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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /_/
Filed by a Party other than the Registrant /x/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Hills Stores Company
_________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Dickstein Partners Inc.
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2).
/x/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).*
/_/ Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
_______________________________________________________________
(2) Aggregate number of securities to which transaction
applies:
_______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
________________________________________________________________
_________________________
(1) Set forth the amount on which the filing fee is calculated
and state how it was determined.
* Previously paid.
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_______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount Previously Paid:
_________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________
(3) Filing Party:
_________________________________________________________________
(4) Date Filed:
_________________________________________________________________
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News Release
MACKENZIE
PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
212 929-5500
FAX: 212 929-0308
FOR IMMEDIATE RELEASE
Contact: Stan Kay
MacKenzie Partners, Inc.
212-929-5940
DICKSTEIN PARTNERS WILLING TO RAISE OFFER FOR HILLS STORES
NEW YORK, NEW YORK (June 5, 1995) -- Dickstein Partners Inc.
today announced that it has mailed to Hills shareholders proxies
to elect its slate of nominees to the Hills Board and that in
response to Hills rejection of its merger proposal, its
President, Mark Dickstein, has sent a letter to Hills Chief
Executive Officer, Michael Bozic, which underscores Dickstein
Partners' willingness to raise its offer to acquire Hills. The
contents of the letter are as follows:
Dear Mike:
We were disappointed, but not surprised, by your Board's
rejection of our most recent merger proposal and by your
Board's refusal to commence an auction process to see if this
bid can be improved upon.
In your letter to the Hills shareholders you imply that
if an auction of Hills is to occur, better for the auctioneers
not to also be bidders. Firstly, if the existing Board were
to conduct the auction, we would agree to defer our attempt to
replace the Board so long as our rights were not impaired.
Secondly, if our nominees are elected, then the sale of Hills
would be conducted by an independent special committee of the
Board comprised of our nominees, Chaim Edelstein and John Burden,
plus hopefully yourself and Jack Reen, who we have
previously said we would intend to appoint to the new Hills
Board.
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I would also like to state that if our nominees are
elected to the Hills Board, I pledge that Dickstein Partners
will use its best efforts to ensure the following: One, the
new Chairman of Hills would be compensated at substantially less
than the $250,000 per year that your existing Chairman is paid.
Two, if a board member is a consultant he would receive
substantially less than the $750,000 your one board member-
consultant received last year. Three, any board member-
consultants would not be eligible for a $2 million golden
parachute payment of the type that your existing Board has
agreed to make.
I would also like to point out that we believe that your
Chairman has a conflict of interest regarding the sale of Hills.
It is our understanding that entities which he controls own
approximately 340,000 rights to purchase Hills stock for $.01
per share which would be rendered worthless if another entity
were to acquire Hills. As a result, I wonder whether he can
truly act in a disinterested fashion in this matter.
On the topic of "golden parachutes" not all the news is
bad. As you are probably aware, in the event of a change of
control that the existing Hills Board does not approve, then
in fact there will be approximately $20 million of payments
that must be made to members of the management and one board
member even if the beneficiaries continue to be employed by
Hills. However, if the existing Board approves of the change
in control, then the severance payments are only made if the
respective individual is no longer employed by Hills in a
similar capacity. Obviously, in such a circumstance a
prospective buyer for Hills can, all other things being equal,
afford to pay a higher price for Hills. And, due to the fact
that our stated preference is to continue to employ all of
Hills' existing management, if the existing Hills Board does
not automatically trigger the $20 million golden parachute
upon a change in control then we believe it probable that we
can raise our existing offer.
I also think that if the Hills Board does not approve of
this change in control it would be ignoring its fiduciary
obligations to shareholders by effectively transferring $20
million from shareholders to management just when a sale of
the company is about to occur.
Your message to Hills shareholders can be summarized as
follows:
1) This is the wrong time to sell the Company because the
stock price is too low. When is the right time, when
the stock price is high? I don't get it.
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2) If the Dickstein nominees are elected there is no
guarantee the Company will be sold. Firstly, we pledge
to use our best efforts to sell the Company. Secondly,
we have no problem with the existing Board acting as
auctioneer so long as the process is fair. Thirdly, we
believe we can consummate our merger proposal by
September if we can expeditiously enter into a merger
agreement with Hills.
By voting their proxies the Hills shareholders will
determine the outcome of this situation. As the votes are
counted over the next three weeks, we continue to be willing
to delay our proxy contest if the existing Board postpones the
upcoming annual meeting so as to allow for the sale of the
Company to the highest bidder.
Sincerely,
Mark Dickstein
Mark Dickstein commented, "The Hills shareholders now need
to make the choice whether they prefer a low stock price combined
with a risky, growth strategy or do they prefer the sale of the
Company for at least as much consideration as our merger
proposal.
Numerous interested parties, both financial and strategic,
have expressed interest in working with us to acquire Hills. We
expect to soon sign letters of intent with several financial
institutions regarding the investment of equity capital in our
proposed acquisition of Hills."
