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.