As filed with the Securities and Exchange Commission on September 5, 2000
Registration No.
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
HALLWOOD ENERGY CORPORATION
(Exact name of registrant as specified in its articles)
Delaware
(State or other jurisdiction of
incorporation or organization)
4610 South Ulster Street, Suite 200
Denver, Colorado 80237
(303) 850-7373
(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal
executive offices)
---------------------------
84-1489099
(I.R.S. Employer
Identification No.)
Cathleen M. Osborn
Vice President and General Counsel
Hallwood Energy Corporation
4610 South Ulster Street, Suite 200
Denver, Colorado 80237
(303) 850-7373
(Name, address, including ZIP code, and telephone
number, including area code, of agent for
service)
---------------------------
Copy to:
W. Alan Kailer
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend
reinvestment plans, check the following box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Title of Securities Amount Being Offering Price Proposed Maximum Amount of
Being Registered Registered (1) Per Share (1) Aggregate Offering Price Registration Fee
-------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 417,406 $8.375 $3,495,775 $923
=================================== ================ ===================== ========================= =================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the average of the high and low
prices reported on the Nasdaq-National Market on August 28, 2000.
</FN>
</TABLE>
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
--------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
Subject to Completion, dated September __, 2000
417,406 Shares
HALLWOOD ENERGY CORPORATION
Common Stock
(Par Value $0.01 Per Share)
---------------------------
This prospectus relates to the public offering, which is not being
underwritten, of up to 417,406 shares of Hallwood's common stock, par value
$0.01 per share.
The prices at which the selling stockholders may sell the shares will
be determined by the prevailing market price for the shares or negotiated
transactions. Hallwood will not receive any of the proceeds from the sale of the
shares.
Hallwood originally issued the shares in connection with an agreement
to purchase oil and gas properties owned by several entities, and such selling
entities are registering the shares pursuant to that agreement. Hallwood is
paying all expenses of registration of the shares, but the selling stockholders
will pay all selling and other expenses they incur.
The common stock is traded on the Nasdaq National Market under the
symbol "HECO." The last reported sale price of common stock on August 28, 2000,
on Nasdaq was $8.25 per share.
See "Risk Factors" beginning on page 4 for a discussion of certain
factors that should be carefully considered by prospective purchasers of the
common stock offered hereby.
---------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
The date of this prospectus is September 5, 2000.
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this prospectus in connection with the offer made
hereby and, if given or made, such information or representations must not be
relied upon as having been authorized by Hallwood or any of the selling
stockholders. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstance, create any implication that there has
been no change in the facts set forth in this prospectus or in the affairs of
Hallwood since the date hereof. This prospectus does not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
TABLE OF CONTENTS
Where You Can Find More Information............................................2
Risk Factors...................................................................3
The Company....................................................................6
Selling Stockholders...........................................................7
Use of Proceeds................................................................8
Plan of Distribution...........................................................8
Legal Matters..................................................................9
Experts.......................................................................10
WHERE YOU CAN FIND MORE INFORMATION
Available Information
Hallwood files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. Hallwood's
SEC filings are available to the public over the Internet at the SEC's web site
at http://www.sec.gov. You may also read and copy any document Hallwood files at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at 7 World Trade Center,
Suite 1300, New York, New York 10048 and at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information
on the operation of the SEC's public reference room in Washington, D.C. by
calling the SEC at 1-800-SEC-0330.
Hallwood filed a registration statement on Form S-3 (File No. [ ]) to
register with the SEC the shares of common stock. This prospectus is a part of
that registration statement. As allowed by SEC rules, this prospectus does not
contain all the information contained in the registration statement or in the
exhibits to the registration statement. The registration statement may be
inspected and copied at the public reference facilities of the SEC described
above.
