SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HALLWOOD ENERGY CORPORATION
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
40636X
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(CUSIP Number)
W. Alan Kailer, Esq.
Jenkens & Gilchrist, a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
(214) 855-4500
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(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
June 8, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(e), (f) or (g), check the following box [ ].
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CUSIP No. 40636X
1. Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Persons:
The Hallwood Group Incorporated 51-0261339
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [ ] (b) [ ]
3. SEC Use Only
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4. Source of Funds (See instructions) 00
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5. Check box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6. Citizenship or Place of Organization Delaware
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7. Sole Voting Power 1,800,000 Shares
Number of Shares --------------------
Beneficially Owned by
Each Reporting Person 8. Shared Voting Power 0
With --------------------
9. Sole Dispositive Power 1,800,000 Shares
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10. Shared Dispositive Power 0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,800,000 Shares
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12. Check if the Aggregate Amount in Row 11 Excludes Certain Shares (See
Instructions) [ ]
13. Percent of Class Represented by Amount in Row 11.
18%
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14. Type of Reporting Person (See Instructions):
CO
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Item 1. Security and Issuer.
This statement relates to shares of common stock, par value $0.01 per
share, (the "Common Stock") of Hallwood Energy Corporation, a Delaware
corporation ("HEC") having its principal executive offices at 4610
South Ulster Street, Suite 200, Denver, Colorado 80237.
Item 2. Identity and Background.
(a) Name:
The person on whose behalf this statement is filed is The
Hallwood Group Incorporated, a Delaware corporation ("Hallwood").
Hallwood's Board of Directors consists of Anthony J. Gumbiner,
Brian M. Troup, Charles A. Crocco, Jr. and J. Thomas Talbot.
Hallwood's officers are Anthony J. Gumbiner, Chairman of the Board of
Directors and Chief Executive Officer; Brian M. Troup, President and
Chief Operating Officer; William L. Guzzetti, Executive Vice
President; Melvin J. Melle, Vice President, Chief Financial Officer
and Secretary; Mary P. Doyle, Vice President, and Joseph T. Koenig,
Assistant Secretary and Treasurer. Although such directors and
officers are not reporting persons, they are persons ("Instruction C
Persons") identified in Instruction C to Schedule 13D and hence
provide the information required by Items 2 through 6 of this Schedule
13D.
(b) Business address:
The address of the principal office of Hallwood is 3710 Rawlins,
Suite 1500, Dallas, Texas 75219. All of the directors and executive
officers can be contacted at this address.
(c) Principal business:
Hallwood is a diversified holding company comprised of two
divisions operating in four business segments: real estate, energy,
textile products and hotels.
Anthony J. Gumbiner is Chief Executive Officer and a director of
Hallwood.
William L. Guzzetti is Executive Vice President of Hallwood.
Brian M. Troup is President and Chief Operating Officer and a
director of Hallwood.
Charles A. Crocco, Jr. is a director of Hallwood and Counsel to
the law firm of Jackson & Nash, LLP.
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J. Thomas Talbot is a director of Hallwood a partner of Shaw &
Talbot and Pacific Management Group and the owner of The Talbot
Company.
Melvin J. Melle is Vice President, Chief Financial Officer and
Secretary of Hallwood.
Mary P. Doyle is Vice President of Hallwood.
Joseph T. Koenig is Assistant Secretary and Treasurer of
Hallwood.
(d) Criminal convictions:
None of the persons providing information in this statement have
been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) in the last five years.
(e) Civil proceedings:
Except for Hallwood, none of the persons providing information in
this statement have been subject to a judgment, decree or final order
enjoining future violations of or mandating activities subject to
federal securities laws or finding any violation with respect to such
laws.
On July 22, 1996, Hallwood agreed to a settlement of a claim by
the Securities and Exchange Commission (the "SEC") arising from
Hallwood's sale of a small portion of its holdings in the stock of
ShowBiz Pizza Time, Inc. ("ShowBiz") during a four-day period in June
1993. These and other similar sales were made by Hallwood pursuant to
a pre-planned, long-term selling program begun in December 1992. The
SEC asserted that some, but not all, of Hallwood's June 1993 sales
were improper because, before the sales program was completed,
Hallwood is alleged to have received nonpublic information about
ShowBiz. In connection with the settlement, Hallwood agreed to
contribute approximately $953,000, representing the loss that the SEC
alleged Hallwood avoided by selling during the four-day period, plus
interest of $240,000. Hallwood also agreed to be subject to an
injunction against any future violations of certain federal securities
laws. In addition, the SEC alleged that Anthony J. Gumbiner, Chairman
of the Board and Chief Executive Officer of Hallwood, failed to take
appropriate action to discontinue Hallwood's sales of the ShowBiz
shares during the four days in question. Mr. Gumbiner did not directly
conduct the sales, nor did he sell any shares for his own account or
for the account of any trust for which he has the power to designate
the trustee. Although the sales were made solely by Hallwood, the SEC
assessed a civil penalty of $477,000 against Mr. Gumbiner, as a
"control person" for Hallwood. Mr. Gumbiner, however, is not subject
to any separate injunction concerning his future personal activities.
