Whitehall Jewelers Holdings, Inc., a leading national specialty retailer of fine jewelry, said its wholly owned subsidiary, Whitehall Jewelers, Inc., has acquired the assets and leases of 78 stores from Friedman’s, Inc. and Crescent Jewelers ( a subsidiary of Friedman’s) for approximately $14.3 million.
The Chicago-based specialty jewelry retailer said it is acquiring the inventory, prepaid assets, deposits and other tangible property and it plans to continue to operate substantially all of these retail locations as either Whitehall or Lundstrom stores and said it may acquire consignment goods currently held for sale by Friedman’s, subject to obtaining certain consents.
“We are very pleased to have capitalized on this opportunity, which fits well into a corporate strategy that includes growing the business through acquisitions,” said Edward Dayoob, chairman and chief executive officer of Whitehall. “The acquisition of these assets considerably increases the number of jewelry stores that we will operate and will increase our market share. It also will allow us to strengthen our current Whitehall operations as well as leverage our management team and existing infrastructure, which we expect will result in a more competitive company overall.”
The purchase price, which is subject to adjustment after a physical inventory is completed by a third party, was equal to 63 percent of the aggregate cost value of the inventory. Whitehall said it paid 67 percent of the purchase price at closing, and has delivered an irrevocable standby letter of credit to Friedman’s to secure its obligation to pay the balance.
The Friedman assets were sold in connection with a bankruptcy proceeding concerning Friedman’s in the United States Bankruptcy Court for the District of Delaware. The Bankruptcy Court entered an order approving this sale of assets on April 10.
Whitehall is financing the purchase price for this acquisition through borrowing under its revolving credit facility, which was amended to permit additional borrowings simultaneous with the closing of the asset acquisition, and will be borrowing an additional $5 million from PWJ Lending II LLC, an affiliate of Prentice Capital Management, LP, under the Company’s existing Term Loan Credit Agreement which will be used to reduce its borrowings under the revolving credit facility.
Whitehall currently operates approximately 297 stores in regional and super-regional malls under the names Whitehall and Lundstrom.