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: Jay L. Schottenstein
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: OO
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: 230,000
8. Shared Voting Power: 29,167,024
9. Sole Dispositive Power: 230,000
10. Shared Dispositive Power: 29,167,024
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
29,397,024
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:
[ ]
13. Percent of Class Represented by Amount in Row (11): 67.5%
14. Type of Reporting Person: IN
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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
(a) Jay L. Schottenstein ("Mr. Schottenstein")
(b) 1800 Moler Road, Columbus, Ohio 43207
(c) Mr. Schottenstein's principal occupation is Chairman of
Schottenstein Stores Corporation, 1800 Moler Road, Columbus,
Ohio 43207
(d) During the last five years Mr. Schottenstein has not been
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors).
(e) During the last five years Mr. Schottenstein has not been a party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in a judgement, 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.
(f) Mr. Schottenstein is a citizen of the United States.
ITEM 3. Source and Amount of Funds or Other Consideration
Mr. 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. 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
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CUSIP No. 920387 10 7
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. Mr. Schottenstein has no present plans or
intentions which 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) Mr. Schottenstein beneficially owns 29,397,024 shares of the
Company's common stock in the aggregate, representing 67.5% of
the outstanding shares. This includes (i) 230,000 shares of
common stock beneficially owned by Mr. Schottenstein
individually (174,000 shares held directly and 56,000 shares
are subject to presently exercisable stock options held by Mr.
Schottenstein); (ii) 27,668,852 shares of the Company's common
stock beneficially owned by Schottenstein Stores Corporation
(Mr. Schottenstein serves as a director and Chief Executive
Officer of Schottenstein Stores Corporation); (iii) 1,312,500
shares of common stock owned by GB Stores, a Pennsylvania
limited partnership (Mr. Schottenstein serves as Chairman and
President of Glosser Brothers Acquisition, Inc., General
Partner of GB Stores, a Pennsylvania limited partnership; Mr.
Schottenstein expressly disclaims beneficial ownership of
these shares); and (iv) 185,672 shares of common stock held by
various charitable foundations for which Mr. Schottenstein
serves as trustee (Mr. Schottenstein expressly disclaims
beneficial ownership of these shares).
(b) Mr. Schottenstein has sole power to vote and dispose of
230,000 shares. Mr. Schottenstein shares the power to vote and
dispose of 29,167,024 shares as follows:
Mr. Schottenstein, as co-trustee of various family charitable
foundations, shares the power to dispose 185,672 shares. Mr.
Schottenstein expressly disclaims beneficial ownership of all
such shares.
Mr. Schottenstein, as Chairman of the Board, President, and a
director of Glosser Brothers Acquisition, Inc., General
Partner of GB Stores, shares the power to vote 1,312,500
shares owned by GB Stores, a Pennsylvania limited partnership.
Mr. Schottenstein expressly disclaims beneficial ownership of
all such shares.
Mr. Schottenstein is a director and Chief Executive Officer of
Schottenstein Stores Corporation and has shared power to vote
and dispose of 27,668,852 shares beneficially owned by
Schottenstein Stores Corporation.
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CUSIP No. 920387 10 7
(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 Mr.
Schottenstein or any person or entity controlled by him or any
person or entity for which he 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
Mr. 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. 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 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
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CUSIP No. 920387 10 7
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 Mr. Schottenstein 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 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.
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CUSIP No. 920387 10 7
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.
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CUSIP No. 920387 10 7
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.
DATED: October 7, 2002 By: /s/JAY L. SCHOTTENSTEIN
-------------------------------
Jay L. Schottenstein