SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (or Date of Earliest Event Reported): June 8, 1999
HALLWOOD ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-9579 84-1489099
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
4610 South Ulster Street, Suite 200
Denver, Colorado 80237
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 850-7373
1
<PAGE>
ITEM 5. OTHER EVENTS.
------------
I. Rights Plan
On June 8, 1999, the Board of Directors of Hallwood Energy Corporation
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.01 per share,
of the Company (the "Common Stock"). The dividend is payable on June 8, 1999
(the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series B Junior Participating Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Stock") at a price of $40 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and Register and Transfer Company, as Rights
Agent (the "Rights Agent").
Detachment of Rights: Exercise. Until the earlier to occur of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (with certain exceptions, an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding shares of Common Stock or
(ii) 10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer that
would result in the beneficial ownership by a person or group of 15% or more of
the outstanding shares of Common Stock (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate, together with a copy of the Summary of Rights in
substantially the form of Exhibit C to the Rights Agreement (the "Summary of
Rights").
The Rights Agreement provides that, until the Distribution Date (or
earlier expiration of the Rights), the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or earlier expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuances of Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of the Summary of Rights, will also constitute the transfer
of the Rights associated with the shares of Common Stock represented by such
certificates. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 7, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended
2
<PAGE>
or unless the Rights are earlier redeemed or exchanged by the Company, in each
case as described below.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of shares of Common Stock having a market value of two times the exercise price
of the Right.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number of
shares of common stock of the person with whom the Company has engaged in the
foregoing transaction (or its parent) that at the time of such transaction have
a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such Acquiring Person which will have become
void), in whole or in part, for shares of Common Stock or Preferred Stock (or a
series of the Company's preferred stock having equivalent rights, preferences
and privileges), at an exchange ratio of one share of Common Stock, or a
fractional share of Preferred Stock (or other preferred stock) equivalent in
value thereto, per Right.
Preferred Shares. Each share of Preferred Stock will be entitled, when,
as and if declared, to a dividend payment per share equal to an aggregate
dividend of 1,000 times the dividend declared per share of Common Stock. In the
event of liquidation, dissolution or winding up of the Company, the holders of
the Preferred Stock will be entitled to a minimum preferential payment of $1.00
per share (plus any accrued but unpaid dividends) but will be entitled to an
aggregate payment of 1,000 times the payment made per share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which outstanding shares of Common Stock are converted or
exchanged, each share of Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock. These Rights are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
3
<PAGE>
The offer and sale of the Preferred Stock or Common Stock issuable upon
exercise of the Rights will be registered pursuant to the Securities Act of
1933, as amended; such registration will not become effective until the Rights
become exercisable.
Antidilution and Other Adjustments. The number of one one-thousandths
of a share of Preferred Stock or other securities or property issuable upon
exercise of the Rights, and the Purchase Price payable, are subject to customary
adjustments from time to time to prevent dilution.
Redemption of Rights. At any time prior to the earlier of (i) the
Distribution Date or (ii) the Final Expiration Date, the Board of Directors of
the Company may redeem all but not less than all of the then outstanding Rights
at a price of $0.01 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. At
the effective time of such redemption, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
No Rights as Stockholder. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
Amendment of Rights. For so long as the Rights are then redeemable, the
Company may, except with respect to the redemption price, amend the Rights
Agreement in any manner. After the Rights are no longer redeemable, the Company
may, except with respect to the redemption price, amend the Rights Agreement in
any manner that does not adversely affect the interests of holders of the
Rights.
This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated by reference.
ITEM 7. Financial Statements and Exhibits.
---------------------------------
1. Instruments defining the rights of security holders.
4.1* Form of Rights Agreement between Hallwood Energy Corporation
and Registrar and Transfer Company, which includes the form of
Certificate of Designation for Designating Series B Junior
Participating Preferred Stock, $.01 par value, as Exhibit A
and the form of Right Certificate as Exhibit B.
4.2* Form of Certificate of Designation for Designating Series B
Junior Participating Preferred Stock, $.01 par value (included
as Exhibit A to Rights Agreement filed as Exhibit 4.1 hereto).
4.3* Form of Right Certificate (included as Exhibit B to Rights
Agreement as Exhibit 4.1 hereto).
