connection with routine internal planning processes and not in connection with any potential transaction involving the Company. Amounts set forth below are in millions of U.S. dollars.

The Company’s management used the following key assumptions in preparing the December Business Plan:

•

Energy Margins:

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•

Forward market prices as of October 30, 2015.

​

•

Blending of market information and the Company’s fundamental pricing models beginning in 2018 for assets located in the PJM, New York Independent System Operator, which we refer to as NYISO, and Western Electricity Coordinating Council, which we refer to as WECC, markets.

​

•

Transition to 100% fundamental price forecast by 2020 for assets located in the PJM, NYISO and WECC markets.

​

•

Generation availability based on timing and duration for planned and unplanned (historical average) outages.

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•

Capacity Margins:

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•

PJM capacity margins based on the actual PJM auction results through May 2019.

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•

PJM capacity margins, beginning with June 2019, based on internally developed prices forecast.

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•

Exclusion of economics associated with the Ironwood, C.P. Crane, Holtwood and Lake Wallenpaupack generating facilities, which were sold in 2016 pursuant to agreements announced in 2015.

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•

Operations and maintenance expenses, prepared in the fourth fiscal quarter 2015, developed by each department based on expected headcount, general maintenance, contractors and expected outage costs.

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•

Capital expenditures, prepared in the fourth quarter 2015, based on expected cost for each project, service contract, uranium pricing, along with experience associated with normal outage cost.

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•

Taxes based on the result of operations, traditional tax income reporting reconciliation items, along with preliminary estimates for the utilization of net operating losses acquired in connection with the acquisition of MACH Gen, LLC, which we refer to as MACH Gen, in November 2015.

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(a)

Adjusted EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization, or EBITDA, further adjusted for certain non-cash and other items that the Company’s management believes are not indicative of ongoing operations, including, but not limited to, unrealized gains and losses on derivative contracts, stock-based compensation expense, asset retirement obligation accretion, gains and losses on securities in the nuclear decommissioning trust fund, impairments, gains or losses on sales, dispositions or retirements of assets, debt extinguishments, and transition, transaction and restructuring costs.

​

(b)

Adjusted Free Cash Flow represents Cash from Operations less capital expenditures, excluding growth-related capital expenditures, adjusted for changes in counterparty collateral and further adjusted for after-tax transaction and restructuring costs, and certain other after-tax cash items that management believes are not indicative of ongoing operations. Adjusted Free Cash Flow should not be considered an alternative to Cash from Operations, which is determined in accordance with GAAP. We believe that Adjusted Free Cash Flow, although a non-GAAP measure, is an important measure to both management and investors as an indicator of the Company’s ability to sustain operations without additional outside financing beyond the requirement to fund maturing debt obligations.

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(c)

A non-GAAP financial measure representing Operating Income adjusted to account for items that the Company’s management believes are not indicative of profitability from ongoing operations. Gross Margin should not be considered an alternative to Operating Income, which is determined in accordance with GAAP. We believe that Gross Margin, although a non-GAAP measure, is an important measure to both the Company’s management and investors as an indicator of the Company’s profitability.

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Set forth below is a reconciliation to GAAP of each of Adjusted EBITDA, Adjusted Free Cash Flow and Gross Margin (amounts shown in millions). Net Income (Loss), Cash from Operations and Operating Income, respectively, are the GAAP financial measures that are most closely comparable to Adjusted EBITDA, Adjusted Free Cash Flow and Gross Margin, respectively.

May Forecasts

Set forth below is prospective financial information based on the information contained in the updated forecasts with respect to the Company’s long-range plan prepared by the Company’s management in May 2016 to assist the Disinterested Directors in evaluating the Company’s potential strategic transactions with the assistance of the Company’s advisors and in light of the passage of time since the December Business Plan was prepared. The methodology applied by management to market items was consistent with the Company’s historical planning and budgeting process and the methods used in preparing the December Business Plan. Amounts set forth below are in millions of U.S. dollars.

The Company’s management used the following key assumptions in preparing the May Forecasts:

•

Energy Margins:

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•

Forward market prices as of April 30, 2016.

​

•

Blending of market information and the Company’s fundamental pricing models beginning in 2018 for assets located in the PJM, NYISO and WECC markets.

​

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•

Transition to 100% fundamental price forecast by 2020 for assets located in the PJM, NYISO and WECC markets.

