Playing King Of The Hills Stores

BOSTON FINANCIER THOMAS Lee stands to lose as much as $7 million now that raider Mark Dickstein has won control of Lee-led Hills Stores. Dickstein won a proxy fight to replace the department-store chain's seven-member board. Lee's forces conceded defeat June 28, even though the official tally is due July 7.

With Dickstein prevailing, Lee will lose the $250,000 yearly he collects as chairman. But the biggest hit may come from possibly losing thousands of stock rights owned by two investment pools he runs--bought for $20.50 per share and worth almost $7 million by Dickstein's reckoning. Lee aides wouldn't confirm details of his rights position.

The rights can be converted to common gradually over more than 10 years. According to Hills documents, though, the rights "shall terminate and lapse" if the company is sold. But Hills CEO Michael Bozic, a Lee loyalist, says he has a legal interpretation that "those rights do survive."

Lee, who has 7.3% of the chain through his investment vehicles, might offset a rights wipeout by selling his stake to an acquirer. Dickstein plans to pay $27 per share (current Hills price: $24.50) or to auction Hills off to the highest bidder.

Before it's here, it's on the Bloomberg Terminal.