What was involved, from operational and finance perspectives, in switching from an oil-production operation to a coal-mining operation?
Oil is hard to find, but once you find it, it’s very easy to produce. You don’t need many employees. You hook it up to pipelines and it goes. On the other hand, coal is easy to find, but it’s hard to produce. We have 300 employees producing coal and a $22 million payroll. It’s a very labor-intensive business. The issues that went with that — involving human resources, health benefits, workmen’s comp — were different for Hallador. The mine is basically a 24/7 operation. We’ve got three shifts running.
Did you know anything about the coal business before you rejoined Hallador?
Well, we still dabble some in oil and gas. But no — the Hallador management team in Denver, including me, is quickly catching up, but we were not all that familiar with the coal business. The team in Indiana is led by Brent Bisland, Sunrise’s president. But those guys aren’t familiar with being a public company, and [Hallador CEO Victor Stabio] and I are.
There is a separate CFO for Sunrise, Larry Martin. He’s a former auditor, like me, but he has mostly dealt with private companies. A private company doesn’t do [Management Discussion and Analysis sections of financial reports], it doesn’t disclose its salaries to the world like a public company does, and it doesn’t have onerous internal-controls audits. All of that is what we bring to the table in Denver.
Speaking of salaries, yours is $100,000, according to your filing. Is that low for the CFO of a $100 million company?
We’re big believers in restricted stock units and not a whole lot of cash. I’ve done OK in my career, and I don’t need the cash all that much. Pay us in stock. That gives us more incentive. We said in our September 8-K that we’re going to give a certain number of RSUs to management. [Bishop currently owns 58,500 shares of Hallador stock, according to public filings.]
With the coal business being so different from the oil business, did you know what you were getting into?
Oh yes. I left Hallador in 1993 and went into the seminar business, but I always officed with them, and I helped them on their SEC filings and worked with their auditors. I know the board members, and the CEO in 1993 is still the CEO now.
What I like about our board is that they’ve got skin in the game. One of our board members is Brian Lawrence, and his entity, Yorktown, controls 55% of the stock. Another board member controls 20%. Altogether more than 90% of the shares are closely held.
In the 8-K filed in September when the company purchased the remaining 20% of Sunrise, Hallador said it’s planning to move from the OTC Bulletin Board to the Nasdaq Stock Market. Why are you making that change, and as the CFO, what do you have to do to make it happen?
I have to make the application, which may be in December. And I’m responsible for getting the corporate governance lined up. We just brought on an outside board member as the chair of our audit committee and audit expert.