Hallador Energy Secures $600M Loan for New Power Plant
Hallador Energy (HNRG) secured a $600 million senior secured term-loan facility to advance its proposed Turtle Creek natural gas power plant. The loan includes an immediate draw of $550 million and up to $50 million in delayed draws over the next year, with part used to refinance existing facilities. This financing supports construction preparations but leaves a remaining funding gap that will depend on cash flow from ongoing operations before commercial operation begins by mid-2028. The company aims to minimize equity dilution while managing high borrowing costs, including an initial interest rate of 11.5% and additional fees. Post-commercial operation, the interest rate drops but remains significant at SOFR plus 8%. Lenders also require a minimum return on investment, which could constrain future cash flow flexibility. Despite these challenges, Hallador has strong contracted revenue through 2040 from coal sales and external customers, providing potential funding for construction. However, execution risks remain in securing power purchase agreements and managing project costs.
Tickers: $HNRG
Topics: capital allocation debt financing power plant development