Incorporation of Certain Documents by Reference
The SEC allows Hallwood to "incorporate by reference" certain
information into this document. The information incorporated by reference is an
important part of this prospectus, and information that Hallwood files later
with the SEC will automatically update and supersede this information. Hallwood
incorporates by reference the documents listed below and any further filings
Hallwood makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering has been completed:
o Annual Report on Form 10-K for the year ended December 31, 1999;
o Quarterly Report on Form 10-Q for the three months ended March 31,
2000;
o Quarterly Report on Form 10-Q for the three months ended June 30,
2000; and
o The description of the common stock contained in the registration
statement on Form S-4, registration number 333-77409, filed with the
SEC, including any amendments or reports filed for the purpose of
updating that description.
2
<PAGE>
The documents incorporated by reference (other than exhibits to those
documents unless the exhibits are specifically incorporated by reference) are
available to any person, including any beneficial owner, to whom this prospectus
is delivered on written or oral request, without charge, directed to Hallwood
Energy Corporation, 4610 South Ulster Street, Suite 200, Denver, Colorado 80237,
(telephone number (303) 850-7373), Attention: Secretary.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. Hallwood has not
authorized anyone else to provide you with different information. The selling
stockholders are not making an offer of the common stock in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of those documents.
RISK FACTORS
Prospective purchasers should carefully consider the following risk
factors, together with the other information provided, before deciding to
purchase shares of common stock. Each of these risk factors could adversely
affect the value of an investment in the common stock.
Hallwood's success might be adversely affected by the volatility of oil and gas
prices
It is impossible to predict future oil and gas price movements with
certainty. Declines in oil and gas prices may materially adversely affect
Hallwood's financial condition, liquidity, ability to finance planned capital
expenditures and results of operations. Lower oil and gas prices may also reduce
the amount of oil and gas that Hallwood can produce economically.
Hallwood's revenues, profitability, future growth and ability to borrow
funds or obtain additional capital, as well as the carrying value of its
properties, will be substantially dependent upon prevailing prices of oil and
gas. Historically, the markets for oil and gas have been volatile, and they are
likely to continue to be volatile in the future. Prices for oil and gas are
subject to wide fluctuation in response to relatively minor changes in the
supply of and demand for oil and gas, market uncertainty and a variety of
additional factors that are beyond Hallwood's control.
Hedging arrangements may expose Hallwood to financial loss
To reduce its exposure to short-term fluctuations in the prices of oil
and gas, Hallwood periodically enters into hedging arrangements. The hedging
arrangements apply to only a portion of its production and provide only partial
price protection against declines in oil and gas prices. Such hedging
arrangements may expose Hallwood to risk of financial loss in some
circumstances, including instances where production is less than expected or
where the other party to any hedging arrangement fails to perform. In addition,
when oil and gas prices are increasing, the hedging arrangements may negatively
affect Hallwood's cash flow or require us to post collateral to its
counterparties.
Similarly, in order to reduce its exposure to short-term fluctuations
in interest rates and to provide a measure of predictability for a portion of
its interest payments under its debt facilities, we have entered into contracts
to hedge its interest payments on a portion of its variable rate debt. These
hedges provide only partial protection against increases in interest rates.
These hedging arrangements may expose Hallwood to risk of financial loss in some
circumstances, including instances where the other party to any hedging
arrangement fails to perform. In addition, the hedging arrangements may limit
the benefit to Hallwood of declines in interest rates.
Hallwood experiences competition from larger, more established oil and gas
companies
Hallwood encounters competition from other oil and gas companies in all
areas of its operation, including the acquisition of exploratory prospects and
proven properties. Hallwood's competitors include major integrated oil and gas
companies and numerous independent oil and gas companies, individuals and
drilling and income programs. Many of its competitors are large,
well-established companies with substantially larger operating staffs and
greater capital resources than Hallwood's and, in many instances, have been
engaged in the oil and gas business for a much longer time than Hallwood. Those
companies may be able to pay more for exploratory prospects and productive oil
and gas properties, and may be able to define, evaluate, bid for and purchase a
greater number of properties and prospects than
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<PAGE>
Hallwood's financial or human resources permit. Hallwood's ability to explore
for oil and gas prospects and to acquire additional properties in the future
will be dependent upon its ability to conduct its operations, to evaluate and
select suitable properties and to consummate transactions in highly competitive
environments.
