CANTON, Mass.--Hills Stores Corp. went on the offensive Wednesday in its attempt to ward off a New York investment company's attempt to gain control of the discount department store's board of directors.
The retailer said it sent a letter to shareholders urging their support of the current board by not giving the investment company, Dickstein & Co. LP, permission to dump four of the current board of eight directors.
The Hills letter, a preliminary consent revocation, also gives shareholders the right to revoke their permission if they had already given Dickstein the go-ahead.
The action is in direct response to Dickstein, which earlier this month, in a move aimed at forcing Hills to buy back 5.5 million shares to increase the value of the outstanding shares, said it sought to replace four directors. Dickstein sent shareholders a letter asking for their support to do so.
Dickstein and affiliated companies own a 9.5 percent stake in Hills and recently got federal approval to purchase up to 50 percent of Hills' shares.
As part of its offensive, Hills also charged Dickstein and its principals with violating federal securities laws. In a suit filed in Federal Court in Boston, Hills is seeking to stop the investment company's consent solicitation. Among other charges, Hills contends Dickstein never intended to purchase up to half of Hills' shares, but only intended to run up Hills' stock price.
Hills, which emerged from Chapter 11 in October, has retained Smith Barney Inc. to investigate Dickstein's buyback proposal. It also signed new employment contracts with six key executives and a senior consultant.
--Fairchild News Service

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