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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. 2)*
and
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
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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 30, 1998
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
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* Constituting the Final Amendment to Schedule 14D-1.
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<PAGE>
SCHEDULE 14D-1
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CUSIP NOS. 431692102 (COMMON STOCK) PAGE 2 OF 7 PAGES
431692201 (PREFERRED STOCK)
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
HSC ACQUISITION CORP.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,570,575* SHARES OF COMMON STOCK (INCLUDING 153,086 SHARES TENDERED BY
MEANS OF GUARANTEED DELIVERY) AND 554,483 SHARES OF PREFERRED STOCK
(INCLUDING 106 SHARES TENDERED BY MEANS OF GUARANTEED DELIVERY)
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
N/A |_|
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
84.6%* OF SHARES OF COMMON STOCK AND 65.3% OF SHARES OF PREFERRED STOCK
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10 TYPE OF REPORTING PERSON
CO
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- ---------------------------
*. Includes 2,073,753 shares of common stock, par value $.01 per share (the
"Common Stock"), of Hills Stores Company, a Delaware corporation (the
"Company") issuable pursuant to a Stock Option Agreement dated as of
November 12, 1998, between the Company and Ames Department Stores, Inc.,
a Delaware corporation ("Parent"), and owner of all capital stock of HSC
Acquisition Corp., a Delaware corporation, pursuant to which the Company
granted to Parent an option (the "Stock Option") to purchase up to
2,073,753 shares of Common Stock or such other number of shares of common
stock of the Company as equals 19.9% of the Company's issued and
outstanding shares of its common stock at the time of the exercise of the
Stock Option. The Stock Option Agreement is described more fully in
Section 11 of the Offer to Purchase, dated November 18, 1998.
<PAGE>
SCHEDULE 14D-1
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CUSIP NOS. 431692102 (COMMON STOCK) PAGE 3 OF 7 PAGES
431692201 (PREFERRED STOCK)
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
AMES DEPARTMENT STORES, INC.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,570,575* SHARES OF COMMON STOCK (INCLUDING 153,086 SHARES TENDERED BY
MEANS OF GUARANTEED DELIVERY) AND 554,483 SHARES OF PREFERRED STOCK
(INCLUDING 106 SHARES TENDERED BY MEANS OF GUARANTEED DELIVERY)
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
N/A |_|
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
84.6%* OF SHARES OF COMMON STOCK AND 65.3% OF SHARES OF PREFERRED STOCK
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10 TYPE OF REPORTING PERSON
CO
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*. The footnote on page 2 is incorporated by reference herein.
<PAGE>
TENDER OFFER
This Amendment No. 2 amends and supplements the Tender Offer Statement on
Schedule 14D-1 filed on November 18, 1998, as amended, relating to the offer by
HSC Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of Ames Department Stores, Inc. ("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 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The Offer expired at 12:00 Midnight, Eastern Time, on Wednesday,
December 30, 1998. Based on information provided by the Depositary,
approximately 8,496,822 Common Shares (including 153,086 Common Shares tendered
by means of guaranteed delivery) or 81.5% of the Common Shares outstanding, and
approximately 554,483 Preferred Shares (including 106 Preferred Shares tendered
by guaranteed delivery) or 65.3% of the Preferred Shares outstanding (or an
aggregate of 80.3% of the total Shares outstanding), were validly tendered
pursuant to the Offer. Purchaser has accepted for payment and has notified the
Depositary to promptly pay for the tendered and accepted Shares, in accordance
with the terms and subject to the conditions set forth in the Offer to Purchase
and the related Letter of Transmittal. In addition, pursuant to the Stock Option
Agreement, Parent has the right to purchase up to 2,073,753 Common Shares, or
such other number of Common Shares as equals 19.9% of the issued and outstanding
Common Shares at the time of exercise of the Stock Option. Pursuant to the
Merger Agreement, and effective upon the consummation of the Offer, seven of the
nine members of the Board of Directors of the Company resigned as directors and
three persons designated by Parent were appointed as members of such Board of
Directors.
In accordance with the Merger Agreement, it is currently anticipated that
a meeting of the Company's stockholders will be held as soon as practicable for
the purpose of approving the Merger Agreement and the merger (the "Merger") of
Purchaser with and into the Company. Under the DGCL and pursuant to the
Certificate of Incorporation, the affirmative vote of the holders of a majority
of outstanding Common Shares and Preferred Shares, voting together as a single
class, is the only vote of any class or series of the Company's capital stock
that would be necessary to approve the Merger Agreement and the Merger at a
meeting of the Company's stockholders. Because Purchaser owns approximately
80.3% of the Shares entitled to vote at such meeting, it will have the power to
effect the Merger without the approval of any other stockholder of the Company.
However, Purchaser or an affiliate of Purchaser may seek to acquire additional
Shares through open market purchases, privately negotiated transactions, or
otherwise. In the event that Purchaser acquires in the aggregate at least 90% of
the outstanding Common Shares and at least 90% of the outstanding Preferred
Shares pursuant to the Offer or otherwise, then Parent may effect a short-form
merger of
4
<PAGE>
Purchaser with and into the Company pursuant to Section 253 of the DGCL without
any further approval of the Company Board or the stockholders of the Company.