There are numerous risks relating to drilling activities
Hallwood's success will be materially dependent upon the continued
success of its drilling program. Hallwood's future drilling activities may not
be successful and, if drilling activities are unsuccessful, such failure will
have an adverse effect on Hallwood's future results of operations and financial
condition. Oil and gas drilling involves numerous risks, including the risk that
no commercially productive oil or gas reservoirs will be encountered, even if
the reserves targeted are classified as proved. The cost of drilling, completing
and operating wells is often uncertain, and drilling operations may be
curtailed, delayed or canceled as a result of a variety of factors, including
unexpected drilling conditions, pressure or irregularities in formations,
equipment failures or accidents, adverse weather conditions, compliance with
governmental requirements and shortages or delays in the availability of
drilling rigs and the delivery of equipment. Although Hallwood has identified
numerous drilling prospects, there can be no assurance that such prospects will
be drilled or that oil or gas will be produced from any such identified
prospects or any other prospects.
Availability of capital is important to Hallwood's ability to grow
The acquisition of reserves is capital intensive, and funding for the
costs of acquisition may be greater than Hallwood's cash flow can provide. As a
result, additional financing may be required, and the availability or terms of
any such additional financing cannot be assured. In the event sufficient capital
resources are not available to Hallwood, it may negatively affect Hallwood's
flexibility in planning for and reacting to possible acquisition activities.
There are numerous risks relating to the acquisition of oil and gas properties
The successful acquisition of producing properties requires an
assessment of recoverable reserves, future oil and gas prices, operating costs,
potential environmental and other liabilities and other factors. Such
assessments are necessarily inexact and their accuracy inherently uncertain. In
connection with such an assessment, Hallwood will perform a review of the
subject properties that it believes to be generally consistent with industry
practices. This usually includes on-site inspections and the review of reports
filed with various regulatory entities. Such a review, however, will not reveal
all existing or potential problems, nor will it permit a buyer to become
sufficiently familiar with the properties to fully assess their deficiencies and
capabilities. Inspections may not always be performed on every well, and
structural and environmental problems are not necessarily observable even when
an inspection is undertaken. Even when problems are identified, the seller may
be unwilling or unable to provide effective contractual protection against all
or part of these problems. There can be no assurances that any acquisition of
property interests by Hallwood will be successful and, if an acquisition is
unsuccessful, that the failure will not have an adverse effect on Hallwood's
future results of operations and financial condition.
There are a number of hazards relating to well operations and lack of insurance
The oil and gas business involves certain hazards such as well
blowouts; cratering; explosions; uncontrollable flows of oil, gas or well
fluids; fires; formations with abnormal pressures; pollution; and releases of
toxic gas or other environmental hazards and risks, any of which could result in
substantial losses to Hallwood. In addition, Hallwood may be liable for
environmental damages caused by previous owners of property purchased or leased
by Hallwood. As a result, substantial liabilities to third parties or
governmental entities may be incurred, the payment of which could reduce or
eliminate the funds available for exploration, development or acquisitions or
result in the loss of Hallwood's properties. While Hallwood believes that it
maintains all types of insurance commonly maintained in the oil and gas
industry, it does not maintain business interruption insurance. In addition,
Hallwood cannot predict with certainty the circumstances under which an insurer
might deny coverage. The occurrence of an event not fully covered by insurance
could have a materially adverse effect on Hallwood's financial condition and
results of operations.
