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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
(Amendment No. 1)
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
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HILLS STORES COMPANY
(Name of Subject Company)
HSC Acquisition Corp.
Ames Department Stores, Inc.
(Bidders)
Common Stock, $.01 par value
Series A Convertible Preferred Stock, $.10 par value
(Titles of Classes of Securities)
431692102
431692201
(CUSIP Numbers of Classes of Securities)
David H. Lissy, Esq.
Senior Vice President, General Counsel
and Corporate Secretary
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, Connecticut 06067-2598
Telephone: (860) 257-2578
Facsimile: (860) 257-5160
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
Copy to:
Jeffrey J. Weinberg, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
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December 16, 1998
(Date of Event which Requires Filing of this Statement)
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TENDER OFFER
This Amendment No. 1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 filed on November 18, 1998, relating to the offer by HSC
Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of Ames Department Stores, Inc., a Delaware corporation ("Parent"),
to purchase (i) all outstanding shares of Common Stock, par value $0.01 per
share (the "Common Stock"), including the preferred stock purchase rights
associated therewith issued pursuant to the Rights Agreement, dated as of August
16, 1994, by and between Hills Stores Company, a Delaware corporation (the
"Company") and Chemical Bank as Rights Agent (the "Rights" and, together with
the Common Stock, the "Common Shares"), and (ii) all outstanding shares of
Series A Convertible Preferred Stock, par value $0.10 per share ("the Preferred
Stock"), including the associated Rights (the Preferred Stock, together with the
associated Rights, the "Preferred Shares"; and, together with the Common Shares,
the "Shares"), of the Company, at a price of $1.50 per Share, net to the seller
in cash, without interest, plus a Deferred Contingent Cash Right (as defined and
described in Purchaser's Offer to Purchase dated November 18, 1998 (the "Offer
to Purchase")), upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related Letter of Transmittal (together with the Offer
to Purchase, the "Offer"). Unless otherwise indicated, the capitalized terms
used herein shall have the meanings specified in the Offer to Purchase.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
On December 16, 1998, the Purchaser issued a press release announcing that
it has extended the period during which the Offer will remain open to 12:00
Midnight, Eastern time, on Wednesday, December 30, 1998. The full text of the
press release is set forth in Exhibit (a)(10) and is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
On December 16, 1998, the Company consented to the extension described
under Item 5 above. The text of this letter is set forth in Exhibit (c)(4) and
is incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(10) Text of Press Release, dated December 16, 1998, issued by Ames
Department Stores, Inc.
(c)(4) Text of letter, dated December 16, 1998, from Hills Stores Company to
Ames Department Stores, Inc. and HSC Acquisition Corp.
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SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: December 16, 1998
HSC Acquisition Corp.
BY: /s/ David H. Lissy
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Name: David H. Lissy
Title: Vice President--Secretary
Ames Department Stores, Inc.
BY: /s/ David H. Lissy
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Name: David H. Lissy
Title: Senior Vice President--
General Counsel and Corporate Secretary
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INDEX TO EXHIBITS
Exhibit Sequential
Page No.
(a)(10) Text of Press Release, dated December 16, 1998, issued by Ames
Department Stores, Inc.
(c)(4) Text of letter, dated December 16, 1998, from Hills Stores Company to
Ames Department Stores, Inc. and HSC Acquisition Corp.
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AMES AMES DEPARTMENT STORES, INC.
- ---- 2418 MAIN STREET
ROCKY HILL, CT 06067-2598
(860) 257-2000
For Immediate Release
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Ames Revises Offer For Hills Senior Notes:
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Final Tender and Consent Dates Set
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Rocky Hill, Conn., December 16, 1998 - Ames Department Stores, Inc. (NASDAQ:
AMES) said today that it has revised its offer to purchase with respect to the
$195 million (principal amount) of 12-1/2% Senior Notes due 2003 of Hills Stores
Company (NYSE: HDS).
Ames said it would now pay total cash consideration of $700 per $1000 principal
amount of the Notes, provided a minimum of 85% of the outstanding Notes are
tendered. When the tender offer was announced on November 12, 1998, Ames offered
to purchase a minimum of 66 2/3% of the Notes for $550 per $1000 principal
amount. The offer continues to include a portion of a potential recovery in the
form of deferred contingent cash rights with regards to litigation initiated by
Hills against certain of Hills' former directors. The cash consideration
includes both accrued and unpaid interest, up to but not including the payment
date, as well as a fee of $30 per $1000 principal amount of Notes for the
consent of the noteholders to the modification or elimination of certain
covenants contained in the indentures governing the Notes.
