SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 15
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Hills Stores Company
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
431692102
(CUSIP Number)
David P. Levin, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
(212) 715-9100
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
May 24, 1995
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box: /_/
Check the following box if a fee is being paid with this
statement: /_/
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Amendment No. 15 to Schedule 13D
This Statement amends the Schedule 13D, dated May 6,
1994, as amended on July 22, 1994, July 28, 1994, August 11,
1994, August 17, 1994, August 30, 1994, September 21, 1994,
September 26, 1994, February 23, 1995, March 7, 1995, April 27,
1995, May 4, 1995, May 5, 1995, May 12, 1995 and May 17, 1995
(the "Schedule 13D"), filed by Dickstein & Co., L.P., Dickstein
International Limited, Dickstein Focus Fund L.P., Dickstein
Partners, L.P., Dickstein Partners Inc. and Mark Dickstein with
respect to the Common Stock, $.01 par value (the "Common Stock"),
of Hills Stores Company, a Delaware corporation (the "Company").
Notwithstanding this Amendment No. 15, the Schedule 13D speaks as
of its respective dates. Capitalized terms used without
definition have the meanings ascribed to them in the Schedule
13D.
I. Item 4 of the Schedule 13D, "Purpose of the Transaction,"
is amended by adding the following:
"On May 24, 1995, Dickstein Inc. announced that it had
increased the consideration under its proposal to acquire the
Company from $25 per share to $27 per share, consisting of $22
per share in cash and $5 per share in debt securities. The debt
securities, which would be issued by a holding company, would
bear interest at 14% per annum (payable in kind for up to five
years) and mature in twelve years. Dickstein Inc. also reported
that it had been advised by NatWest Bank N.A. ('NatWest') and
National Westminster Bank, plc, New York Branch ('NatWest
Markets') that they are 'highly confident' with respect to
arranging all of the debt financing necessary to consummate the
acquisition proposal.
Mark Dickstein, President of Dickstein Inc., sent a letter
to Michael Bozic, President and Chief Executive Officer of the
Company, informing him of these developments. A copy of
Dickstein Inc.'s press release in respect of the developments,
including the text of Mr. Dickstein's letter to Mr. Bozic, is
attached hereto as Exhibit 14. A copy of NatWest's 'highly
confident' letter is attached hereto as Exhibit 15. A copy of
NatWest Markets' 'highly confident' letter is attached hereto as
Exhibit 16."
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II. Item 7 of the Schedule 13D, "Material to be Filed as
Exhibits," is amended by adding the following Exhibits:
"Exhibit 14 Press release, dated May 24, 1995.
Exhibit 15 Letter, dated May 24, 1995, from NatWest
to Dickstein Inc.
Exhibit 16 Letter, dated May 24, 1995, from NatWest
Markets to Dickstein Inc."
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SIGNATURE
After reasonable inquiry and to the best knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this Statement is true, complete and
correct.
Date: May 24, 1995
DICKSTEIN & CO., L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein
Partners, L.P., the general partner
of Dickstein & Co., L.P.
/s/ Alan Cooper
Name: Alan Cooper
DICKSTEIN INTERNATIONAL LIMITED
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
agent of Dickstein International
Limited
/s/ Alan Cooper
Name: Alan Cooper
DICKSTEIN FOCUS FUND L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein
Partners, L.P., the general partner
of Dickstein Focus Fund L.P.
/s/ Alan Cooper
Name: Alan Cooper
DICKSTEIN PARTNERS, L.P.
By: Alan Cooper, as Vice President
of Dickstein Partners Inc., the
general partner of Dickstein
Partners, L.P.
/s/ Alan Cooper
Name: Alan Cooper
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DICKSTEIN PARTNERS INC.
By: Alan Cooper, as Vice President
/s/ Alan Cooper
Name: Alan Cooper
/s/ Mark Dickstein
Name: Mark Dickstein
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Exhibit 14
Contact: Stanley J. Kay
MacKenzie Partners, Inc.
212-929-5940
FOR IMMEDIATE RELEASE:
DICKSTEIN PARTNERS RAISES BID FOR
HILLS STORES AND DISCLOSES FINANCING
NEW YORK, N.Y. (May 24, 1995) -- Dickstein Partners Inc.
today announced that in a letter sent by its President, Mark
Dickstein to Michael Bozic, Chief Executive Officer of Hills
Stores Co. (NYSE: HDS), Dickstein Partners increased its offer
to acquire Hills from $25 per share to $27 per share, consisting
of $22 per share in cash and $5 per share in debt securities.