4
<PAGE>
Hallwood may find it difficult to continue to replace and expand its reserves
Future oil and gas production depends on continually replacing and
expanding reserves. In general, the volume of production from oil and gas
properties declines as reserves are depleted, with the rate of decline depending
on reservoir characteristics. Hallwood's future oil and gas production is,
therefore, highly dependent upon its ability to economically find, develop or
acquire additional reserves in commercial quantities. Except to the extent
Hallwood acquires properties containing proved reserves or conducts successful
exploration and development activities, or both, the proved reserves of Hallwood
will decline as reserves are produced. The business of exploring for, developing
or acquiring reserves is capital-intensive. To the extent cash flow from
operations is reduced, and external reserves of capital become limited or
unavailable, Hallwood's ability to make the necessary capital investments to
maintain or expand its asset base of oil and gas reserves would be impaired. In
addition, there can be no assurance that Hallwood's future exploration,
development and acquisition activities will result in additional proved reserves
or that Hallwood will be able to drill productive wells at acceptable costs.
Furthermore, although Hallwood's revenues could increase if prevailing prices
for oil and gas increase significantly, Hallwood's finding and development costs
could also increase.
Estimates of reserves and future cash flows are imprecise
Reservoir engineering is a subjective process of estimating underground
accumulations of oil and gas that cannot be measured in an exact manner.
Estimates of economically recoverable oil and gas reserves and of future net
cash flows necessarily depend upon a number of variable factors and assumptions,
such as historical production from the area compared with production from other
producing areas, the assumed effects of regulations by governmental agencies,
and assumptions concerning future oil and gas prices, future operating costs,
severance and excise taxes, development costs and workover and remedial costs,
all of which may in fact vary considerably from actual results. For these
reasons, estimates of the economically recoverable quantities of oil and gas
attributable to any particular group of properties, classifications of such
reserves based on risk of recovery, and estimates of the future net cash flows
expected from them prepared by different engineers, or by the same engineers but
at different times, may vary substantially, and such reserve estimates may be
subject to downward or upward adjustment based upon such factors. In addition,
the status of the exploration and development program of any oil and gas company
is ever-changing. Consequently, reserve estimates also vary over time. Actual
production, revenues and expenditures with respect to Hallwood's reserves will
likely vary from estimates, and such variances may be material.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Some statements contained in this document regarding future financial
performance and results and other statements that are not historical facts are
"forward-looking statements." The words "expect," "project," "estimate,"
"predict," "anticipate," "believes" and similar expressions are also intended to
identify forward- looking statements. Such statements and Hallwood's results may
be affected by numerous risks, uncertainties and assumptions, including but not
limited to:
o changes in general economic conditions in the United States;
o changes in law and regulations to which Hallwood is subject;
o the cost and effects of legal and administrative claims and
proceedings against Hallwood or its subsidiaries or which may be
brought against Hallwood or its subsidiaries;
o conditions in the capital markets utilized by Hallwood to access
capital to finance operations;
o Hallwood's ability to develop expanded markets and product
offerings as well as maintain existing markets;
o energy prices;
5
<PAGE>
o competition from other pipelines and alternate fuels;
o the ability of Hallwood to sustain its past practice of growth
through acquisitions; and
o the general level of natural gas and petroleum product demand and
weather conditions, among other things.
THE COMPANY
Hallwood Energy Corporation is a Delaware corporation engaged in the
development, exploration, acquisition and production of oil and gas properties.
Hallwood began operations June 8, 1999, in connection with the consolidation of
Hallwood Energy Partners, L.P. and Hallwood Consolidated Resources Corporation
and the acquisition of the direct energy interests of The Hallwood Group
Incorporated.
Today, Hallwood is an active exploration and production company, with
over twenty years of experience in expanding reserves through a variety of
methods, including acquisitions, consolidations, and development and exploration
drilling. During the 1970's and 1980's, Hallwood's predecessors expanded
primarily through mergers and acquisitions. In the 1990's, growth was achieved
through acquisitions, exploration and exploitation. At June 30, 2000, Hallwood
had $192 million in assets.
