1
OFFER TO PURCHASE SHARES FOR
SHAREHOLDERS OF HALLWOOD ENERGY CORPORATION
THIS OFFER WILL EXPIRE ON NOVEMBER 22, 1996
UNLESS EXTENDED.
To Our Clients Who Hold Shares of:
Hallwood Energy Corporation
Enclosed for your consideration are materials relating to an Offer
being made by The Hallwood Group Incorporated to Shareholders of Hallwood Energy
Corporation. On October 9, 1996, Hallwood Energy Corporation (the "Company")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the acquisition of all publicly held shares of common stock of the Company
by The Hallwood Group Incorporated ("Hallwood Group"). Hallwood Group currently
beneficially owns approximately 82% of the outstanding shares of the Company.
Pursuant to the Merger Agreement, Hallwood Group commenced today a
tender offer to purchase any and all outstanding shares of the Company's common
stock at a price of $19.50 per share in cash. If at least a majority of the
shares not now owned by Hallwood Group are tendered, which would mean that
Hallwood Group would own at least 90% of the outstanding shares after the tender
offer, and after satisfaction of certain other conditions, the Company will be
merged with and into Hallwood Group. Each share of the Company's common stock
then outstanding (other than shares of stockholders properly exercising
appraisal rights under Texas law and shares owned by Hallwood Group) will be
converted into the right to receive $19.50 per share in cash. Following
consummation of the merger, the Company will no longer exist.
This material is being forwarded to you as the beneficial owner of
Shares carried by us in your account but not registered in your name on the
records of ▇▇▇▇▇▇▇▇ Energy Corporation. A tender of the Shares may only be made
on your behalf by us, as the holder of record, pursuant to your instructions.
Accordingly, if you wish for us to tender your Shares on your behalf pursuant to
the Offer, you must notify us in writing. PLEASE READ ALL OF THE ENCLOSED
MATERIAL CAREFULLY.
Important:
1. The Offer will expire on November 22, 1996, unless extended by Hallwood
Energy Corporation. Accordingly, your instructions should be forwarded to us as
soon as possible so as to permit sufficient time to tender your Shares for the
Offer.
2. The Depositary will send a check for the shares after the Offer expires and
Hallwood Group accepts the tender of the shares.
3. The price paid per Share will be $19.50. We will forward the certificate(s)
relating to your Shares to the Depositary as soon as practicable after we
receive your authorization.
