New Credit Facility

On March 5, 2026, Hallador entered into a credit agreement with Texas Capital Bank, as administrative agent, and Old National Bank, among others, that replaces the Credit Agreement with PNC Bank, National Association, (“PNC”) and includes a $75.0 million senior secured revolving credit facility (the "New Revolving Credit Facility") and a $45.0 million senior secured term loan facility (the "Delayed Draw Term Loan", and together with the New Revolving Credit Facility, the "New Credit Facility"). The New Revolving Credit Facility includes (i) a $25.0 million sub-facility for letters of credit and (ii) a $10.0 million sub-facility for swingline loans. The Company may, subject to conditions set forth in the New Credit Facility, request additional revolving facility commitments and incremental term loan commitments in an aggregate amount not to exceed $25.0 million. The Company and certain of its subsidiaries, as guarantors under the New Credit Facility, granted a security interest in substantially all of their assets to secure the Company’s obligations under the New Credit Facility. 

The New Credit Facility bears interest at a rate equal to, at the Company’s election, either a base rate or term secured overnight financing rate (“SOFR”), plus an applicable margin based upon the Company’s total leverage ratio. Under the

New Credit Facility, (A) base rate loans will bear interest at a rate equal to the greater of (i) the prime rate, (ii) the sum of the Federal Funds Rate plus one half of one percent (0.50%), and (iii) the term SOFR plus one percent (1.00%), in each case, plus the applicable margin for base rate loans, which ranges from 2.25% to 2.75%, and (B) term SOFR loans will bear interest at term SOFR, plus the applicable margin for term SOFR loans, which ranges from 3.25% to 3.75%. The New Credit Facility includes a commitment fee of 0.50% on the daily unused portions of the New Revolving Credit Facility. As of June 30, 2026, we were subject to paying the applicable SOFR plus 3.50% on outstanding bank debt, which equates to an all-in rate of 7.11%.

On May 15, 2026, the Company borrowed the $45.0 million available under the Delayed Draw Term Loan. A portion of the proceeds was used to repay $8.0 million of outstanding borrowings under the New Revolving Credit Facility, with the remainder available for ongoing working capital and general corporate purposes. The principal balance of the Delayed Draw Term Loan is due and payable in quarterly installments of 2.5% of the original principal amount, or $1.1 million, commencing September 30, 2026, with a final payment of the remaining balance upon maturity on March 5, 2029.

On April 21, 2026, the Company entered into a First Amendment to the Credit Agreement, which among other things made certain administrative and technical modifications. On June 25, 2026, the Company entered into a Second Amendment to the Credit Agreement (the "Second Amendment"), which modified certain financial covenants. The maximum Total Leverage Ratio was amended to 4.25 to 1.0 for periods ending on or after June 30, 2026, compared to our original 4.0 to 1.0. The maximum Senior Secured Leverage Ratio was amended to 3.00 to 1.0 for periods ending June 30, 2026 through September 30, 2026, and 2.75 to 1.0 for periods ending December 31, 2026 through March 31, 2027, returning to 2.50 to 1.0 for periods ending on or after June 30, 2027. The Second Amendment also updated certain schedules to the Credit Agreement to reflect recently executed material agreements, including the Asset Purchase Agreement with Energy World Corporation Ltd. The increase in our maximum permitted Total Leverage Ratio and Senior Secured Leverage Ratio under the Second Amendment was obtained, in part, to provide us with additional flexibility in connection with our anticipated financing of the turbine equipment acquisition described in “Note 14 – Commitments and Contingencies” to the condensed consolidated financial statements. Our ability to fund the remaining purchase price and related costs, including through additional borrowings under the New Credit Facility, remains subject to compliance with these covenants, as amended, and there can be no assurance that our current covenant levels will provide sufficient capacity for that purpose or that additional covenant relief will be available if needed.

Prior Credit Agreement

The Company was party to a credit agreement with PNC, in its capacity as administrative agent, which consisted of a revolving credit facility of up to $75.0 million and a term loan.

On June 27, 2025, the Company executed the Third Amendment (“Third Amendment”) to our Credit Agreement, which was accounted for as a debt modification. The primary purpose of the Third Amendment was to provide additional operating flexibility for the remainder of 2025 by redefining covenants and deferring certain covenants until the third quarter of 2025. During the second quarter of 2025, the Company entered into a $35.0 million prepaid forward power sales contract of which $19.0 million of the proceeds were deposited into a money market account with the administrative agent as a compensating balance. The compensating balance was utilized to fully repay the outstanding term loan during the fourth quarter of 2025. As of March 5, 2026, the Company fully repaid its revolving credit facility with PNC.

Liquidity

Liquidity consists of our additional borrowing capacity and unrestricted cash and cash equivalents. As of June 30, 2026, we had additional borrowing capacity of $55.3 million under the New Revolving Credit Facility and total liquidity of $84.2 million. Our additional borrowing capacity is net of $19.7 million in outstanding letters of credit as of June 30, 2026 that were required to maintain surety bonds and other credit support obligations.

Fees

Bank fees and other costs incurred in connection with the New Credit Facility totaled $6.2 million and are amortized over the term of the New Credit Facility. Upon the funding of the Delayed Draw Term Loan on May 15, 2026, unamortized fees allocated to the Delayed Draw Term Loan were reclassified from other assets to a direct deduction from the carrying amount of the Delayed Draw Term Loan. Unamortized bank fees as of June 30, 2026, and December 31, 2025, were $5.6 million and $0.3 million, respectively, of which $3.5 million related to the New Revolving Credit Facility and is included in other noncurrent assets, and $2.1 million related to the Delayed Draw Term Loan and is presented as a reduction of bank debt in the table below. The New Credit Facility includes a commitment fee of 0.50% on any daily unused portions of the New Revolving Credit Facility.

Unamortized bank fees and other costs incurred in connection with our Prior Credit Agreement of $0.2 million were recorded as a loss on extinguishment of debt on the condensed consolidated statements of operations. 

Bank debt, less debt issuance costs, is presented below (in thousands):

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Future maturities of bank debt as of June 30, 2026, are as follows (in thousands):

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Covenants

As of June 30, 2026 our covenants include:

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As of June 30, 2026, we were in compliance with all covenants defined in the New Credit Facility.

Interest Rate

The New Credit Facility bears interest with margins ranging from 2.25% to 3.75% above SOFR or the applicable base rate, subject to a SOFR floor of 1.00%, as further described above. The applicable margin is determined based upon the Company's leverage ratio and the type of loan drawn. As of June 30, 2026, we were subject to paying the applicable SOFR plus 3.50% on any outstanding bank debt which equates to an all-in rate of 7.11%.