HILLS STORES CO /DE/
SC 13D/A, 1998-11-10
VARIETY STORES
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                        
                                  SCHEDULE 13D
                                 (Rule 13d-101)
                                        
                    Under the Securities Exchange Act of 1934
                                (Amendment No. 7)
                                        
                              HILLS STORES COMPANY
- --------------------------------------------------------------------------------
                                (Name of Issuer)
                                        
                          Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
                         (Title of Class of Securities)
                                        
                                    431692102
               ---------------------------------------------------
                                 (CUSIP Number)
                                        
                             Wendy Schnipper Clayton
                           DDJ Capital Management, LLC
                           141 Linden Street, Suite 4
                            Wellesley, MA  02482-7910
                                  781-283-8500
- --------------------------------------------------------------------------------
 (Name, address and telephone number of person authorized to receive notices and
                                 communications)
                                        
                                November 4, 1998
- --------------------------------------------------------------------------------
             (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 [   ].
                                        
                         (Continued on following pages)
                                        
                              (Page 1 of 10 Pages)

<PAGE>

                                  SCHEDULE 13D
CUSIP NO. 431692102                       Page 2 of 10 Pages


1    NAME OF REPORTING PERSON
     S.S. OR  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
     DDJ Capital Management, LLC
     04-3300754
2    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
     SEE ITEM #5                             (a) [ X ]
                                             (b) [    ]
3    SEC USE ONLY
4    SOURCE OF FUNDS*
     OO
5    CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
     2(d) or 2(e)                            [     ]
6    CITIZENSHIP OR PLACE OF ORGANIZATION
     Commonwealth of Massachusetts

NUMBER OF           7         SOLE VOTING POWER
SHARES                        474,274
BENEFICIALLY        8         SHARED VOTING POWER
OWNED BY
EACH                9         SOLE DISPOSITIVE POWER
REPORTING                     474,274
PERSON WITH         10        SHARED DISPOSITIVE POWER


11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
     474,274
12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
     [     ]
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
     4.5%
14   TYPE OF REPORTING PERSON *
     OO
                      *SEE INSTRUCTIONS BEFORE FILLING OUT!
                                        
<PAGE>
                                        
                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 3 of 10 Pages


1    NAME OF REPORTING PERSON
     S.S. OR  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
     DDJ Overseas Corp.
     98-01511108
2    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
     SEE ITEM #5                             (a) [ X ]
                                             (b) [    ]
3    SEC USE ONLY
4    SOURCE OF FUNDS*
     WC
5    CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
     2(d) or 2(e)                            [     ]
6    CITIZENSHIP OR PLACE OF ORGANIZATION
     Cayman Islands

NUMBER OF           7         SOLE VOTING POWER
SHARES                        457,224
BENEFICIALLY        8         SHARED VOTING POWER
OWNED BY
EACH                9         SOLE DISPOSITIVE POWER
REPORTING                     457,224
PERSON WITH         10        SHARED DISPOSITIVE POWER


11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
     457,224
12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
     [     ]
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
     4.4%
14   TYPE OF REPORTING PERSON *
     CO
                      *SEE INSTRUCTIONS BEFORE FILLING OUT!

<PAGE>

                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 4 of 10 Pages


1    NAME OF REPORTING PERSON
     S.S. OR  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
     The Galileo Fund, L.P.
     04-3258283
2    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
     SEE ITEM #5                             (a) [ X ]
                                             (b) [    ]
3    SEC USE ONLY
4    SOURCE OF FUNDS*
     WC
5    CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
     2(d) or 2(e)                            [     ]
6    CITIZENSHIP OR PLACE OF ORGANIZATION
     Delaware

NUMBER OF           7         SOLE VOTING POWER
SHARES                        17,050
BENEFICIALLY        8         SHARED VOTING POWER
OWNED BY
EACH                9         SOLE DISPOSITIVE POWER
REPORTING                     17,050
PERSON WITH         10        SHARED DISPOSITIVE POWER


11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
     17,050
12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
     [     ]
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
     .2%
14   TYPE OF REPORTING PERSON *
     PN
                      *SEE INSTRUCTIONS BEFORE FILLING OUT!

<PAGE>

                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 5 of 10 Pages


1    NAME OF REPORTING PERSON
     S.S. OR  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
     DDJ Galileo, LLC
     04-3304422
2    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
     SEE ITEM #5                             (a) [ X ]
                                             (b) [    ]
3    SEC USE ONLY
4    SOURCE OF FUNDS*
     OO
5    CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
     2(d) or 2(e)                            [     ]
6    CITIZENSHIP OR PLACE OF ORGANIZATION
     Commonwealth of Massachusetts

NUMBER OF           7         SOLE VOTING POWER
SHARES                        474,274
BENEFICIALLY        8         SHARED VOTING POWER
OWNED BY
EACH                9         SOLE DISPOSITIVE POWER
REPORTING                     474,274
PERSON WITH         10        SHARED DISPOSITIVE POWER


11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
     474,274
12   CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
     [     ]
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
     4.5%
14   TYPE OF REPORTING PERSON *
     OO
                      *SEE INSTRUCTIONS BEFORE FILLING OUT!