Hallwood's focus moving forward will be directed toward meaningful
reserve growth through core area development and a significant exposure to high
return and moderate risk opportunities, with a significant portion of free cash
flow now exposed to these opportunities. Historically, Hallwood has made
strategic acquisitions in its core areas and it will continue to look for
similar opportunities in the future.
During the second quarter of 2000, Hallwood Energy Corporation produced
an average of 60 million cubic feet of gas and 1,429 barrels of oil per day.
After the Company's strategic property sales in the first quarter of 2000, the
Company currently owns approximately 500 properties in five states. Hallwood's
properties are primarily located in the Gulf Coast, Greater Permian and Rocky
Mountain regions.
Daily Production
(for the quarter ended June 30, 2000)
Net Percentage
Natural Gas (Mcfd) 60,044 88%
Oil (Bopd) 1,429 12%
----- ---
Total (Mcfde) 68,618 100%
====== ====
Estimated proved reserves at December 31, 1999 for the Company totaled
152 billion cubic feet of gas and 12 million bbl of oil (222 Bcfe) of which 91%
were proved developed. Using 1999 pro forma production rates, the reserves have
a remaining life of approximately 8 years.
The present value of projected future net cash flows from the proved
reserves at December 31,1999 aggregated $208 million, based upon a 10% discount
rate, using year-end gas and oil prices held constant. The Company directly
operated 89% of this value. The weighted average unit prices used in estimating
end of year 1999 reserves and related future net cash flows were $2.00 per mcf
and $24.32 per barrel.
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<PAGE>
Proved Reserves as of December 31, 1999
Developed Undeveloped
Natural Gas (Mmcf) 139,839 11,829
Oil (Mbls) 10,301 1,380
------ -----
Total (Mmcfe) 201,645 20,109
======= ======
Allocation of 2000 Capital Budget by Region
Region Net Capital Percentage of
($ in 000's) Net Capital
Gulf Coast $ 14,500 60%
Rocky Mountain 7,000 30%
Greater Permian 500 2%
Other 2,000 8%
----- --
Total Proposed Capital Projects $24,000 100%
======= ====
During the first six months of 2000, the Company completed the
disposition of certain non-strategic assets. Hallwood's goal was to concentrate
our efforts on four core areas instead of eleven. Proceeds of over $21 million
were used to reduce debt, improving the Company's debt capitalization ratios. As
a result of these sales and other planned overhead reductions, per Mcfe lease
operating costs are expected to decrease by 5% to 10% from pre-sale levels, and
ultimately administrative savings should total slightly less than $1 million per
year. The non-strategic properties that were sold consisted of approximately 500
wells and represented over 35% of Hallwood's total well count. However, the net
cash flow reduction in the year 2000 resulting from the sales will be only 11%.
Proved Reserves by Region
(as of December 31, 1999)
Present Value at
10% Discount
Location Gas (Mmcf) Oil (Mbbl) ($ in 000's)
Gulf Coast Region 24,945 1,328 $ 41,336
Greater Permian Region 30,071 5,540 56,019
Rocky Mountain Region 93,838 1,322 91,005
Other 2,814 3,491 19,640
----- ----- ------
Total 151,668 11,681 $ 208,000
======= ====== =======
SELLING STOCKHOLDERS
The following table sets forth the name, address and relationship with
Hallwood of each Selling Stockholder and (i) the number of shares of common
stock beneficially owned by each Selling Stockholder as of August 30, 2000,
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<PAGE>
(ii) the maximum number of shares of common stock which may be offered for the
account of each Selling Stockholder under this prospectus and (iii) the amount
and percentage of common stock that would be owned by each Selling Stockholder
after completion of the offering, assuming the sale of all of the common stock
which may be offered hereunder. Except as otherwise noted below, none of the
selling stockholders has, within the past three years, had any position, office
or other material relationship with Hallwood.
