DALLAS, Feb. 7, 2014 /PRNewswire/ -- The Hallwood
Group Incorporated (NYSE MKT: HWG) (the "Company") today
announces that it has reached a settlement in a purported class and
derivative action which, subject to court approval, will increase
the Merger Consideration by $3.00 per
share, from $10.00 to $13.00 per Share, less any incentive fee and
attorneys' fees that may be awarded by the Court.
As previously announced, on June 4, 2013, the Company,
Hallwood Financial Limited, a corporation organized under the laws
of the British Virgin Islands
("Parent"), and HFL Merger Corporation, a Delaware corporation and wholly owned
subsidiary of the Parent ("Merger Sub"), entered into an Agreement
and Plan of Merger, as amended on July 11,
2013 (the "Merger Agreement"). The Merger Agreement provides
that, upon the terms and subject to the conditions set forth in the
Merger Agreement, Merger Sub will merge with and into the Company
(the "Merger"), with the Company continuing as the surviving
corporation and a wholly owned subsidiary of Parent. Parent is
controlled by Anthony J. Gumbiner,
Chairman and Chief Executive Officer of the Company, and Parent
currently owns 1,001,575, or 65.7%, of the issued and outstanding
shares of common stock, par value $0.10 per share, of the Company. (Capitalized
terms used but not defined in this Press Release shall have the
meanings ascribed to them in the Merger Agreement.)
Section 2.1(a) of the Merger Agreement provides, among other
things, that at the Effective Time, each Share (other than Excluded
Shares and any Dissenting Shares) will be converted automatically
into and will thereafter represent the right to receive
$10.00 in cash, without interest (the
"Original Merger Consideration").
On August 23, 2013, Gary L. Sample ("Plaintiff") filed a purported
class and derivative action in the Court of Chancery of the
State of Delaware (the "Court")
against the parties to the Merger Agreement and certain directors
and officers of the Company (collectively, the "Defendants"),
asserting, among other things, that the Original Merger
Consideration was unfair and did not reflect the true value of the
Company and all of its assets (the "Litigation").
On February 7, 2014, Plaintiff and
the Defendants (together, the "Parties") entered into a Stipulation
of Settlement (the "Stipulation"), by and through their respective
attorneys, whereby the Parties agreed that, in order to resolve the
Litigation, the parties to the Merger Agreement would, among other
actions, amend the Merger Agreement to increase the Merger
Consideration by $3.00 per share,
from $10.00 per Share to $13.00 per Share, less any incentive fee and
attorneys' fees that may be awarded by the Court to Plaintiff and
Plaintiff's counsel in accordance with the Stipulation (the
"Increased Merger Consideration"). The Defendants specifically deny
that they have engaged in any wrongdoing, deny that they committed
any violation of law, deny that they breached any fiduciary duties,
and deny liability of any kind to Plaintiff, the Company, or its
stockholders. The Increased Merger Consideration will be paid if
the settlement set forth in the Stipulation (the "Settlement") is
approved by the Court and the Merger is consummated pursuant to the
terms of the Merger Agreement as amended by the Second Amendment to
the Merger Agreement, which was entered into by the Company,
Parent, and Merger Sub as of February 7,
2014 (the "Second Amendment").
The Board of Directors of the Company, by affirmative vote of
all of the members of the Board of Directors of the Company other
than Mr. Gumbiner, acting upon the unanimous recommendation of the
Special Committee, has (i) reaffirmed its original determination
that the Merger is substantively and procedurally fair to the
Company's minority and unaffiliated stockholders; (ii) declared
that it is advisable and in the best interests of the Company and
its minority stockholders that the Increased Merger Consideration
be accepted in connection with the Settlement in order to resolve
the Litigation and as an additional benefit to the Company's
minority stockholders if the Settlement is approved by the Court
and the Merger is consummated pursuant to the terms of the Merger
Agreement as amended by the Second Amendment; (iii) approved the
execution, delivery and performance of the Second Amendment; and
(iv) resolved to recommend adoption by the stockholders of the
Company of the Merger Agreement as amended by the Second
Amendment.
If the Settlement is approved by the Court, all known and
unknown claims against the Defendants relating to the Litigation,
the Merger, the Settlement, and investments in securities issued by
the Company between November 6, 2012
and the date of the Merger will be released, including derivative
claims. If the Court does not approve the Settlement, the
Settlement and any actions to be taken with respect to the
Settlement will be of no further force or effect and will be null
and void, provided, however, that any amendment to the Merger
Agreement entered into by the parties thereto shall remain in
effect. In the event that the Court does not approve the
Settlement, the parties to the Merger Agreement have agreed to
proceed with the consummation of the Merger based on the Original
Merger Consideration of $10.00 per
Share, without the $3.00 per Share
increase to the Merger Consideration contemplated by the Second
Amendment, which would involve the resolicitation of stockholder
approval at such price.
The Company has filed a preliminary proxy statement with the SEC
relating to the holding of a special meeting of its stockholders
for the adoption of Merger Agreement. In the near future, the
Company expects to file with the SEC, and subsequently mail to its
stockholders, a definitive proxy statement, and currently expects
that the special meeting of stockholders will be held in March or
April 2014.
The foregoing information only describes certain terms of the
Merger Agreement, as amended by the Second Amendment, and is not a
complete description of all of the parties' rights and obligations
under the Merger Agreement, as amended by the Second Amendment. For
the complete terms, please read: (a) the Merger Agreement
filed as Exhibit 2.1 to the Company's Current Report on Form 8-K
filed with the SEC on June 5, 2013, (b) the Amendment
filed as Exhibit 2.1 to the Company's Current Report on Form 8-K
filed with the SEC on July 12, 2013,
and (c) the Second Amendment filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K filed with the SEC on February 7,
2014.
This press release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements generally can be identified by the use
of forward-looking terminology, such as "may," "might", "will,"
"would," "expect," "intend," "could," "estimate," "should,"
"anticipate", "doubt" or "believe." The Company intends that
all forward-looking statements be subject to the safe harbors
created by these laws. All statements other than statements
of historical information provided herein are forward-looking and
may contain information about financial results, economic
conditions, trends, and known uncertainties. All forward-looking
statements are based on current expectations regarding important
risk factors. Many of these risks and uncertainties are
beyond the Company's ability to control, and, in many cases, the
Company cannot predict all of the risks and uncertainties that
could cause actual results to differ materially from those
expressed in the forward-looking statements. Actual results
could differ materially from those expressed in the forward-looking
statements, and readers should not regard those statements as a
representation by the Company or any other person that the results
expressed in the statements will be achieved. Important risk
factors that could cause results or events to differ from current
expectations are described in the Company's annual report on Form
10-K for the year ended December 21,
2012 under Item 1A –"Risk Factors". These factors are
not intended to be an all-encompassing list of risks and
uncertainties that may affect the operations, performance,
development and results of the Company's business. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The
Company undertakes no obligation to release publicly the results of
any revisions to these forward-looking statements which may be made
to reflect events or circumstances after the date hereof, including
without limitation, changes in its business strategy or planned
capital expenditures, growth plans, or to reflect the occurrence of
unanticipated events, although other risks and uncertainties may be
described, from time to time, in the Company's periodic filings
with the SEC.
SOURCE The Hallwood Group Incorporated