As provided in the settlement, neither Hallwood nor Mr. Gumbiner
admits or denies the allegations made by the SEC, and both entered
into the settlement to avoid the extraordinary time and expense that
would be involved in protracted litigation with the government.
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(f) Hallwood is a Delaware corporation with its principal business
offices at the address given above. Messrs. Gumbiner and Troup are
citizens of the U.K. Messrs. Guzzetti, Crocco, Talbot, Melle and
Koenig and Ms. Doyle are citizens of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Hallwood beneficially owns 1,800,000 shares of Common Stock.
Hallwood acquired or may be deemed to have acquired the Common Stock
as a result of the consolidation (the "Consolidation") of Hallwood
Energy Partners, L.P. ("HEP"), Hallwood Consolidated Resources
Corporation ("HCRC"), and the energy interests of HEPGP, Ltd.
("HEPGP") and Hallwood pursuant to a Merger and Asset Contribution
Agreement, dated as of December 15, 1998, by and among Hallwood Energy
Corporation ("HEC"), HEC Acquisition Partnership, L.P., HEC
Acquisition Corp., HEP, HCRC, HCRC Acquisition Corp., and HEPGP. HEP
and HCRC continue as the surviving entities becoming wholly-owned
subsidiaries of HEC.
Hallwood acquired 100 shares of Common Stock as part of the initial
capitalization of HEC. Hallwood acquired 380,853 shares of Common
Stock in exchange for its Class A Units of HEP. Hallwood acquired
106,636 shares of Common Stock in exchange for its Class B Units of
HEP. HEPGP acquired 1,312,411 shares of Common Stock as a result of
its:
o relinquishing its rights to participate in drilling and
acquisitions by HEP;
o relinquishing its rights to receive a share of revenues from HEP
greater than the amount of expenses allocated to it;
o its contribution of assets and the general partner interest in
HEP to HEC;
o Hallwood's relinquishing its contractual rights to fees paid by
HEP and HCRC; and
o Hallwood's relinquishing its right to vote the Class units of
HEP, which vote as a separate class on all matters brought to a
vote of unitholders.
Item 4. Purpose of Transactions.
The purpose of the Consolidation was to combine HEP, HCRC and the
energy interests of HEPGP and Hallwood into a larger entity with a
greater member of stockholders and larger equity capitalization than
either HEP or HCRC alone. The Consolidation simplified the structure
of the entities and eliminated cross-ownership between HEP and HCRC.
The simplified structure of HEC will eliminate duplicative record
keeping and reporting.
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Hallwood may, subject to market conditions and other factors deemed
relevant by it, purchase additional shares Common Stock from time to
time either in open market purchases, privately negotiated
transactions or otherwise.
Hallwood intends to review, on a continuing basis, its investment in
the Common Stock and Hallwood's business affairs and financial
conditions, as well as conditions in the securities markets and
general economic and industry conditions. Hallwood may in the future
take such actions with respect to its investment in the Common Stock
as it deems appropriate in light of the circumstances existing from
time to time, including, without limitation, purchasing additional
Common Stock or disposing of the Common Stock it now holds or
hereafter acquires.
Item 5. Interest in Securities of the Issuer.
Hallwood owns, either directly or through wholly owned subsidiaries,
1,800,000 shares of Common Stock, or approximately 18% of the
outstanding Common Stock. No transactions in the Common Stock, other
than as described in Item 3 and below, have been reported by Hallwood
or any of the entities or the executive officers or directors listed
in response to Item 2, during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationship's with Respect
to Securities of the Issuer.
On May 7, 1999, Hallwood announced that it had reached an agreement
with Brian M. Troup regarding a separation of their interests. Mr.
Troup is a director and officer of Hallwood. Completion of the
agreement is conditioned on, among other things, a satisfactory
refinancing of the $14,088,000 outstanding principal amount of
Hallwood's 7% Collateralized Senior Subordinated Debentures due July
31, 2000 and the completion of the Consolidation. According to the
agreement, upon satisfaction of the conditions, Mr. Troup will resign
from all positions with Hallwood. As part of the agreement, Hallwood
will transfer to 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
HEC that Hallwood will receive in the Consolidation. Hallwood Energy
Corporation has agreed to register the shares upon request by Mr.
Troup and Hallwood, at Hallwood's expense. Hallwood 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. Subsequent to that, Mr. Troup may sell the shares subject
to a number of restrictions, including a right of first refusal in
favor of Hallwood.
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Item 7. Materials to Be Filed as Exhibits.
1. Agreement, dated May 5, 1999, by and among The Hallwood Group,
Epsilon Trust and Brian M. Troup, filed as Exhibit 10.34 to Hallwood's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-8303) and
incorporated herein by reference.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: June 17, 1999 THE HALLWOOD GROUP INCORPORATED
By: /s/ Joseph T. Koenig
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Joseph T. Koenig
Assistant Secretary
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