PROSPECTUS SUPPLEMENT
To Joint Proxy Statement/Prospectus Dated May 4, 1999
10,000,000 Shares of Common Stock
2,290,375 Shares of Preferred Stock
HALLWOOD ENERGY CORPORATION
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This prospectus supplement supplements and amends the joint proxy
statement/prospectus dated May 4, 1999, relating to 10,000,000 shares of common
stock, $.01 par value per share, and 2,290,375 shares of preferred stock, par
value $0.01 per share, of HALLWOOD ENERGY CORPORATION, a Delaware corporation,
to be issued in connection with the consolidation of Hallwood Energy Partners,
L.P., a Delaware limited partnership, Hallwood Consolidated Resources
Corporation, a Delaware corporation and the energy interests of The Hallwood
Group Incorporated, a Delaware corporation.
Neither the Securities and Exchange Commission or any state securities
commission has approved these securities or determined if this joint
proxy statement/prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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On May 7, 1999, Hallwood Group announced that it had reached an agreement
with Mr. Brian M. Troup regarding a separation of their interests. Mr. Troup is
a director and officer of Hallwood Group, a director of the general partner of
Energy Partners, a director of Consolidated Resources and will be a director of
Hallwood Energy. Completion of the agreement is conditioned on, among other
things, a satisfactory refinancing of the $14,090,000 outstanding principal
amount of Hallwood Group's 7% Collateralized Senior Subordinated Debentures due
July 31, 2000 and the completion of the consolidation. Mr. Troup is
discontinuing his association with Hallwood Group to pursue other interests.
According to the agreement, upon satisfaction of the conditions, Mr. Troup will
resign from all positions with Hallwood Group, the general partner of Energy
Partners, Consolidated Resources and Energy Corporation.
AGREEMENT BETWEEN HALLWOOD GROUP AND MR. BRIAN TROUP
As part of the agreement, Hallwood Group will transfer to or Mr. Troup or a
trust, of which members of Mr. Troup's family are beneficiaries, 360,000 of the
shares of the common stock of Energy Corporation that Hallwood Group will
receive in the consolidation. Energy Corporation has agreed to register the
shares upon request by Mr. Troup and Hallwood Group, at Hallwood Group's
expense. Hallwood Group will have the right to purchase all of these shares at
the then current trading price for a period of six months after the
effectiveness of the agreement. After that, Mr. Troup may sell the shares
subject to a number of restrictions, including a right of first refusal in favor
of Hallwood Group.
We cannot assure you that the conditions to completion of the agreement
between Hallwood Group and Mr. Troup will be satisfied or that the agreement
will be completed. Until completion of these conditions, Hallwood Group and Mr.
Troup do not anticipate any change in their relationships.
WARRANTS
The following discussion is a clarification of information already provided
on page 44 of the joint proxy statement/prospectus:
As stated in the proxy statement/prospectus, Prudential Insurance Company
of America holds a warrant to purchase 98,599 shares of Consolidated Resources
common stock and, under the terms of that warrant, after the completion of the
consolidation, will have the right to purchase shares of Energy Corporation
common stock. The number of shares of Energy Corporation common stock that they
may purchase and the purchase price of those shares will be determined under the
adjustment provisions of the current warrant by reference to the terms of the
consolidation and the value of the Energy Corporation common stock. Although
those provisions are ambiguous, the number of shares of Energy Corporation
common stock that may be purchased will be at least equal to the number of
shares of Consolidated Resources common stock that may be purchased under the
current warrant and the price at which the Energy Corporation shares may be
purchased will be at least equal to the value of the Energy Corporation common
stock upon completion of the consolidation.
The date of this prospectus supplement is May 17, 1999.