<PAGE>

                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 6 of 10 Pages


ITEM 1.   SECURITY AND ISSUER:

     This Amendment No. 7 to Schedule13D ("Amendment No. 7") should be read in
conjunction with the Schedule 13D ("the Schedule 13D") dated August 15, 1996,
Amendment No. 1 dated February 25, 1997, Amendment No. 2 dated February 25,
1997, Amendment No. 3 dated November 21, 1997, Amendment No. 4 dated May 7,
1998, Amendment No. 5 dated August 24, 1998 and Amendment No. 6 dated October
30, 1998 (collectively, "Amendment Nos. 1-6") each as filed with the Securities
and Exchange Commission by DDJ Capital Management, LLC, a Massachusetts limited
liability company ("DDJ"), and certain affiliates.  This Amendment No. 6 amends
the Schedule 13D, Amendment Nos. 1-6 only with respect to those items listed
below.  All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto on the Schedule 13D, Amendment Nos. 1-6.

     The filing of this Amendment No. 7 is not, and should not be deemed to be,
an
admission that the Schedule 13D or any Amendment thereto is required to be
filed.

     This statement relates to the common stock, $.01 par value of Hills Stores
Company (the "Company").  The principal executive offices of the Company are
located at 15 Dan Road, Canton, MA  02021.

     As of November 5, 1998, DDJ and the DDJ Affiliates beneficially own less
than 5% of the Shares outstanding and from such date will no longer be subject
to any filing requirements.  This filing speaks as of November 5, 1998 and does
not make any statements with respect to any day following such date.


ITEM 3.   SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION:

     Item 3 is deleted in its entirety and amended as follows:

     The Funds which own or owned Shares purchased an aggregate of 474,274
Shares for cash in the amount of approximately $2,138,734.23 including brokerage
commissions.  All of the 457,224 Shares owned by DDJ Overseas Corp. were
purchased for cash or on margin pursuant to a typical customer margin agreement
with Goldman Sachs & Co. and all of 17,050 Shares owned by The Galileo Fund,
L.P. were purchased for cash.

     Shares purchased and/or sold by the Funds since November 3, 1998 are set
forth on the attached Schedule B.

<PAGE>

                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 7 of 10 Pages


ITEM 5.   INTEREST IN SECURITIES OF ISSUER:

     Item 5 (a) is deleted in its entirety and is amended as follows:

     (a)  DDJ Overseas Corp. owns, and DDJ Galileo, LLC and DDJ beneficially own
as majority shareholder and investment manager, respectively, of DDJ Overseas
Corp., 457,224 Shares, or approximately 4.4% of the outstanding Shares of the
Company.  The Galileo Fund, L.P. owns, and DDJ Galileo, LLC and DDJ beneficially
own, as general partner and investment manager, respectively, of The Galileo
Fund, L.P., 17,050 Shares, or approximately .2% of the outstanding Shares of the
Company.  Accordingly, DDJ, as investment manager to the Funds may be deemed to
beneficially own 474,274 Shares, or approximately 4.5% of the outstanding Shares
of the Company.  Neither DDJ nor any of the DDJ Affiliates and, to the best
knowledge of DDJ and the DDJ Affiliates, none of the persons named in Schedule
A, beneficially own any other Shares.

ITEM 7.   MATERIAL TO BE FILED AS EXHIBITS:


          Not Applicable.

<PAGE>
                                        
                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 8 of 10 Pages


                                   Signature:
                                    ========
                                        
     After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.


DDJ CAPITAL MANAGEMENT, LLC


By:  / s / Wendy Schnipper Clayton
     -------------------------------------------
     Wendy Schnipper Clayton
     Attorney-In-Fact*

*Limited Power of Attorney filed with the SEC on September 3, 1998.


<PAGE>
                                        
                                  SCHEDULE 13D
CUSIP No. 431692102                       Page 9 of 10 Pages

                                        
                                   SCHEDULE A
                                   ===========
                                        
     The name and present principal occupation or employment of each executive
officer and member of DDJ Capital Management, LLC and each director of the DDJ
Affiliates are set forth below.  The business address of each person and the
address of the corporation or organization in which such employment is conducted
is 141 Linden Street, Suite 4, Wellesley, MA 02482-7910, except that the
principal address of DDJ Overseas Corporation, Kepler Overseas Corp., Mr. Austin
and Mr. Hunter is set forth in Item 2.  Mr. Breazzano and Ms. Mencher are U. S.
citizens.  Mr. Austin and Mr. Hunter are Cayman Islands citizens.


NAME                  PRINCIPAL OCCUPATION OR EMPLOYMENT
=====                 =======================================

David J. Breazzano    Principal of DDJ Capital Management, LLC, DDJ Galileo,
                      LLC and DDJ Copernicus, LLC

Judy K. Mencher       Principal of DDJ Capital Management, LLC, DDJ Galileo,
                      LLC, DDJ Copernicus, LLC, Vice President of DDJ Overseas
                      Corporation and Director of Kepler Overseas Corp.
                                        
Michael Austin        Director of DDJ Overseas Corporation, Director of Kepler
                      Overseas Corp.; Corporate Director

Dennis Hunter         Director of Kepler Overseas Corporation; Managing
                      Director of Queensgate Bank


<PAGE>
                                        
                                  SCHEDULE 13D
CUSIP No. 431692102                      Page 10 of 10 Pages
                                        
                                        
                                   SCHEDULE B
                                   ===========

Hills Stores Company
======================

     Set forth below is an itemization of all purchases and sales of Shares of
Common Stock since November 3, 1998.  The transactions were made for cash in
open market transactions.

          TYPE:
          PURCHASE                       AGGREGATE
DATE      OR SALE        SHARES              PRICE



11/3/98    SALE        (50,000)         $67,247.70
11/4/98    SALE       (100,000)        $134,495.41
11/5/98    SALE        (55,600)         $71,715.99





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