Hallador cuts revolver to $200 million with liquidity, compliance aim

By Wendy Van Sickle

Columbus, Ohio, March 18 – Hallador Energy Co. made amendments on Friday to its credit agreement with PNC as administrative agent with an eye toward increasing liquidity and maintaining compliance through the agreement’s maturity, the company said in an 8-K filing with the Securities and Exchange Commission.

Under the amended agreement, the revolver was reduced to $200 million from $250 million. The term loan size was not changed.

The downsizing increases Hallador’s liquidity to $90 million not including current cash balances, according to the filing.

Additionally, the maximum leverage ratio was increased to 4x through March 31, stepping up to 4.25x through June 30 and to 4.5x through March 31, 2017, then down to 4.25x through March 31, 2018, to 4x through Sept. 30, 2018, to 3.75x through Dec. 31, 2018 and to 3.5x through June 30, 2019. Prior to the amendment, the ratio had been 2.75x.

Also, the fixed-charge coverage ratio was changed to a debt service coverage ratio and requires a minimum of 1.25x through the facility’s maturity in August 2019. The amendment defines the debt service coverage as trailing 12 months EBITDA to annual debt service.

In addition, a maximum annual capex of $30 million is included.

The interest rate on the facility ranges from Libor plus 225 basis points to Libor plus 400 bps, depending on the company’s leverage ratio. The company expects to be at the top end of that range for the remaining life of the credit agreement.

Denver-based Hallador focuses on coal development and delivery.

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