Indiana-based Hallador Energy on Jan. 7 announced that its wholly owned subsidiary, Hallador Power Co. executed a Conversion Transaction Commitment Agreement with a global data center developer, effective January 2, 2025.
Hallador Energy is a vertically integrated independent power producer based in Terre Haute, Indiana. The company has two core businesses: Hallador Power Company, LLC, which produces electricity and capacity at its one-gigawatt Merom Generating Station, and Sunrise Coal, LLC, which produces and supplies fuel to the Merom Generating Station and other companies.
The agreement is in furtherance of a previously announced non-binding term sheet signed during the third quarter of 2024, “reflecting an important milestone as both the company and the developer seek to finalize a definitive transaction agreement to support the delivery of energy and capacity (through a utility partner) to a potential data center development within the state of Indiana,” Hallador Energy said.
The agreement provides exclusivity in negotiations to the counterparty for a period of 105 business days and cumulative payments of up to $5 million to Hallador Power Co. with $1 million due in January, $2 million of payments due in March, if the parties have not satisfied certain conditions precedent to the proposed transaction, and an additional $2 million in June “if such conditions precedent have not been satisfied by the end of the exclusivity period.”
The parties will use the exclusivity period to finalize selection of a utility partner and to negotiate and complete other definitive agreements related to the proposed transaction.
If Hallador Energy is successful in executing definitive agreements and once the transaction commences, it “is expected to contract the majority of the company’s energy and capacity at prices higher than the forward curve for more than a decade,” it said.
Completion of the proposed transaction is subject to, among other things, finalizing definitive agreements.
