SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Hills Stores Company
(Name of Registrant as Specified In Its Charter)
Dickstein Partners Inc.
(Name of Person(s) Filing Proxy Statement)
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News Release MACKENZIE
PARTNERS, INC.
CONTACT: 156 FIFTH AVENUE
Daniel H. Burch NEW YORK, NY 10010
212-929-5500 212 929-5500
FAX 212 929-0308
FOR IMMEDIATE RELEASE:
HILLS REJECTS DICKSTEIN SETTLEMENT PROPOSAL
NEW YORK, N.Y. (September 20, 1994) - Dickstein Partners
Inc. today announced that if it successfully removes and replaces
four of the eight Hills Stores directors in its consent
solicitation which began on August 16, its nominees would seek to
have Hills purchase 4.63 million of its shares for $27 principal
amount per share ($125 million) of a new holding company 12% cash
pay twelve-year debentures. Previously Dickstein had announced
that its nominees would pursue a 5.5 million share, or $150
million buyback.
Dickstein Partners also announced that in an attempt to
expeditiously and consensually resolve the current situation it
has made a settlement proposal to Hills (see below) which
includes, among other things, the following terms:
1) Termination of the consent solicitation
2) $100 million stock buyback utilizing Dickstein's
structure ($27 for 3.7 million shares)
3) Three Dickstein designees are appointed to Hills Board
4) Hills recent golden parachute amendments are rescinded
5) Poison pill threshold is raised from 15% to 20%
Mark Dickstein, President of Dickstein Partners Inc. said
"Several large Hills shareholders have told us that they prefer a
$100 million to $125 million buyback over our original $150
million proposal. This lower debt level should easily afford
Hills the opportunity to, if warranted, pursue a growth strategy
of opening ten to twenty new stores a year. Furthermore, our
settlement proposal would only require $12 million of cash in
1995 as compared to the $35 million Hills has told several
shareholders it is willing to spend to repurchase stock."
Mr. Dickstein also said "This settlement proposal is on the
table through September 26. In the meantime we will be
continuing to solicit consents, a process which to date is going
well. Company representatives in rejecting our proposal have
informed us that in their view a majority of the Hills
shareholders prefer a $35 million buyback using cash to a $100
million buyback proposal. As a result, our consent solicitation
has in essence become a referendum as to which proposal the
shareholders prefer."
Wilbur Ross of Rothschild, Inc., financial advisor to
Dickstein commented, "The Dickstein proposal in no way
jeopardizes the company or compromises any realistic growth
plan."
DICKSTEIN SETTLEMENT PROPOSAL
Dickstein will terminate its consent solicitation if Hills agrees
to all of the following items:
1) $100 million buyback using Dickstein Partners Inc.
structure, with up to $2 million to be paid to a third party
standby underwriter.
2) Dickstein Partners Inc. reimbursed for up to $1 million of
expenses including success fees to Rothschild and MacKenzie.
3) Two incumbent Hills directors resign and Mark Dickstein,
Mark Kaufman and one other Dickstein designee is appointed
to Hills board.
4) Hills' recent golden parachute amendments are rescinded.
5) The threshold for triggering the poison pill is raised from
15% to 20%.
6) Thru 3/1/97 - Dickstein Partners Inc. will not:
a) seek to remove or replace the remaining six incumbent
directors
b) seek to increase its ownership position to more than
20% of Hills voting stock
7) Thru 3/1/97 - Hills agrees to support the reelection of the
Dickstein directors.
8) The corporate charter is amended so that any action by the
board on the following items require more than a two-thirds
vote:
a) employment agreements (including modifications of
existing agreements)
b) changing the poison pill
c) expanding the size of the board, or changing the timing
or manner in which directors are elected or nominated.
d) issuing or granting new stock or new stock options
9) Registration Rights on demand for any stock owned by
Dickstein Partners Inc. or its affiliates.
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