Whitehall Agrees to Prentice/Holzman Merger at $1.60 Per Share

In yet another twist in the Whitehall, Newcastle, Prentice saga, Whitehall Jewellers Inc. announced on Thursday that they had reached a merger agreement with Prentice Capital Management, LP and Holtzman Opportunity Fund, L.P. for $1.60 per share.  A $1.50 per share offer from Newcastle had previously been seen as a "Superior Proposal" and had the backing of Whitehall's board of directors.

The merger means that the January 31, 2006 maturity of Whitehall's bridge term loan credit agreement dated October 3, 2005 is being extended for three years. Prentice and Holzman are also making an additional $20 million loan to Whitehall for working capital and general corporate purposes. They are also reinstating $10 million in availability under the credit facility.

The Prentice share purchase offer is expected to begin on or about February 8 and will remain open for a minimum of 20 business days. Any shares not purchased in the offer will be acquired for the same price in cash in a second-step merger.

The special meeting of stockholders that was previously postponed to February 6, 2006 in connection with the company's proxy and that securities purchase agreement has been cancelled.

Whitehall Jewellers, Inc. is a national specialty retailer of fine jewelry, operating 366 stores in 38 states. The Company has announced that it intends to close a number of stores in the near term. The Company operates stores in regional and super regional shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers.