SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
WHITEHALL JEWELLERS, INC.
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(Name of Registrant as Specified in Its Charter)
NEWCASTLE PARTNERS, L.P.
NEWCASTLE CAPITAL MANAGEMENT, L.P.
NEWCASTLE CAPITAL GROUP, L.L.C.
JWL ACQUISITION CORP.
MARK E. SCHWARZ
STEVEN J. PULLY
JOHN P. MURRAY
MARK A. FORMAN
CLINTON J. COLEMAN
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
Newcastle Partners, L.P. ("Newcastle"), together with the other
participants named herein, is filing materials contained in this Schedule 14A
with the Securities and Exchange Commission ("SEC") in connection with the
definitive filing with the SEC of a proxy statement and accompanying proxy card
to be used to solicit votes against proposals of Whitehall Jewellers, Inc. (the
"Company") relating to a pending financing transaction between the Company and
investment funds managed by Prentice Capital Management, L.P. and Holtzman
Opportunity Fund, L.P. and for the election of its slate of director nominees at
a special meeting of stockholders scheduled for January 19, 2006.
Item 1: On January 9, 2006, Newcastle issued the following press
release.
PRESS RELEASE
CONTACTS:
Daniel H. Burch (212)-929-5748
Jeanne M. Carr (212)-929-5916
MacKenzie Partners, Inc.
FOR IMMEDIATE RELEASE:
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NEWCASTLE PARTNERS ELIMINATES FINANCING CONTINGENCY
AND CALLS ON BOARD TO NEGOTIATE WITH NEWCASTLE IN GOOD FAITH
DALLAS, TX - JANUARY 9, 2006 -- Today, Newcastle Partners, L.P.
announced that it has eliminated the financing contingency from its tender offer
to purchase all of the outstanding shares of Whitehall Jewellers, Inc. (Pink
Sheets: JWLR) for $1.50 per share in cash. With the removal of this condition,
all of the conditions to the offer are now truly in the control of Whitehall's
Board of Directors.
Newcastle Partners, through its whole-owned subsidiary, commenced a
cash tender offer to purchase all of the outstanding shares of Whitehall on
December 5, 2005. On January 4, 2006, Newcastle announced that it was increasing
its offer price to $1.50 per share, extending the termination date of the offer
to 5:00 pm, New York City time on Friday, January 27, 2006 and eliminating or
amending a number of conditions to its offer. Newcastle now believes that the
majority of the remaining conditions are now in the control of the Board of
Directors of Whitehall.
Newcastle also announced that it had received a letter from Daniel
Levy, on behalf of the Whitehall Board, detailing a list of self-serving reasons
why Newcastle's offer is not a superior proposal. Newcastle believes that
Whitehall has continued to look for reasons, excuses and smokescreens for why
the Newcastle offer cannot proceed, when the Whitehall Board should be working
to maximize value for stockholders.
Mark Schwarz, the managing member of Newcastle Partners, stated: "We
believe our offer provides Whitehall's shareholders with a clearly superior
alternative to the Prentice transaction. With the elimination of the financing
contingency condition from our offer, we do not understand how the Board can
justify selling up to 87% of Whitehall to Prentice for as little as $.75 per
share rather than allowing stockholders to receive $1.50 per share now."
Newcastle informed Whitehall's Board of Directors of the removal of
this condition, and responded to Mr. Levy's letter, by letter today, as follows:
"Newcastle Partners, L.P.
January 9, 2006
VIA FACSIMILE AND FEDERAL EXPRESS
Richard Berkowitz
Daniel Levy
Norman Patinkin
Sanford Shkolnik
c/o Board of Directors
Whitehall Jewellers, Inc.
155 North Wacker Drive
Chicago, Illinois 60606
Gentlemen:
We are disappointed, although not surprised based on the Whitehall
Board's actions to date, at the Press Release issued by the Board today
regarding the letter from one of Newcastle Partners, L.P.'s potential lenders.
We are equally disappointed with the subsequent letter to Newcastle received
from Daniel Levy, on behalf of the Whitehall Board. The potential lender had
determined not to proceed at the present time because Newcastle was forced to
pursue litigation against Whitehall and Whitehall's Board was continuing to urge
stockholders to reject Newcastle's offer. While we believe the Whitehall Board's
description of the letter to be misleading, we do not believe it is productive
to engage in discussions regarding this point at the present time. What should
be clear however is that this lender remains prepared to provide a senior credit
facility in a negotiated transaction between Newcastle and Whitehall. Most
importantly, Whitehall's Board has consistently used the refinancing of the
Senior Credit Facility condition, among other things, as a smokescreen for not
permitting Whitehall's stockholders from proceeding with the superior Newcastle
transaction.
