DICKSTEIN PARTNERS OFFERS $25 PER SHARE FOR HILLS STORES.NEW YORK--(BUSINESS WIRE)--May 3, 1995--Dickstein Partners today announced that in a letter sent to Michael Bozic, chief executive officer of Hills Stores, it has proposed to acquire pursuant to a merger all of Hills' outstanding shares for $25 per share in cash. The text of the letter is printed below. "Dear Mike: As you are aware Dickstein Partners Inc. manages three investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company which collectively own approximately 10.3% of Hills voting stock Voting stock The shares in a corporation that entitle the shareholder to vote. voting stock Stock for which the holder has the right to vote in the election of directors, in the appointment of auditors, or in other matters brought up at the . We have been keenly observing your efforts to convince the investment community that by spending more than $70 million annually on capital expenditures, Hills will achieve increases in earnings per share that justify valuing Hills as a growth stock. Obviously, either the message has not been communicated or it has not been believed. We seriously question the wisdom, in the existing retail environment, of spending the capital necessary to open twenty new stores a year, particularly when weighed against the alternative of repurchasing Hills' own stock in the marketplace at approximately three times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and when you have not yet gone up against Target Stores, who is likely to be Hills' toughest competition. Notwithstanding the above, we do believe that Hills' existing franchise is a strong one and as a result we are proposing to acquire, pursuant to a merger, all of Hills outstanding shares for $25 per share in cash. Dickstein Partners has retained National Westminster Bank Plc to serve as its financial advisor for this transaction. At this time we are having discussions with NatWest Bank N.A. and National Westminster Bank Plc regarding their arranging the bank debt portion, and assisting in placing the subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". portion of the acquisition financing, respectively. As warranted, we will promptly inform you of further developments regarding these efforts. Dickstein Partners is willing to provide up to one half of the $75 million of equity capital we believe will be required to finance this transaction. We intend to expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex initiate discussions with third parties in order to raise the balance of the equity capital. Depending on the level of interest, we may be able to increase our proposal to materially higher than $25 per share. Toward this end, we request that the Hills board modify its shareholder rights plan to permit us to discuss with other Hills shareholders their interest in contributing equity capital to our proposed transaction without causing a "triggering" of the rights. If we are successful in acquiring Hills, our preference would be to continue to employ existing management. However, we have prepared for the possibility of existing management leaving by retaining Chaim Edelstein, who we would intend to install as Hills' interim Chief Executive Officer while we search for a permanent management team. Mr. Edelstein was formerly chairman of Abraham & Strauss / Jordan Marsh Jordan Marsh was the name of a Boston, Massachusetts-based department store. Founded in 1841 and eventually part of Allied Stores and then Federated Department Stores; in 1996, the last of the Jordan Marsh stores were renamed Macy's. , a division of Federated Connected and treated as one. See federated database and federated directories. Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. . In case the Hills Board chooses to reject our acquisition proposal we are taking the precaution of nominating a slate of directors for election at Hills' upcoming annual meeting. Our nominees are Mr. Edelstein, John Burden, formerly CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Federated Department Stores, and Mark Dickstein Partners, Mark Brodsky, Mark Kaufman, Sam Katz For the mayoral candidate in Philadelphia, see . Samuel (Sam) Michael Katz, OM , BA (born Rehovot, Israel, 1951) is the 42nd mayor of Winnipeg, Manitoba, Canada.[1] He is also an entrepreneur and a member of the Order of Manitoba. and David Brail brail Nautical n. 1. One of several small ropes attached to the leech of a sail for drawing the sail in or up. 2. A small net for drawing fish from a trap or a larger net into a boat. tr.v. of Dickstein Partners. If elected, our nominees would, as soon as practicable, seek to have Jack Reen and yourself added to the Board. Our nominees would seek to have Hills sold to the highest bidder HIGHEST BIDDER, contracts. He who, at an auction, offers the greatest price for the property sold. 2. The highest bidder is entitled to have the article sold at his bid, provided there has been no unfairness on his part. . Subject to obtaining financing and other standard conditions we would be prepared to offer at least $25 per share in cash for Hills in such an auction. NatWest Bank N.A. has also advised us that, subject to certain conditions, it is "highly confident" that it can arrange up to $335 million of new senior secured bank financing which may be required, together with Hills' available cash, to refinance those portions of Hills' existing debt (i.e., the working capital facility and the $160 million of public debt) which could accelerate upon the change of control that will occur if our nominees are elected to the Hills Board. If Hills would allow us access to its non-public information in order to facilitate our due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. review we may be prepared to improve our proposal to materially higher than $25 per share. We await your prompt response. Sincerely, Mark Dickstein" Mark Dickstein, President of Dickstein Partners Inc. commented: "We are committed to seeing that Hills Stores is sold at auction to the highest bidder. Dickstein Partners intends to be a serious bidder in this auction with an offer of at least $25 per share. We believe Hills' existing "growth" strategy of opening twenty new stores a year to be an extremely high risk undertaking in the existing retail environment. We have come to the conclusion that the only way to ensure that the existing value of Hills is not put at risk is to force the sale of the company to either Dickstein Partners or a third party." Dickstein Partners, Inc. is a New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of based investment firm which owns 1,113,459 shares of Hills stock, representing approximately 10.3% of the shares of the company. CONTACT: MacKenzie Partners, Inc. Stanley J. Kay 212/929-5940 |
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