The letter also discloses that NatWest Bank N.A. and NatWest
Markets are "highly confident" with respect to all of the debt
financing necessary to consummate this proposal. The text of
the letter is as follows:
Dear Mike:
At this time I am pleased to report that, based on the
strong indications of interest we have received regarding the
investment of equity capital in our proposed acquisition and
in consultation with NatWest Markets, Dickstein Partners is now,
subject to standard conditions, increasing its offer to acquire
Hills Stores to $27 per share, comprised of $22 per share in cash
and $5 principal amount per share of a new 14% (payable in kind
for up to five years) holding company debenture maturing in
twelve years.
At this time I can also report that NatWest Bank N.A. has
advised us that it is "highly confident" that it can arrange for
the bank debt portion of the acquisition financing for this
proposal. In addition, NatWest Markets has advised us that it
is "highly confident" that the Senior Subordinated debt portion
of the acquisition financing can be successfully placed. Both
"highly confident" letters are subject to an investment of
$75 million of equity capital and certain other conditions. For
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your information I have included copies of the "highly confident"
letters. I would hope that the Hills Board's concerns regarding
our financing have now been satisfied.
NatWest Bank's confidence in its ability to arrange for our
acquisition financing in no way affects its also being "highly
confident" in arranging for up to $335 million of new senior
secured bank financing which may be required, together with
Hills' available cash, to refinance those portions of Hills'
existing debt (i.e., the working capital facility and the $160
million of public debt) which could accelerate upon the change of
control that will occur if our nominees are elected to the Hills
Board.
At this time we request that Hills commence an auction
process and allow us (along with any other potential buyers) to
perform due diligence in order to determine whether this
acquisition proposal can be improved upon.
Needless to say, if the Hills Board does not put the company
up for sale, then we will continue to move forward with our
attempt to elect our slate of nominees to the Hills Board at the
upcoming annual meeting. Our nominees would seek to sell Hills
in an auction process to the highest bidder; an auction in which
Dickstein Partners intends to offer at least as much as its
current proposal.
In order to clear up what may be a misunderstanding, I want
to make clear that if we acquire Hills our preference is to
retain all existing management, including yourself. We have
taken the precaution of retaining Chaim Edelstein to serve as
interim Chief Executive Officer only in the event that you decide
to leave.
Sincerely,
Mark Dickstein
Mark Dickstein commented, "Now that our ability to finance
this acquisition should no longer be in doubt, we hope that the
Hills Board will expeditiously begin a process which leads to the
sale of the company. If Hills does not commence an auction
process we will continue our solicitation to elect our slate of
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nominees to the Hills Board at the upcoming Annual Meeting. We
anticipate mailing our definitive proxy materials to Hills
shareholders shortly."
Dickstein Partners, Inc. is a New York based investment firm
which owns 1,113,459 shares of Hills stock, representing approxi-
mately 10.3% of the shares of the company.
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National Westminster Bank USA
175 Water Street
New York, NY 10038
212-602-1000
May 24, 1995
Dickstein Partners Inc.
9 West 57th Street - Suite 4630
New York, New York 10019
Gentlemen:
You have advised NatWest Bank N.A. ("NatWest") of your
interest in acquiring all of the outstanding shares (the
"Acquisition") of Hills Stores Company, a Delaware corporation
(the "Company") at price per share of $27.00.
You have informed us that, assuming the foregoing share
price, the aggregate purchase price for all of the Company's
capital stock will be approximately $326 million, which, together
with fees and expenses and all funded debt of the Company to be
assumed or refinanced (and after taking into account
approximately $58 million of the Company's cash to be used for
the Acquisition), would result in a total transaction cost of
approximately $630 million, which would be met by (a) $75 million
of equity investments (the "Equity Investment"), (b) $55 million
value of holding company securities (the "Holding Company
Securities") issued in exchange for the Company's capital stock,
(c) a $150 million bank term loan, together with a $225 million
revolving credit facility which will be drawn at closing only to
the extent necessary to refinance the then outstanding working
capital loans of the Company (the "Senior Secured Financing"), to
the Company, (d) approximately $150 million of the Company's
existing capital leases, and (e) the sale of approximately $200
million of the Company's senior subordinated notes (the "Senior
Subordinated Notes").