The deadline for receipt of consents in order to qualify for the consent fee
will only be extended to 5:00 p.m. Eastern Time on December 24, 1998. Ames has
extended the deadline for tender of the Notes until 12:00 midnight Eastern Time
on December 30, 1998.
Ames estimates that the revisions to the tender for the Notes increases the
overall cost of the transaction by approximately $9 million, a portion of which
will be recovered through savings in annual interest expense on the reduced
number of Notes outstanding through 2003.
Ames said that a group of noteholders, including PPM America, Inc. who, together
own or control $65.5 million principal amount (or approximately 34%) of the
outstanding Notes, have signed an irrevocable agreement to tender their Notes
and to deliver consents with respect to their Notes. As of the close of business
on December 16, 1998, a further $39.3 million (or approximately 20%) of the
Notes had been tendered.
(more)
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The terms of the tender offer for all outstanding Hills common and preferred
stock remain unchanged. At least 60% of the outstanding shares of Hills must be
tendered by the deadline, which has also been extended to 12:00 midnight Eastern
Time on December 30, 1998. As of the close of business on December 16, 1998, a
total of 7,961,536 shares of Hills common and preferred stock had been tendered
under the offer, representing approximately 71%.
Hills has stated that if the tender offer is not successful and its recent
operating trend continues, there is a substantial prospect that it would be
required to seek protection under the federal bankruptcy laws in the near
future. In that event, it is likely that any recovery for noteholders and
stockholders of Hills would be below the amounts that would be received in the
respective tender offers.
With $2.2 billion in annual net sales, Ames Department Stores, Inc., operates
301 stores in 14 Northeastern, Middle Atlantic and Midwestern states and the
District of Columbia. Ames is a full-line discount retailer, offering a broad
range of merchandise categories including family apparel, housewares, domestics,
electronics, ready-to-assemble and patio furniture, jewelry, craft and pet
supplies, health and beauty care items, stationery, sporting goods, toys,
seasonal products and more.
# # #
Contacts:
Rolando de Aguiar
Executive Vice President and Chief Financial Officer
Ames Department Stores, Inc.
(860) 257 5317
Owen Blicksilver
Managing Director
Dewe Rogerson, Inc.
(212) 419 4283
HILLS STORES COMPANY
15 DAN ROAD
CANTON, MASSACHUSETTS 02021
December 16, 1998
Ames Department Stores, Inc.
HSC Acquisition Corp.
2418 Main Street
Rocky Hill, Connecticut 06067
Gentlemen:
Reference is made to the Agreement and Plan of Merger, by and among
Ames Department Stores, Inc. ("Parent"), HSC Acquisition Corp. ("Purchaser"),
and Hills Stores Company (the "Company"), dated as of November 12, 1998 (the
"Merger Agreement"). Capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Merger Agreement.
The Company hereby consents, pursuant to Section 1.02(a) of the
Merger Agreement, in connection with the increase by Parent and Purchaser of the
aggregate cash consideration payable to each holder of Notes pursuant to the
Note Offer to Purchase and the related Consent Solicitation from 55% to 70% of
the principal amount of the Notes, to the increase by Purchaser of the
percentage in aggregate principal amount of outstanding Notes needed to satisfy
the Minimum Note Condition from at least 66 2/3% in aggregate principal amount
of the then outstanding Notes to at least 85% in aggregate principal amount of
the then outstanding Notes.
In addition, each of Parent, Purchaser and the Company hereby agree
that (i) Section 9.03(j) of the Merger Agreement is hereby amended to add after
the words "prior to the consummation of the Offer" the words "or, if not so
designated prior to the consummation of the Offer, by a majority of those
persons serving as directors of the Company on the date of consummation of the
Offer as promptly as practicable thereafter but in no event later than January
31, 1999," and (ii) paragraph 15 of the Disclosure Schedule is hereby amended as
provided on Schedule 1 hereto.
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Except as amended hereby, the Merger Agreement shall continue in
full force and effect.
Very truly yours,
HILLS STORES COMPANY
By: /s/ Chaim Edelstein
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Name: Chaim Edelstein
Title: Chairman and Chief
Executive Officer
Accepted and Agreed to:
AMES DEPARTMENT STORES, INC.
By: /s/ Rolando de Aguiar
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Name: Rolando de Aguiar
Title: Executive Vice President
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Schedule 1
Paragraph 15 of Schedule 5.01 is amended by deleting such paragraph as it now
exists and inserting in lieu thereof the following:
"15. The Company may defer making interest payments on the Notes, rental
payments on leases and payments of accounts payable and other liabilities."
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