UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
VALUE CITY DEPARTMENT STORES, INC.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
920387 10 7
(CUSIP Number)
Irwin A. Bain, Esq.
Schottenstein Stores Corporation
1800 Moler Road
Columbus, Ohio 43207
614-449-4332
With a copy to:
Robert J. Tannous, Esq.
Porter, Wright, Morris & Arthur LLP
41 South High Street
Columbus, OH 43215
614-227-1953
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 26, 2002
(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(e), (f) or (g), check the following box [ ]
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CUSIP No. 920387 10 7
1. Names of Reporting Person: Schottenstein Stores Corporation
S.S. or I.R.S. Identification No. of Above Individual (optional): N/A
2. Check the Appropriate Box if a Member of a Group:
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds: WC
5. Check Box if Disclosure of legal Proceedings is Required Pursuant to
Items 2(d) or 2(e):
[ ]
6. Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 27,668,852
8. Shared Voting Power: 0
9. Sole Dispositive Power: 27,668,852
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
27,668,852
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
[ ]
13. Percent of Class Represented by Amount in Row (11): 63.6%
14. Type of Reporting Person: CO
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CUSIP No. 920387 10 7
ITEM 1. Security and Issuer
This Schedule 13D relates to the common stock, no par value (the
"Shares"), of Value City Department Stores, Inc., an Ohio corporation (the
"Company"), whose principal executive offices are located at 3241 Westerville
Road, Columbus, Ohio 43224.
ITEM 2. Identity and Background
The corporation filing this statement is Schottenstein Stores
Corporation, a Delaware corporation. The principal business of Schottenstein
Stores Corporation is the holding of retail interests. Schottenstein Stores
Corporation's principal business and offices are located at 1800 Moler Road,
Columbus, Ohio 43207.
During the last five years, Schottenstein Stores Corporation has not
been convicted in a criminal proceeding. During the last five years
Schottenstein Stores Corporation was not a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction resulting in a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activity subject to, federal or state securities laws or finding
any violations with respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration
On June 11, 2002 Schottenstein Stores Corporation and Cerberus
Partners, L.P., a Delaware limited partnership ("Cerberus") entered into an
Amended and Restated Senior Convertible Loan Agreement ("Loan Agreement") with
the Company in the principal amount of $75,000,000. Upon the obtainment of
shareholder approval on September 26, 2002, the Loan Agreement became
convertible at the option of the holder at any time to the extent that any
portion of the loan remains outstanding, at a conversion price of $4.50 per
share, subject to adjustment under certain circumstances. Additionally, pursuant
to a financing agreement (the "Financing Agreement"), dated as of June 11, 2002
by and among the Company, certain subsidiaries of the Company, the lenders from
time to time party thereto, and Schottenstein Stores Corporation, Cerberus and
Schottenstein Stores Corporation made available to the Company two term loans,
each in the aggregate principal amount of $50,000,000. In connection with the
Financing Agreement, on September 26, 2002, the Company issued a warrant to
purchase 1,477,396 Shares (subject to certain conversion price adjustments) to
Schottenstein Stores Corporation. The warrant is exercisable at any time at the
option of the holder thereof until ten years from the date of issuance.
On October 2, 2002, Schottenstein Stores Corporation sold a 6%
participation interest in the Financing Agreement to a third-party. Pursuant to
the terms of the agreement, Schottenstein Stores Corporation transferred 88,644
warrants to the third-party.
ITEM 4. Purpose of Transaction
Schottenstein Stores Corporation acquired the securities referred to in
this filing for investment purposes. Schottenstein Stores Corporation has no
present plans or intentions which
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CUSIP No. 920387 10 7
relate to or would result in any of the transactions required to be described in
Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
(a) Schottenstein Stores Corporation owns 27,668,852 shares of the
Company's common stock, representing 63.8% of the outstanding
shares. This includes 8,333,333 shares of Common Stock
issuable upon the conversion of amounts under the Loan
Agreement in the principal amount of $37,500,000 within 60
days of September 26, 2002 and 1,388,753 shares of common
stock issuable upon the exercise of warrants exercisable
within 60 days of October 2, 2002.
(b) Schottenstein Stores Corporation has sole power to vote and
dispose of 27,668,852 shares. There is no shared power to
vote, dispose, or direct the voting or disposition of shares.
Jay L. Schottenstein is a director and Chief Executive Officer
of Schottenstein Stores Corporation and has power to vote and
dispose of shares of Schottenstein Stores Corporation held by
various trusts.
(c) During the sixty days prior to September 26, 2002, the only
transactions in shares, or securities convertible into,
exercisable for or exchangeable for shares, by Schottenstein
Stores Corporation or any person or entity controlled by it or
any person or entity for which it possesses voting or
investment control over the securities thereof, were the
September 26, 2002 transactions described in this Schedule
13D.
(d) N/A.