Based on the information we have received to date, NatWest
is highly confident that under current market conditions it could
arrange the Senior Secured Financing. The foregoing is expressly
subject to (a) the absence of any material adverse condition
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affecting, or change in, the business, assets, liabilities,
financial condition or prospects of the Company, (b) performance
by the Company prior to consummation of the Acquisition
substantially in compliance with the projections furnished by you
to NatWest prior to the date hereof, (c) the execution of
definitive documentation containing terms satisfactory in all
respects to NatWest with respect to the Senior Secured Financing
(including satisfactory collateral therefor) and the Company's
other debt and equity (including, without limitation, the Senior
Subordinated Notes, the Equity Investment and the Holding Company
Securities), (d) satisfactory completion of NatWest's legal and
business due diligence review, (e) the execution by you and the
Company of definitive documentation containing terms satisfactory
in all respects to NatWest with respect to the Acquisition, (f)
the obtaining of any necessary governmental or contractual
consents and NatWest's satisfaction in all respects with all
other legal matters, (g) the absence of any competing placement
or arrangement of any debt securities of the Company prior to
or during the arrangement of the Senior Secured Financing other
than the Senior Subordinated Notes; provided the placement or
arrangement of such other debt financings are coordinated with
the arrangement of the Senior Secured Financing in a manner
satisfactory to NatWest, (h) NatWest's satisfaction with the
Company's capitalization and capital structure consistent with
the capitalization and capital structure described above
(including as to the Equity Investment and the Senior
Subordinated Notes) after giving effect to the Acquisition and
the financings therefor, (i) market conditions and (j) our
assumption that the Acquisition will be consummated prior to
January 31, 1996 at the per share price indicated above.
As you know, the potential reception, as well as the terms
and pricing, of the Senior Secured Financing will be subject to,
among other things, market conditions prevailing from time to
time. Please also note that this letter does not constitute
either a guarantee that the Senior Secured Financing will be
successfully arranged or a commitment to lend any portion
thereof.
Very truly yours,
NATWEST BANK N.A.
By: Michael Richmond
Title: VP
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NatWest Markets
Corporate & Investment Banking
175 Water Street
New York, NY 10038-4924
Telephone: (212) 602-4800
May 24, 1995
Dickstein Partners, Inc.
9 West 57th Street, Suite 4630
New York, NY 10019
Gentlemen:
We refer to the letter agreement (the "Engagement Letter")
between Dickstein Partners, Inc. and National Westminster Bank
Plc, New York Branch ("NatWest Markets"), dated May 2, 1995,
under which Dickstein Partners, Inc. and its affiliates (the
"Company") have engaged NatWest Markets as their exclusive
financial advisor in connection with a proposed Transaction (as
defined in the Engagement Letter) involving the acquisition by
the Company of Hills Stores Company ("Hills Stores").
You have informed us that, assuming a price of $27 per share
in the Transaction for the outstanding capital stock of Hills
Stores, the aggregate purchase price for such capital stock would
be approximately $326 million, which, together with fees and
expenses and the funded debt of Hills Stores to be assumed or
refinanced (and after taking into account approximately $58
million of Hills Stores' cash to be used for the Transaction),
would result in a total Transaction cost of approximately $630
million, which would be met by (a) $75 million of equity
investments, (b) $55 million value of holding company securities
issued in exchange for Hills Stores' capital stock, (c) a $150
million bank term loan to Hills Stores (in addition to Hills
Stores' $225 million revolving credit facility), (d) approximate-
ly $150 million of Hills Stores' existing capital leases, and (e)
the sale of approximately $200 million of Hills Stores' senior
subordinated notes (the "Senior Subordinated Notes").
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NatWest Markets is pleased to confirm its interest in acting
as an agent for the placement of the Senior Subordinated Notes,
subject to our completion of a legal and business due diligence
review, mutual agreement with respect to a co-manager for the
placement and the execution and delivery of a placement agency
agreement setting forth customary terms, provisions and
conditions.
Based on the information we have received to date, and
current market conditions, we are highly confident that the
Senior Subordinated Notes can be successfully placed in today's
market. The foregoing is expressly subject, however, to
(i) satisfactory terms and conditions of the Senior Subordinated
Notes, (ii) the cooperation of all interested parties and
satisfactory resolution of all other components of the
Transaction, (iii) the absence of any material condition
affecting, or change in, the business, assets, liabilities,
financial condition or prospects of Hills Stores or in Hills
Stores' capitalization or capital structure, (iv) such matters
as may be disclosed by our legal and business due diligence
review, (v) the receipt of minimum credit ratings of B- from
Standard & Poor's Corporation and B3 from Moody's Investors
Service for the Senior Subordinated Notes, and (vi) market
conditions for new issues of high-yield debt and conditions of
the financial and capital markets generally.
This letter does not constitute a guarantee concerning the
successful placement of the Senior Subordinated Notes or a
commitment on the part of NatWest Markets or any of its
affiliates to place, underwrite or purchase any of the Senior
Subordinated Notes.
This letter is intended solely for use by the Company
in connection with the Transaction. While it may be delivered
in this connection in its entirety to Hills Stores and other
interested parties and disseminated in its entirety publicly,
neither the Company nor its representatives shall quote from,
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excerpt or summarize this letter or purport to describe,
characterize or summarize the views of NatWest Markets expressed
herein without the prior consent of NatWest Markets.
Very truly yours,
National Westminster Bank Plc
New York Branch
By: J.P. Adams
Title: Executive Vice President
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