<TABLE>
<CAPTION>
Percentage of
Name and Address of Shares Owned Shares Which May Be All Outstanding
Selling Stockholder Prior to Offering(1) Sold Hereunder(2) Common Stock
<S> <C> <C> <C>
John D. and Catherine T. 313,055 313,055 3.35%
MacArthur Foundation
c/o Joshua J. Mintz
140 South Dearborn Street
Suite 1100
Chicago, Illinois 60603-5285
CHC I Limited 104,351 104,351 1.12%
c/o Patrick G. Cox
5956 Sherry Lane, Suite 1300
Dallas, Texas 75225
------------
<FN>
(1) Beneficial ownership as of August 30, 2000, based upon information
provided by the respective selling stockholders.
</FN>
<FN>
(2) Assumes sale of all shares of Common stock registered hereunder,
although selling stockholders are under no obligation known to Hallwood
to sell any shares of common stock at this time.
</FN>
</TABLE>
USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale
of shares offered by this document. Hallwood will not receive any proceeds from
the sale of the shares.
PLAN OF DISTRIBUTION
The selling stockholders have advised Hallwood that they (or, subject
to applicable law, their pledgees, donees, distributees, transferees or other
successors in interest) intend to sell all or a portion of the shares offered by
this prospectus from time to time on the Nasdaq National Market, in negotiated
transactions at fixed prices that may be changed, at market prices prevailing at
the time of sale or at prices reasonably related thereto or at negotiated
prices, or by a combination of the foregoing methods of sale through:
o ordinary brokerage transactions in which the broker solicits
purchases;
o sales to one or more brokers or dealers as principal, and the
resale by such brokers or dealers for their account pursuant to
this prospectus, including resales to other brokers and dealers;
o block trades in which the broker or dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion
of the block as principal in order to facilitate the transaction;
or
o negotiated transactions with purchasers with a broker or dealer.
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<PAGE>
Hallwood is not aware as of the date of this prospectus of any agreements
between the selling stockholders and any broker-dealers with respect to the sale
of the shares offered by this prospectus. In connection with distributions of
the shares or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers. In connection with these transactions:
o broker-dealers may engage in short sales of the shares registered
hereunder in the course of hedging the positions they assume with
selling stockholders;
o the selling stockholders may sell shares of common stock short and
deliver the shares to close out such short positions;
o the selling stockholders may enter into option or other
transactions with broker-dealers that require the delivery to the
broker-dealer of the shares registered hereunder, which the
broker-dealer may resell pursuant to this prospectus; and
o the selling stockholders may pledge the shares registered
hereunder to a broker or dealer and upon a default, the broker or
dealer may effect sales of the pledged shares pursuant to this
prospectus.
The selling stockholders and any broker, dealer or other agent
executing sell orders on behalf of the selling stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended, in
which event commissions received by any such broker, dealer or agent and profit
on any resale of the shares of principal may be deemed to be underwriting
commissions under the Securities Act. Commissions received by a broker, dealer
or agent may be in excess of customary compensation. The shares may also be sold
in accordance with Section 4(1) of the Securities Act or Rule 144 and Rule 145
under the Securities Act.
Information as to whether underwriters who may be selected by the
selling stockholders, or any other broker- dealer, is acting as principal or
agent for the selling stockholders, the compensation to be received by
underwriters who may be selected by the selling stockholders, or any
broker-dealer, acting as principal or agent for the selling stockholders and the
compensation to be received by other broker-dealers, will, to the extent
required, be set forth in a supplement to this prospectus. Any dealer or broker
participating in any distribution of the shares may be required to deliver a
copy of this prospectus, including the prospectus supplement, if any, to any
person who purchases any of the shares from or through such dealer or broker.
All expenses of registration incurred in connection with the offering
will be borne by Hallwood. All selling and other expenses incurred by the
selling stockholders will be borne by the selling stockholders.