Pursuant to the Merger Agreement, in connection with the Merger, the
Company will become a wholly owned subsidiary of Parent and each issued and
outstanding Share (other than Shares owned by Parent, Purchaser, the Company or
any direct or indirect wholly-owned subsidiary of Parent or of the Company, or
by stockholders who have properly exercised their dissenter's rights under
Delaware law) will be converted into the right to receive $1.50 per Share, in
cash, without interest, plus a DCCR.
A copy of Parent's press release, dated December 31, 1998, announcing the
expiration of the Offer and acceptance for payment of the Shares tendered
pursuant thereto and its plans to effect promptly a merger of Purchaser with and
into the Company is attached hereto as Exhibit (a)(11), and the complete text
thereof is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated November 18, 1998.*
(a)(2) Letter of Transmittal.*
(a)(3) Notice of Guaranteed Delivery.*
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.*
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.*
(a)(7) Text of Press Release, dated November 12, 1998, issued by Parent and
the Company.*
(a)(8) Text of Press Release, dated November 18, 1998, issued by Parent.*
(a)(9) Form of Summary Advertisement, dated November 18, 1998.*
(a)(10) Text of Press Release, dated December 16, 1998, issued by Parent.*
(a)(11) Text of Press Release, dated December 31, 1998, issued by Parent.
(b)(1) Commitment Letter from BankAmerica Business Credit, Inc., dated
November 6, 1998.*
(c)(1) Agreement and Plan of Merger, dated as of November 12, 1998, among
Parent, Purchaser, and the Company.*
(c)(2) Stock Option Agreement, dated as of November 12, 1998, by and between
Parent and the Company.*
(c)(3) Confidentiality Agreement, dated as of August 21, 1998, by and between
Purchaser and the Company.*
(c)(4) Text of letter, dated December 16, 1998, from the Company to Parent
and Purchaser.*
(d) None.
(e) Not Applicable.
(f) None.
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* Previously Filed
5
<PAGE>
SIGNATURES
After due inquiry and to the best of each of the undersigned's knowledge
and belief, the Undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: January 5, 1999
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
HSC ACQUISITION CORP.
By: /s/ David H. Lissy
-------------------------------------
Name: David H. Lissy
Title: Vice President-Secretary
6
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
(a)(1) - Offer to Purchase, dated November 18, 1998*...................
(a)(2) - Letter of Transmittal*........................................
(a)(3) - Notice of Guaranteed Delivery*................................
(a)(4) - Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees*.................................
(a)(5) - Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees*....................
(a)(6) - Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9*................................
(a)(7) - Text of Press Release, dated November 12, 1998, issued
by Parent and the Company*....................................
(a)(8) - Text of Press Release, dated November 18, 1998, issued
by Parent*....................................................
(a)(9) - Form of Summary Advertisement, dated November 18, 1998*.......
(a)(10) - Text of Press Release, dated December 16, 1998, issued
by Parent*....................................................
(a)(11) - Text of Press Release, dated December 31, 1998, issued
by Parent.....................................................
(b)(1) - Commitment Letter from BankAmerica Business Credit, Inc.,
dated November 6, 1998*.......................................
(c)(1) - Agreement and Plan of Merger, dated as of November 12,
1998, among Parent, Purchaser, and the Company*...............
(c)(2) - Stock Option Agreement, dated as of November 12, 1998,
by and between Parent and the Company*........................
(c)(3) - Confidentiality Agreement, dated as of August 21, 1998,
by and between Purchaser and the Company*.....................
(c)(4) - Text of letter, dated December 16, 1998, from the
Company to Parent and Purchaser*..............................
(d) - None..........................................................
(e) - Not Applicable................................................
(f) - None..........................................................
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* Previously Filed
7
FOR IMMEDIATE RELEASE
AMES DEPARTMENT STORES, INC. COMPLETES TENDER
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FOR HILLS STORES COMPANY
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Rocky Hill, Conn., December 31, 1998 -- Ames Department Stores, Inc.
(NASDAQ:AMES), the nation's largest regional discount retailer, announced today
that it has acquired an aggregate of approximately 80 percent of the common and
preferred stock of Hills Stores Company through its tender offer, which expired
yesterday.
Ames also announced that approximately 74 percent of the $195 million
outstanding principal amounts of Hills' 12 1/2 percent Senior Notes due 2003
were tendered and accepted for payment in the Ames tender offer for the Notes,
which also expired yesterday. The previously announced 85 percent minimum
condition for the note tender was waived.
Ames expects to consummate the acquisition of the remaining shares of common and
preferred stock of Hills by merger following compliance with applicable
securities law requirements.
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:
Lynn Riemer
Director of Corporate Communications
Ames Department Stores, Inc.
(860) 257-5317
Owen Blicksilver
Managing Director
Dewe Rogerson Inc.
212-419-4283
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