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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 17, 2000
VALUE CITY DEPARTMENT STORES, INC.
(Exact name of registrant as specified in its charter)
OHIO
(State or other jurisdiction of incorporation)
1-10767 NO. 31-1322832
(Commission File Number) (IRS Employer Identification No.)
3241 WESTERVILLE ROAD, COLUMBUS, OHIO 43224
(Address of principal executive offices) (Zip Code)
(614) 471-4722
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On March 17, 2000, Value City Department Stores, Inc. (the "Company"),
through its wholly-owned subsidiary, Base Acquisition, Inc. ("Base Acquisition")
completed the acquisition of substantially all of the assets and assumed certain
liabilities of Filene's Basement Corp., a Massachusetts corporation, and
Filene's Basement, Inc., a wholly owned subsidiary of Filene's Basement Corp.
(collectively, "Filene's") pursuant to the closing of the asset purchase
agreement, dated February 2, 2000, and previously announced on February 3, 2000.
The press release announcing the closing is included as an exhibit to
this Form 8-K and is incorporated herein by this reference.
The purchase price included cash of $3.5 million paid at closing, $6
million to be paid in three equal annual installments, 403,208 shares of the
Company's common stock with an agreed value of $5.5 million and the assumption
of specified liabilities. The assumed liabilities included the payment of
amounts outstanding under Filene's debtor-in-possession financing facility of
approximately $30.6 million and certain trade payable and other obligations
which will be paid in the ordinary course. The acquisition will be accounted for
as a purchase. Allocation of the purchase price will be determined based on fair
market valuation of the net assets acquired.
The acquisition was funded by cash from operations and a portion of the
proceeds from the Company's $300.0 million Amended and Restated Credit
Agreement, dated as of March 15, 2000 (the "New Bank Facility"). It was
co-underwritten by National City Bank and Bank One Capital Markets, Inc. It has
a three year term ending March 15, 2003, and replaced a $167.5 million facility
that would have matured in May 2001. The New Bank Facility is secured only by a
pledge of the stock of Base Acquisition and the Filene's assets acquired. It
provides for various borrowing rates, currently equal to 200 basis points over
LIBOR.
On March 17, 2000, the Company also closed a $75.0 million Senior
Subordinated Convertible Loan Agreement, dated as of March 15, 2000 (the "Senior
Facility") with Prudential Securities Credit Corp., LLC ("Prudential"), as
lender. The Senior Facility also bears interest at various rates, currently
equal to 250 basis points over LIBOR. The interest rate increases 50 basis
points every 90 days after the first anniversary date of the closing. The Senior
Facility is due in September 2003. However, if the Company has not repaid the
Senior Credit Facility prior to March 17, 2001, from the proceeds of an equity
offering or other subordinated debt acceptable to the lenders under the New Bank
Facility, then after that date Prudential has the right to convert the debt into
stock of the Company at a price equal to 95% of the 20-day average of high and
low sales prices reported on the New York Stock Exchange at the time of
conversion. After that date, Prudential also has the right to require
Schottenstein Stores Corporation ("SSC"), the owner of a majority of the
Company's outstanding stock, to purchase the Senior Facility at par plus accrued
interest, pursuant to the terms of a Put Agreement, dated as of March 15, 2000,
between Prudential and SSC. The Company paid SSC a one time fee of 200 basis
points, or $1.5 million, at closing in consideration for entering into the Put
Agreement.
Both the New Bank Facility and the Senior Facility contain customary,
affirmative and negative covenants, including certain financial covenants.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Not applicable
(b) Pro Forma Financial Information.
Not applicable
(c) Exhibits.
99 Press Release, dated March 21, 2000, entitled "Value
City Announces Completion of Filene's Basement Asset
Acquisition and of an Amended and Restated Credit
Facility."
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VALUE CITY DEPARTMENT STORES, INC.
(Registrant)
By: /s/ Robert M. Wysinski
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Robert M. Wysinski, Senior Vice
President, Chief Financial
Officer, Treasurer And Secretary*
Date: April 6, 2000
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* Mr. Wysinski is the principal financial officer and has been duly authorized
to sign on behalf of the registrant.
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Exhibit 99
VALUE CITY ANNOUNCES COMPLETION OF FILENE'S BASEMENT ASSET
ACQUISITION AND OF AN AMENDED AND RESTATED CREDIT FACILITY
COLUMBUS, Ohio, March 21 /PR Newswire/ -- Value City Department Stores, Inc.
(NYSE: VCD - news) today announced the completion of the Filene's Basement Corp.
asset acquisition, effective March 17, 2000. The assets were acquired by Value
City's wholly owned subsidiary, Base Acquisition Corp., which also assumed
certain Filene's Basement liabilities. Base acquisition has been managing the
assets, since February 2, under an agreement approved by the U. S. Bankruptcy
Court, in Boston, following Filene's Basement's Chapter 11 filing in August of
1999.
Value City, through Base Acquisition, will continue to operate the remaining 14
Filene's Basement stores, but will liquidate the eight remaining Aisle 3 stores.
On April 13th Value City will re-open three former Filene's Basement stores in
the Washington, D. C. area. These stores are located in the National Press
Building (at 14th & "K"), on Connecticut Avenue (near the Mayflower Hotel) and
on Wisconsin Avenue in the Mazza Galleria.
This acquisition was funded with a portion of the proceeds from Value City's
renewed and restated $300.0 million revolving credit facility. This facility has
a three-year term, ending March 15, 2003, bears a current borrowing rate of 200
basis points over LIBOR and replaces a $167.5 million facility that would have
matured in May of 2001. The facility, which also closed on March 17th, was
co-underwritten by National City Bank and Bank One.
Simultaneously, Value City closed a $75.0 million Senior Subordinated
Convertible Loan issued by Prudential Securities Credit Corp., LLC. This loan
has a current coupon equal to 250 basis points over LIBOR and was enhanced by a
purchase agreement, or "Put", from Schottenstein Stores Corp., Value City's
parent company, and for which Schottenstein Stores Corp. was paid a fee of $1.5
million.
As part of the refinancing, VCD retired the remaining $37.5 million balance,
including interest, of its $50.0 million senior unsecured private placement
notes, otherwise due in December of 2003. Further, the terms of the refinancing
continue to subject the company to certain restrictive covenants and performance
tests.
Value City Department Stores, Inc. is a leading off-price retailer, currently
operating 111 full-line department stores in the mid-west, mid- Atlantic and
southeastern U. S. as well as 58 better-branded, off-price DSW Shoe Warehouse
stores in major metropolitan areas throughout the country.
SOURCE: Value City Department Stores, Inc.