The selling stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including Rule 102
under Regulation M, which provisions may limit the timing of purchases and sales
of any of the common stock by the selling stockholders. Rule 102 under
Regulation M provides, with certain exceptions, that it is unlawful for a
selling stockholder or its affiliated purchaser to, directly or indirectly, bid
for or purchase or attempt to induce any person to bid for or purchase, for an
account in which the selling stockholder or affiliated purchaser has a
beneficial interest in any securities that are the subject of the distribution
during the applicable restricted period under Regulation M. All of the foregoing
may affect the marketability of the common stock. We will require the selling
stockholders, and their brokers if applicable, to provide a letter that
acknowledges their compliance with Regulation M under the Exchange Act before
authorizing the transfer of the selling stockholders' shares.
The selling stockholders may offer all of the shares for sale. Further,
because it is possible that a significant number of shares could be sold at the
same time hereunder, such sales, or the possibility thereof, may have a
depressive effect on the market price of the common stock.
LEGAL MATTERS
The validity of the shares will be passed upon for Hallwood by Jenkens
& Gilchrist, a Professional Corporation, Dallas, Texas.
Dallas1 602714 v 6, 21545.00001
9
<PAGE>
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from Hallwood Energy Corporation's Annual Report on Form 10-K for
the year ended December 31, 1999 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below is an estimate of the approximate amount of the fees
and expenses (other than underwriting commissions and discounts) payable by the
Registrant in connection with the issuance and distribution of the shares.
Securities and Exchange Commission, registration fee ................ $ 923
Printing and mailing ................................................ 500
Accountant's fees and expenses ........................................ 15,000
Counsel fees and expenses ............................................. 12,000
Miscellaneous ..................................................... 0
-----------
Total ....................................................... $28,423
The Selling Stockholders will pay or bear any selling or underwriting
discounts and commissions and other selling expenses with respect to the offer
and sale of their shares of common stock.
Item 15. Indemnification of Directors and Officers
The Certificate of Incorporation of Hallwood generally limits the
liability of Hallwood's directors and officers to Hallwood and the stockholders
for money damages to the fullest extent permitted from time to time by the laws
of the state of Delaware. The Certificate also provides generally for the
indemnification of directors and officers, among others, against judgments,
settlements, penalties, fines, and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities except in connection with a
proceeding by or in the right of Hallwood in which the director was adjudged
liable to Hallwood or in connection with any other proceeding, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by him. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors and officers of Hallwood pursuant to the foregoing
provisions or otherwise, Hallwood has been advised that, in the opinion of the
SEC, such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable.
Hallwood may purchase director and officer liability insurance for the
purpose of providing a source of funds to pay any indemnification described
above.
Item 16. Exhibits
(1) 3.1 - Certificate of Incorporation of Hallwood Energy Corporation
(1) 3.2 - Bylaws of Hallwood Energy Corporation
(1) 4.1 - Certificate of Designations of the Series A Cumulative Preferred
Stock of Hallwood Energy Corporation
(2) 4.1.1 - Rights Agreement dated as of June 8, 1999, between the Company and
Registrar and Transfer Company
(1) 4.2 - Form of Certificate of Designation of Series A Junior Participating
Preferred Stock of Hallwood Energy Corporation
4.3 - Form of Share Certificate
5.1 - Opinion of Jenkens & Gilchrist, A Professional Corporation
(1) 10.2* - 1999 Long-Term Incentive Plan of Hallwood Energy Corporation
(1) 10.3* - 1999 Long-Term Incentive Plan Loan Program of Hallwood Energy
Corporation
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(2) 10.5 - Registration Rights Agreement dated as of June 8, 1999, between
the Company and The Prudential Insurance Company of America
(2) 10.6* - Change of Control Agreement between the Company and Certain
Executives, dated as of June 9, 1999
(4) 10.6.1* - Amended Schedule for Change of Control Contracts, dated as of
December 13, 1999
(2) 10.7 - Amended and Restated Credit Agreement dated as of June 8, 1999,
