Whitehall’s board urges shareholders to reject Newcastle’s offer

Whitehall Jewellers, Inc. on Tuesday said its directors recommended that shareholders reject an unsolicited offer by Newcastle Partners, L.P. In addition, the board has unanimously reaffirmed its recommendation of the financing deal with Prentice Capital Management, L.P. and Holzman Opportunity Fund, L.P.

“Newcastle’s offer does not address how the company will have adequate senior financing going forward,” Robert L. Baumgardner, Whitehall’s chief executive officer, said in a statement. “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.”

He added, “Newcastle’s 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 the Prentice Financing. Newcastle’s offer does not address how the company can retain the essential support of vendors, which is critical to the availability of senior financing and the company’s operations.”

The company’s stockholder meeting to consider the Prentice Financing’s offer has been scheduled for Jan. 19, 2006. Only stockholders of record as of Dec. 9 will be entitled to vote.