​

•

Generation availability based on timing and duration for planned and unplanned (historical average) outages.

​

•

Capacity Margins:

​

•

PJM capacity margins based on the actual PJM auction results through May 2019.

​

•

PJM capacity margins, beginning with June 2019, based on internally developed prices forecast.

​

•

Operations and maintenance expenses, prepared in the first fiscal quarter 2016, developed by each department based on expected headcount, general maintenance, contractors and expected outage cost.

​

•

Capital expenditures, prepared in the first quarter 2016, based on expected cost for each project, service contract, uranium pricing, along with experience associated with normal outage cost.

​

•

Taxes based on the result of operations, traditional tax income reporting reconciliation items, along with bonus depreciation through 2019 and the utilization of net operating losses acquired in connection with the acquisition of MACH Gen in November 2015.

​

(a)

Adjusted EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization, or EBITDA, further adjusted for certain non-cash and other items that the Company’s management believes are not indicative of ongoing operations, including, but not limited to, unrealized gains and losses on derivative contracts, stock-based compensation expense, asset retirement obligation accretion, gains and losses on securities in the nuclear decommissioning trust fund, impairments, gains or losses on sales, dispositions or retirements of assets, debt extinguishments, and transition, transaction and restructuring costs.

​

(b)

Adjusted Free Cash Flow represents Cash from Operations less capital expenditures, excluding growth-related capital expenditures, adjusted for changes in counterparty collateral and further adjusted for after-tax transaction and restructuring costs, and certain other after-tax cash items that management believes are not indicative of ongoing operations. Adjusted Free Cash Flow should not be considered an alternative to Cash from Operations, which is determined in accordance with GAAP. We believe that Adjusted Free Cash Flow, although a non-GAAP measure, is an important measure to both management and investors as an indicator of the Company’s ability to sustain operations without additional outside financing beyond the requirement to fund maturing debt obligations.

​

(c)

A non-GAAP financial measure representing Operating Income adjusted to account for items that the Company’s management believes are not indicative of profitability from ongoing operations. Gross Margin should not be considered an alternative to Operating Income, which is determined in accordance with GAAP. We believe that Gross Margin, although a non-GAAP measure, is an important measure to both the Company’s management and investors as an indicator of the Company’s profitability.

​

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Set forth below is a reconciliation to GAAP of each of Adjusted EBITDA, Adjusted Free Cash Flow and Gross Margin (amounts shown in millions). Net Income (Loss), Cash from Operations and Operating Income, respectively, are the GAAP financial measures that are most closely comparable to Adjusted EBITDA, Adjusted Free Cash Flow and Gross Margin, respectively.

Post-PJM Auction Forecasts

Set forth below is prospective financial information based on the projections prepared by the Company’s management in late May 2016 to assist the Disinterested Directors in evaluating the impact of the PJM Auction on the Company and its future stand-alone prospects. Amounts set forth below are in millions of U.S. dollars.

In addition to the key assumptions that the Company’s management used in preparing the May Forecasts, the Company’s management also relied on the PJM Auction results, including a reduction in the Company’s forecast revenues for calendar years 2019 and 2020, respectively, in preparing the Post-PJM Auction Forecasts.

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(a)

Adjusted EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization, or EBITDA, further adjusted for certain non-cash and other items that the Company’s management believes are not indicative of ongoing operations, including, but not limited to, unrealized gains and losses on derivative contracts, stock-based compensation expense, asset retirement obligation accretion, gains and losses on securities in the nuclear decommissioning trust fund, impairments, gains or losses on sales, dispositions or retirements of assets, debt extinguishments, and transition, transaction and restructuring costs.

​

(b)

Adjusted Free Cash Flow represents Cash from Operations less capital expenditures, excluding growth-related capital expenditures, adjusted for changes in counterparty collateral and further adjusted for after-tax transaction and restructuring costs, and certain other after-tax cash items that management believes are not indicative of ongoing operations. Adjusted Free Cash Flow should not be considered an alternative to Cash from Operations, which is determined in accordance with GAAP. We believe that Adjusted Free Cash Flow, although a non-GAAP measure, is an important measure to both management and investors as an indicator of the Company’s ability to sustain operations without additional outside financing beyond the requirement to fund maturing debt obligations.