among the Company and certain of its subsidiaries and the Banks
listed therein
(2) 10.8 - Agreement Regarding Initial Exercise Price dated June 9, 1999,
between the Company and The Prudential Insurance Company of
America
(2) 10.9* - Phantom Working Interest Incentive Plan of Hallwood Energy
Corporation dated as of June 8, 1999
(2) 10.10 - Amended and Restated Subordinated Note and Warrant Purchase
Agreement dated as of June 8, 1999, between Hallwood
Consolidated Resources Corporation and The Prudential Insurance
Company of America
(2) 10.11 - Common Stock Purchase Warrant dated June 8, 1999 between the
Company and The Prudential Insurance Company of America
(3) 10.12 - Amendment No. 1 to Credit Agreement, dated as of October 15, 1999
(3) 10.13 - Letter Amendment No. 1 to Note Agreement, dated as of October 15,
1999
(4) 10.14 - Amendment No. 2 and Waiver to Credit Agreement, dated as of
January 27, 2000
23.1 -- Consent of Jenkens & Gilchrist, a Professional Corporation
(included in Exhibit 5.1)
23.2 -- Consent of Deloitte & Touche LLP
24.1 -- Power of Attorney (included in Signature Page)
-------------------------
(1) Incorporated by reference to the same exhibit number filed with
Registrant's registration statement No.33-77409.
(2) Incorporated by reference to the same exhibit number filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999.
(3) Incorporated by reference to the same exhibit number filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.
(4) Incorporated by reference to the same exhibit number filed with the
Registrant's Annual Report on Form 10-K for the Year ended December 31,
1999.
* Designates management contracts or compensatory plans or arrangements.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent
II-2
<PAGE>
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offering therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 15 of this
registration statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question as to whether such indemnification by it is against public policy
as expressed in the act, and will be governed by the final adjudication of such
issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Denver, State of Colorado, on the 5th day of
September, 2000.
HALLWOOD ENERGY CORPORATION
a Delaware corporation (Registrant)
By:/s/ Cathleen M. Osborn
Cathleen M. Osborn
Vice President
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints William L. Guzzetti and Cathleen M. Osborn, and each of them, full
power to act without the other, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or and in his or her
name, place and stead, in any and all capacities (until revoked in writing) to
sign any or all amendments (including post-effective amendments) to this
registration statement, to file the same, together with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, to sign any and all applications, registration statements, notices
and other documents necessary or advisable to comply with the applicable state
securities laws, and to file the same, together with all documents in connection
therewith, with the appropriate state securities authorities, granting unto said
attorneys-in-fact and agents or any of them, or their substitutes or substitute,
full power and authority to do and perform each and every act and thing
necessary and advisable as fully to all intents and purposes as he might or
could do in person, thereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitutes or substitute,
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Anthony J. Gumbiner Chairman of the Board and Director September 5, 2000
------------------------------------------------
Anthony J. Gumbiner (Chief Executive Officer)
/s/ William L. Guzzetti President and Director September 5, 2000
------------------------------------------------
William L. Guzzetti
/s/ William J. Baumgartner Vice President, Principal Financial September 5, 2000
------------------------------------------------
William J. Baumgartner and Accounting Officer
/s/ Hans-Peter Holinger Director September 5, 2000
------------------------------------------------
Hans-Peter Holinger
/s/ Rex A. Sebastian Director September 5, 2000
------------------------------------------------
Rex A. Sebastian
/s/ Nathan C. Collins Director September 5, 2000
------------------------------------------------
Nathan C. Collins
/s/ John R. Isaac, Jr. Director September 5, 2000
------------------------------------------------
John R. Isaac, Jr.
/s/ Jerry A. Lubliner Director September 5, 2000
------------------------------------------------
Jerry A. Lubliner
/s/ Hamilton P. Schrauff Director September 5, 2000
------------------------------------------------
Hamilton P. Schrauff
/s/ Bill M. Van Meter Director September 5, 2000
------------------------------------------------
Bill M. Van Meter
</TABLE>
<PAGE>