(e) N/A.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
In connection with the Loan Agreement, Schottenstein Stores Corporation
entered into Amendment No. 1 to the Amended and Restated Senior Convertible Loan
Agreement and an Amended and Restated Registration Rights Agreement pursuant to
which (i) Schottenstein Stores Corporation, Cerberus, the Company, and certain
other parties amended the Loan Agreement to, among other things, modify the
terms of the Loan Agreement, reflect the purchase and assumption by Cerberus of
50% of Schottenstein Stores Corporation's interest in the Loan Agreement and to
set forth certain other agreements by an among the Company, Schottenstein Stores
Corporation and Cerberus with respect thereto, including (a) the obligation of
Schottenstein Stores Corporation to vote all shares held by it, and take such
other action as may be necessary, so that persons designated by Cerberus are
elected to the board of directors of the Company, when Cerberus makes such
designations in connection with its right to designate two directors of the
Company upon the conversion by Cerberus of the Loan Agreement debt into
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CUSIP No. 920387 10 7
shares, (b) in the event that Cerberus converts all or any portion of the Loan
Agreement into shares, the right of Cerberus to require Schottenstein Stores
Corporation to convert up to an equivalent amount of the Loan Agreement into
shares, (c) certain limitations on the ability of the Company to enter into
certain types of transactions or agreements with Schottenstein Stores
Corporation without the prior written consent of Cerberus, unless Schottenstein
Stores Corporation elects to purchase from Cerberus certain designated
securities of the Company then held by Cerberus, (d) the right of Cerberus to
have certain proposed transactions between the Company and Schottenstein Stores
Corporation reviewed by a designated fairness committee, and (e) limitations on
the ability of the Company to enter into certain transactions with Cerberus
without the prior written consent of Schottenstein Stores Corporation; in each
case as more particularly set forth and described in the Amendment No. 1 to the
Amended and Restated Senior Convertible Loan Agreement incorporated by reference
as Exhibit 1 hereto, and (iii) the Company, Schottenstein Stores Corporation,
and Cerberus agreed to the terms pursuant to which the Company shall register
the shares of the Company issuable upon conversion of the Loan Agreement and the
exercise of the warrant issued pursuant to the Financing Agreement for resale by
the filing of a registration statement with the Securities and Exchange
Commission pursuant to the Securities act of 1933, as amended, as well as
perform various other obligations and agreements related to such registration,
as more particularly set forth and described in the Amended and Restated
Registration Rights Agreement incorporated by reference as Exhibit 2 hereto. The
Loan Agreement is incorporated by reference as Exhibit 3 hereto.
In connection with an additional extension of credit to the Company,
Schottenstein Stores Corporation and Cerberus entered into a Financing Agreement
and agreed to a form of warrant pursuant to which (i) Schottenstein Stores
Corporation and Cerberus made available to the Company two term loans, each in
the aggregate principal amount of $50,000,000, as more particularly set forth
and described in the Financing Agreement incorporated by reference as Exhibit 4
hereto, and (ii) Cerberus, the Company and Schottenstein Stores Corporation
agreed to the form of warrant to purchase shares that will be issued to each of
Schottenstein Stores Corporation and Cerberus in connection with the extension
of credit described in clause (i) above, as more particularly set forth and
described in the Form of Warrant incorporated herein by reference as Exhibit 5
hereto.
The descriptions of the transactions and agreements set forth in this
schedule 13D are qualified in their entirety by reference to the complete
agreements governing such matters, each of which are incorporated by reference
or attached to this Schedule 13D as exhibits pursuant to Item 7.
Except as described herein, no contracts, arrangements, understandings
or similar relationships exist with respect to the securities of the Company
between Schottenstein Stores Corporation and any person or entity.
ITEM 7. Material to Be Filed as Exhibits
The following exhibits are filed with this schedule:
1. Amendment No. 1 to the Amended and Restated Senior Convertible Loan
Agreement, dated as of June 11, 2002 by and among the Company, certain
subsidiaries of the Company, the
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CUSIP No. 920387 10 7
lenders from time to time party thereto, and Schottenstein Stores Corporation,
incorporated by reference to Exhibit 10.3.1 to the Company's Quarterly Report on
Form 10-Q for the period ended May 4, 2002 filed by the Company on June 18,
2002.
2. Amended and Restated Registration Rights Agreement, dated as of June 11,
2002, by and among the Company, Schottenstein Stores Corporation, and Cerberus,
incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the period ended May 4, 2002 filed by the Company on June 18,
2002.
3. Amended and Restated Senior Convertible Loan Agreement, dated as of June 11,
2002, by and among the Company, certain subsidiaries of the Company, the lenders
from time to time party thereto, and Schottenstein Stores Corporation,
incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on
form 10-Q for the period ended May 4, 2002 filed by the Company on June 18,
2002.
4. Financing Agreement, dated as of June 11, 2002, by and among the Company,
certain subsidiaries of the Company, Schottenstein Stores Corporation and the
lenders from time to time party thereto, incorporated by reference to Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the period ended May 4,
2002 filed by the Company on June 18, 2002.
5. Form of Warrant, incorporated by reference to Exhibit 10.5 to the Company's
Quarterly Report on Form 10-Q for the period ended May 4, 2002 filed by the
Company on June 18, 2002.
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.
SCHOTTENSTEIN STORES CORPORATION
DATED: October 7, 2002 By: /s/JAY L. SCHOTTENSTEIN
--------------------------------------
Jay L. Schottenstein, Chairman and CEO