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Hills Stores Company
(Name of Registrant as Specified In Its Charter)
Dickstein Partners Inc.
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News Release MACKENZIE
PARTNERS, INC.
CONTACTS: 156 FIFTH AVENUE
Jeanne M. Carr NEW YORK, NY 10010
212-929-5916 212 929-5500
FAX 212 929-0308
FOR IMMEDIATE RELEASE:
DICKSTEIN TO SEEK CASH OPTION FOR
PROPOSED HILLS EXCHANGE OFFER
New York, New York, August 29, 1994 -- Dickstein Partners
Inc. today announced that it intends to begin discussions with
investment banks for the purpose of seeking to arrange for a cash
option for the new Hills Stores bonds which would be issued in
Dickstein's proposed Hills stock buyback. Dickstein Partners
Inc. has initiated a consent solicitation to remove and replace
four of Hills Department Stores eight directors. Dickstein
Partners Inc. has proposed that if its nominees are placed on
Hills Department Stores board they will seek to implement an
exchange offer, whereby $27 principal amount per share of a new
12% twelve-year holding company bond is offered for up to 5.5
million shares of Hills stock.
Although no assurances can be given, Dickstein Partners Inc.
believes that if it is successful in placing its candidates on
the board, it should be feasible for Hills to arrange for a
standby purchaser for the new bond at less than a ten percent
discount to par. As a result, Dickstein Partners Inc. stated
that if its nominees are placed on the board they will use their
best efforts to arrange for a standby purchaser of the new bonds
subject of course to their fiduciary obligations as directors.
Notwithstanding this desire to provide a cash option,
Dickstein Partners Inc. believes that the new bonds will trade at
materially less than a ten percent discount to par.
Dickstein Partners Inc. also announced that as a result of
input from other Hills shareholders its nominees now intend that
the new bonds pay interest only in cash and have covenants
regarding debt incurrence and dividend restrictions similar to
those of the Hills existing public senior debt.
Dickstein Partners Inc. also reiterated that its current
intention is not to tender any of its shares into the exchange
offer because it believes that the intrinsic value of the Company
is materially in excess of $27 per share.
Mark Dickstein said "We are seeking to provide a cash option
and we are eliminating the PIK option and would agree to tight
covenants on the new bond in an attempt to be responsive to
the desires of the Hills shareholders."
Mr. Dickstein further said "We urge each Hills shareholder
to expeditiously sign and return our consent materials. It seems
that every week the existing Hills board erects another obstacle
to shareholder democracy. We are particularly outraged that in
response to our consent solicitation the board has announced that
it has changed senior management employment agreements so that if
we are successful in placing our candidates on the board, Hills
senior management, which we highly value, can simply quit, yet
still receive huge golden parachute payments."
Mr. Dickstein added: "We believe this act to be an
incredibly abusive entrenchment tactic which appears to be a
classic example of a board of directors forgetting that it is not
they, but the shareholders who own the company. We believe these
actions to have been a breach of duty by the existing board and a
waste of corporate assets. We believe that it is in the best
interests of all of Hills shareholders for our nominees to be
placed on the board as soon as possible before the existing board
takes additional steps that might further permanently impair
shareholder value."
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