​

Set forth below is a reconciliation to GAAP of each of Adjusted EBITDA and Adjusted Free Cash Flow (amounts shown in millions). Net Income (Loss) and Cash from Operations, respectively, are the GAAP financial measures that are most closely comparable to Adjusted EBITDA and Adjusted Free Cash Flow, respectively.

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Interests of Executive Officers and Directors of the Company in the Merger

The Company’s executive officers and directors have interests in the Merger that are different from, or in addition to, those of the Company’s stockholders generally. In considering the recommendations of the Board, including that you vote to approve the Merger Agreement Proposal, you should be aware of these interests. In reaching its decision to make such recommendations and to approve the Merger, the Board was aware of and considered the interests described below.

Payments to Executive Officers in Respect of Equity Awards

Upon the effective time of the Merger, each restricted stock unit, performance unit and director stock unit will be converted into the right to receive the Merger Consideration as described below. All unvested stock options held by the Company’s executive officers have exercise prices in excess of the Merger Consideration, and therefore such stock options will be canceled as of the closing date of the Merger for no consideration.

Restricted Stock Units.   At the effective time of the Merger, outstanding restricted stock units will be cancelled in exchange for the RSU Cash Payment. For restricted stock units granted prior to June 2, 2016, the RSU Cash Payment will be paid as promptly as practicable following the effective time of the Merger. For restricted stock units granted between June 2, 2016 and the effective time of the Merger, the RSU Cash Payment will be paid following the effective time of the Merger subject to the same vesting schedule and other vesting terms and conditions applicable to the underlying restricted stock units as of the effective time of the Merger (including conditions governing certain terminations of employment).

Performance Units.   At the effective time of the Merger, outstanding performance units, other than those held by Messrs. Farr, McGuire, Hopf and Rausch will be cancelled in exchange for a cash payment, payable as promptly as practicable following the effective time of the Merger, equal to the product of  (i) the Merger Consideration multiplied by (ii) the total number of the Shares underlying the cancelled performance units assuming the target achievement of applicable performance goals and the satisfaction of all other conditions of delivery, without interest and less applicable taxes required to be withheld. A pro rata portion of the performance units held by Messrs. Farr, McGuire, Hopf and Rausch (determined based on the relative portion of the applicable performance period that has elapsed as of the effective time of the Merger) will be treated in the same manner as the performance units held by all other employees of the Company, and the remaining performance units held by Messrs. Farr, McGuire, Hopf and Rausch will be converted into the right to receive a cash payment in an amount equal to the product of  (x)(a) the total number of the Shares that would be delivered to the executive officer assuming the target achievement of the performance goals applicable to such performance unit, minus (b) the total number of the Shares that would be delivered to the executive officer upon a “change in control” under the terms of the applicable performance unit award agreement and (y) the Merger Consideration, which cash amount will be subject to the service-based (but not the performance-based) vesting terms and conditions applicable to the underlying performance unit as of the effective time of the Merger (including conditions governing certain terminations of employment).

Director Stock Units.   At the effective time of the Merger, each outstanding director stock unit will be converted into an obligation to pay an amount in cash, without interest, equal to the product of  (i) the Merger Consideration multiplied by (ii) the total number of the Shares represented by that director stock unit, with such amount payable or distributed in accordance with the terms of the Directors Deferred Compensation Plan (and any applicable deferral election).

For an estimate of the amount payable to each of Talen Energy’s named executive officers in respect of such unvested equity-based awards on the closing date of the Merger, which we assume to be August 23, 2016 for these purposes, see “— Golden Parachute Compensation” below.

The table below also sets forth the total amount, based on the number of Shares and equity-based awards determined as described above, per individual, payable in respect of such Shares and equity-based awards on the closing date of the Merger, assuming (i) the closing date of the Merger was August 23, 2016 and (ii) the number of outstanding Shares and equity-based awards for each director and executive officer on the closing of the Merger were equal to the number of Shares and equity-based awards that were outstanding as of August 23, 2016, the latest practicable date to determine such amounts before the filing of

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this proxy statement (such numbers do not forecast any grants, any vesting, additional issuances, dividends, additional deferrals or forfeitures of equity-based awards following the date of this proxy statement). For purposes of these estimates, the number of the Shares owned and the Shares subject to restricted stock units, performance units and director stock units were multiplied by the per Share Merger Consideration of $14.00. All of the director stock units noted in the table below were fully vested as of August 23, 2016.

Shares and Equity Awards held by Directors and Executive Officers