Hallador Energy Enters $600M Credit Agreement with KLIM

What Happened
Hallador Energy Company and its subsidiary Turtle Creek Gas Holdings, LLC entered into a Credit Agreement on September 15, 2026 with Kennedy Lewis Investment Management LLC (and other lenders), providing a $600 million senior secured term loan facility. $550 million was funded at closing and a $50 million delayed draw is available for 12 months. The agreement also contemplates a separate post-closing revolving credit facility up to $75 million secured on the same collateral and senior in priority to the term loan lien (subject to an intercreditor agreement).

Key Details

• Term Loan: $600 million total; $550M funded at close, $50M delayed draw (12 months). Matures in 3 years with a 2-year extension option (KLIM approval; 3.0% extension fee).
• Interest & fees: Pre-COD interest = 3.5% cash + (SOFR + 4.50% PIK); post-COD interest = SOFR + 8.00% cash. SOFR floor of 3.5%. 2.5% commitment fee.
• Security & covenants: First-priority lien on substantially all Hallador and Turtle Creek assets. Key covenants include minimum unrestricted cash $10M (starting Dec 31, 2026), minimum consolidated debt service coverage ratio 1.15x (same start), and maximum consolidated leverage ratio 9.00x initially then 8.00x after COD. 100% excess cash flow sweep begins after COD.
• Use of proceeds: turbine purchases/refurbishment, gas plant expansion, equipment, project-cost reimbursements, transaction fees/expenses, repayment of prior Texas Capital Bank indebtedness ($45M delayed draw term loan and $75M revolver) and general corporate purposes.

Why It Matters
This financing materially affects Hallador’s capital structure: it provides substantial near-term liquidity ($550M now, $50M delayed, and a potential $75M revolver) to fund growth projects and refinance existing debt. The facility is heavily secured and contains tight cash, coverage and leverage covenants plus a 100% post-COD cash sweep and significant interest costs, which could constrain free cash flow and affect flexibility. Retail investors should note the maturity timeline (3 years, limited extension), the stated uses (project funding and debt repayment), and the minimum cash and leverage requirements that the company must meet starting in late 2026.