I read the APA (https://www.sec.gov/Archives/edgar/data/788965/000110465926069138/hnrg-20260530xex10d1.htm) and it more reads that the cash is put into an escrow account (it is not released to EWC). The first US$132.5 million of the final tranche, less holdbacks, is released only after Siemens’ conformity assessment. The remaining balance is released only when the required turbine restoration work has been completed, again net of holdbacks. EWC’s US$331 million estimate assumes no material deterioration from the US$22 million baseline restoration estimate. Under the contract:
Hallador bears the first US$22 million of restoration.
The next US$22 million is shared equally.
Above US$44 million, EWC bears every additional dollar.
EWC’s contractual restoration liability is capped at US$315 million.
Delay damages are US$175,000 per day, capped at US$17.5 million.
The purchase-price allocation is redacted, while the agreement permits that portion of the transaction to be terminated if specified Siemens work is NOT completed by the long-stop date. We therefore cannot quantify how much of the US$350 million is attached to that turbine.
I know you said no debt, but @ 31 December 2025, EWC reported:
US$12.0 million of cash;
US$46.5 million of total liabilities;
US$37.7 million of current liabilities;
US$18.5 million of net current liabilities; and
a material uncertainty concerning going concern.
By 30 June, cash had fallen to US$6.694 million. EWC had used US$13.215 million in operating cash during the financial year and had no undrawn financing facilities.
Buyer;s credit agreement also contains a conditional US$45 million delayed-draw term loan. Even adding that to the March liquidity gives US$142.5 million, versus US$315 million of later EWC purchase payments—and Hallador estimates another roughly US$100 million of transport, insurance, logistics and refurbishment expenditure.
Lastly, the Pagbilao site involves a disclosed related-party lease. The terminal and Sengkang are potentially valuable options, but they can also be negative-value options for minority shareholders if exercised with too much capital.
Thank you for your thoughtful comment. The 100 million of transport is not counted against the 350. You are correct if they deliver a turbine that is non functional, they don't get the money. That is part of the risk. That the turbine which was never used is still in operable condition. Hallador has every need and intention to buy these turbines as they have no power plants otherwise. Your risks are like you pointed out if they are junk, then this whole thing falls apart. IE they require too much cost to repair and too much time. They have never be used but they also have been there a while. The delivery schedule is on track per their last disclosures. I'm less concerned about the turbines tbh than them blowing money on their two existing assets. I think they will figure out the Philippines situation though as that is something needed in the country as 50% of the gas is imported. With all that said, there is a reason its half price. No one believes they will get the money till they do or don't :)
I read the APA (https://www.sec.gov/Archives/edgar/data/788965/000110465926069138/hnrg-20260530xex10d1.htm) and it more reads that the cash is put into an escrow account (it is not released to EWC). The first US$132.5 million of the final tranche, less holdbacks, is released only after Siemens’ conformity assessment. The remaining balance is released only when the required turbine restoration work has been completed, again net of holdbacks. EWC’s US$331 million estimate assumes no material deterioration from the US$22 million baseline restoration estimate. Under the contract:
Hallador bears the first US$22 million of restoration.
The next US$22 million is shared equally.
Above US$44 million, EWC bears every additional dollar.
EWC’s contractual restoration liability is capped at US$315 million.
Delay damages are US$175,000 per day, capped at US$17.5 million.
The purchase-price allocation is redacted, while the agreement permits that portion of the transaction to be terminated if specified Siemens work is NOT completed by the long-stop date. We therefore cannot quantify how much of the US$350 million is attached to that turbine.
I know you said no debt, but @ 31 December 2025, EWC reported:
US$12.0 million of cash;
US$46.5 million of total liabilities;
US$37.7 million of current liabilities;
US$18.5 million of net current liabilities; and
a material uncertainty concerning going concern.
By 30 June, cash had fallen to US$6.694 million. EWC had used US$13.215 million in operating cash during the financial year and had no undrawn financing facilities.
Buyer;s credit agreement also contains a conditional US$45 million delayed-draw term loan. Even adding that to the March liquidity gives US$142.5 million, versus US$315 million of later EWC purchase payments—and Hallador estimates another roughly US$100 million of transport, insurance, logistics and refurbishment expenditure.
Lastly, the Pagbilao site involves a disclosed related-party lease. The terminal and Sengkang are potentially valuable options, but they can also be negative-value options for minority shareholders if exercised with too much capital.
Thank you for your thoughtful comment. The 100 million of transport is not counted against the 350. You are correct if they deliver a turbine that is non functional, they don't get the money. That is part of the risk. That the turbine which was never used is still in operable condition. Hallador has every need and intention to buy these turbines as they have no power plants otherwise. Your risks are like you pointed out if they are junk, then this whole thing falls apart. IE they require too much cost to repair and too much time. They have never be used but they also have been there a while. The delivery schedule is on track per their last disclosures. I'm less concerned about the turbines tbh than them blowing money on their two existing assets. I think they will figure out the Philippines situation though as that is something needed in the country as 50% of the gas is imported. With all that said, there is a reason its half price. No one believes they will get the money till they do or don't :)
Yes, my point is that they have to fund $100mm of transport etc. Likely out of FCF.