On September 15, 2026, Hallador Energy Company entered into a Credit Agreement with Kennedy Lewis Investment Management LLC and U.S. Bank, establishing a financing package for its Turtle Creek Gas project. The agreement provides a $600 million senior secured term loan facility, consisting of $550 million funded at closing and a $50 million delayed draw available for 12 months. Additionally, Hallador has the option to establish a super-priority revolving credit facility of up to $75 million, bringing the total potential financing to $675 million.
The facilities are expected to be used primarily to fund the purchase and refurbishment of turbines, gas plant expansion expenses, equipment acquisitions, and project-cost reimbursements. Approximately $120 million of the proceeds will be used to repay existing indebtedness, including a $45 million delayed draw term loan and a $75 million revolving credit facility with Texas Capital Bank. The remaining proceeds will be used for general corporate purposes.
Under the terms of the agreement, borrowings under the term loan facility bear interest at a rate of 3.5% per annum payable in cash, plus SOFR plus 4.50% per annum payable in kind (PIK) prior to commercial operation. After commercial operation, interest is set at SOFR plus 8.00%, payable in cash. The term loan facility matures three years after the closing date, subject to a two-year extension option exercisable with KLIM's approval upon payment of a 3.0% extension fee.
The transaction is secured by a first-priority security interest in substantially all real and personal property of Hallador and its subsidiary, Turtle Creek Gas Holdings, LLC. The Credit Agreement includes financial covenants, such as a minimum unrestricted cash balance of $10 million and a minimum 1.15x consolidated debt service coverage ratio, as well as a maximum consolidated leverage ratio of 9.00x for the first tested period and 8.00x thereafter.
According to the company, the Facilities represent the largest component of its overall financing plan for Turtle Creek, which has an estimated total project cost of less than $800 million. Hallador expects to use the proceeds to support the construction of a 460-megawatt natural gas-fired power plant in the MISO market. The company believes the combination of its contracted forward sales position and the new financing provides a credible pathway to fully fund the project with little to no equity dilution.
