Energy company PPL has agreed to a settlement of $115 million in a litigation case where it was accused of improperly keeping about $900 million from the sale of assets owned by Talen Energy, its former subsidiary.
Allegations and Background
Talen Energy, which was operating as PPL Montana at the time, alleged that in November 2014, cash proceeds from PPL’s sale of hydroelectric assets to NorthWestern Energy Group were not distributed to Talen Montana, as it should have been. PPL spun off its energy supply business in 2015, forming Talen Energy, and PPL Montana became Talen Montana.
PPL Maintains Appropriate Actions
PPL’s Chief Executive, Vincent Sorgi, stated that the company believes it acted appropriately in regards to the asset sale and that the subsequent spinoff entitled PPL to retain the transaction proceeds. However, he acknowledged the risks involved in litigation defense.
Sorgi added that due to the likelihood of prolonged litigation and appeals, it was deemed in the best interest of PPL and its shareholders to bring an end to this legal battle.
Settlement Benefits Both Parties
Talen’s bankruptcy filing last year has made it unlikely for PPL to recover financially on its counterclaims. Talen’s Chief Executive, Mac McFarland, expressed satisfaction with the settlement, stating that it allows both companies to reset their relationship.
Distribution of Settlement Amount
Of the $115 million settlement, $9.5 million will be paid to the general unsecured creditors trust established under Talen’s chapter 11 reorganization plan. The remaining amount will be utilized for securing environmental and other obligations, as well as for general corporate purposes.