4
<PAGE>
4.4* Form of Summary of Rights to Purchase Series B Junior
Participating Preferred Stock (included as Exhibit C to Rights
Agreement, filed as Exhibit 4.1 hereto) which, together with
certificates representing the outstanding shares of Common
Stock of the Company, shall represent the Rights until the
Distribution Date.
4.5* Specimen of legend to be placed pursuant to Section 3(c) of
the Rights Agreement, on all new share certificates for shares
of Common Stock issued after June 8, 1999 and prior to the
Distribution Date upon transfer, exchange or new issuance
(included in Section 3(c) of the Rights Agreement incorporated
by reference herein as Exhibit 4.1).
2. Press release dated August 4, 1999.
- -----------------
* Filed as an exhibit to the Company's Registration Statement on Form S-4
(No. 333-77409), filed with the Securities and Exchange Commission on April
30, 1999 and incorporated herein by reference.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Dated: August 10, 1999
Hallwood Energy Corporation
By: /s/ Cathleen M. Osborn
----------------------
Name: Cathleen M. Osborn
Title: Vice President
6
<PAGE>
COMPANY CONTACT FOR IMMEDIATE RELEASE
Wendy Grant,
Investor Relations
(303) 850-7373
HALLWOOD ENERGY CORPORATION ADOPTS RIGHTS PLAN
Denver, Colorado, August 4, 1999 - Hallwood Energy Corporation (NASDAQ: HECO)
announced today that the Board of Directors has adopted a Shareholder Rights
Plan having the terms described in the Company's prospectus dated May 4, 1999,
relating to the formation of the Company.
Under the Rights Plan, Rights to purchase one one-thousandth (1/1000th) of a
share of a new Series B Junior Participating Preferred Stock of the Company at a
price of $40 per one one-thousandth of a Preferred Share will be distributed as
a dividend at the rate of one Right for each share of the Company's Common Stock
held of record on June 8, 1999.
The Rights contain provisions that are intended to protect shareholders from
abusive takeover tactics that may be used by an acquiror which the Board
believes are not in the best interests of the shareholders. Examples of such
transactions include a gradual accumulation of shares in the open market or a
partial or two-tier tender offer that does not treat all shareholders equally,
and other acquisition attempts which may unfairly pressure shareholders by
coercing them to relinquish their investment and depriving the Company's Board
and shareholders of any real opportunity to determine the future of the Company
and to realize the full value of the shareholders' investment in the Company.
The Rights are not intended to prevent a takeover of the Company and will not do
so. The Rights Plan increases the Board's ability to effectively represent the
interests of shareholders and other constituencies of the Company upon the
occurrence of an unfair acquisition proposal. While the board is not aware of
any present effort to acquire control of the Company, it believes these Rights
represent a sound and reasonable means of safeguarding the interests of its
shareholders.
The Rights are not exercisable until the Distribution Date (triggered only if
certain events occur) and are not detachable from the Company's Common Stock and
they do not give any immediate value to shareholders. No certificates
representing the Rights will be issued at this time.
Ten days after any person or group acquires (with certain exceptions, the
"Acquiring Person") 15% or more of the Company's outstanding Common Stock or
announces a tender offer for 15% or more of the Company's outstanding Common
Stock, the rights will become exercisable. Thereafter, the Rights will trade
separately from the Company's Common Stock and have separate certificates.
Holders of the Rights will be entitled to purchase from the Company one
one-thousandth of a share of Preferred Stock for $40.00.
Under certain circumstances, however, the Rights will be modified so that each
Right not owned by the Acquiring Person would become exercisable for the number
of shares of the Company's Common Stock that at the time have a market value of
two times the $40.00 exercise price of the Right. Shares of Preferred Stock
purchasable upon exercise of the Rights are entitled to dividend, liquidation
and voting rights 1,000 times those afforded one share of common stock.
Accordingly, the value of the one one-thousandth of a share of Preferred Stock
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.
7
<PAGE>
The Rights will expire on June 7, 2009 and may be redeemed by the Company for
one cent ($.01) per Right under certain circumstances. At any time prior to the
time an Acquiring Person becomes such, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right. Until
a Right is exercised or exchanged, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A summary of the plan is contained in the prospectus referred to above.
Hallwood Energy Corporation is a public oil and gas company headquartered in
Denver, Colorado with properties primarily located in South Louisiana, the San
Juan Basin in New Mexico and Colorado, West Texas and the Rocky Mountain Region.
8
