Whitehall Board Rejects Newcastle Offer, Interested in Prentice

Whitehall Jewellers’ board of directors is recommending shareholders reject Newcastle Partners’ new offer, while renewing its recommendation of the financing and related transactions with Prentice Capital Management.

The company said the board reviewed Newcastle’s offer with its financial and legal advisors, adding that both of the board’s recommendations were unanimous.

“Newcastle's offer does not address how the Company will have adequate senior financing going forward. In fact, the offer has a condition relating to senior financing, but Newcastle has not demonstrated that it has any binding commitment or other agreement for such financing,” said CEO Robert Baumgardner in a release.

The offer “does not address how the company will procure additional financing required to remain financially viable such as the $20 million of additional funding that would be provided by the Prentice Financing,” he added.

As a third reason for rejecting the offer, Baumgardner said Newcastle did not say how the company will retain vendors support, “critical to the availability of senior financing and the company's operations.”

Whitehall Jewellers received a $1.20 per share buyout bid from Newcastle in November. Newcastle already holds a 14.46 percent stake in the ailing company. The first buyout offer, made in October, offered $1.10 per share.

On October 4, the company announced its entry into agreements with funds managed by Prentice Capital Management, L.P. and Holtzman Opportunity Fund, L.P. Under the Prentice Agreements, the company has the right, subject to certain conditions, to consider alternative proposals.