Newcastle remains committed to proceeding with its offer. In that
light, to remove yet another Whitehall manufactured impediment, NEWCASTLE HEREBY
ELIMINATES THE REFINANCING OF THE SENIOR FACILITY AS A CONDITION TO ITS OFFER,
AND IS PREPARED TO FINANCE THE TRANSACTION WITH ITS CASH ON HAND. With the
removal of this condition, all of the conditions to Newcastle's offer are truly
in the control of Whitehall's Board of Directors.
Mr. Levy's letter is another example of Whitehall's Board of Directors
manufacturing reasons for why not to proceed with Newcastle, as opposed to
acting in the best interests of Whitehall's stockholders. At this point, our
offer is clear, NEWCASTLE WILL PROVIDE ALL NECESSARY CASH TO FUND BOTH THE
ACQUISITION AND WHITEHALL'S FINANCING NEEDS PENDING CLOSING OF THE MERGER AS
DETAILED BELOW. For the record, Newcastle has on hand sufficient cash to repay
all of Whitehall's outstanding borrowings and to pay Whitehall's stockholders a
substantial premium to market with no closing conditions that are not in the
Whitehall Board's control. Newcastle submitted a draft merger agreement and
bridge loan financing agreement to Whitehall late last week, the terms of which
Newcastle was requested to negotiate in full. Newcastle's counsel thereafter
contacted Whitehall's counsel on Friday to suggest that the agreements be
negotiated over the weekend. Whitehall's response was a letter from Dan Levy on
Monday detailing the reasons why Whitehall would not proceed. We again call on
the Whitehall Board to immediately work for the benefit of all stockholders,
rather than working over the weekend to prepare a letter to Newcastle detailing
why the Newcastle transaction won't work, thereby depriving stockholders of a
more favorable transaction. Based upon the removal of the financing condition,
Newcastle has provided a proposal which is both (i) more favorable from a
financial point of view to the Company, its stockholders and its creditors and
(ii) has no conditions outside of the control of the board of directors. Let us
look at the latest excuses that Whitehall takes to not meet with and negotiate a
definitive agreement with us, but rather finds a better use of its time
preparing and sending self-serving letters in opposition to our proposal.
1. "Newcastle Condition that the Senior Credit Facility be
Refinanced Cannot Be Satisfied." Newcastle has removed this
condition. Newcastle hereby represents and is prepared to
provide Whitehall that it has cash on hand sufficient to pay
off Whitehall's senior credit facility in full by January 31,
2006, pay off the Back Bay subordinated facility and pay off
the $30 million Prentice Bridge Loan.
2. "Newcastle has not provided information about funding for its
condition that the $30 million Prentice Bridge Loan Be
Refinanced with Board Approval." Newcastle will use cash on
hand to repay the $30 million Prentice Bridge Loan (including
prepayment penalties). Newcastle has provided a draft of a
replacement credit facility for the Prentice Bridge Loan which
would be provided simultaneously with the signing of a
definitive merger agreement on substantially the same economic
terms as the existing Prentice facility, without an equity
compensation feature like Prentice had. Newcastle remains
prepared to discuss any and all changes to the documents
reasonably requested by Whitehall.
3. "Newcastle has not detailed its Plans with respect to the
Venders." On the contrary, Newcastle has stated that it is
willing to fulfill all obligations under the existing
agreement between the Company and its trade vendors. Based
upon discussions with representatives of Newcastle, Newcastle
believes the trade vendors will continue to honor their
agreement. Newcastle can only question why the Whitehall Board
thinks that the trade vendors would prefer the Prentice
transaction, where their deferred payments are subordinate to
the Back Bay and Prentice loans, to a recapitalized Whitehall
under Newcastle, where those loans do not exist and the trade
is senior to Newcastle's equity which replaces those
facilities. Further, our offer is not subject to the agreement
with the trade remaining in effect.
4. "Newcastle has not detailed its Plan with respect to Required
Working Capital." This excuse by the Board is nonsensical.
Newcastle is buying 100% of Whitehall's stock and as a result
of the removal of financing condition will fund the repayment
of all of the Company's outstanding borrowings and its
obligations to the trade. Suffice it to say, Newcastle as a
result will fund between $130 million to $150 million of new
cash to Whitehall. How Newcastle deals with working capital
post closing is irrelevant.
5. "Newcastle has not committed to an escrow during the Prentice
Match Periods." Newcastle is prepared to review and negotiate
an appropriate agreement to provide Whitehall with the
necessary assurance that its cash on hand will remain in place
during the notice period to Prentice. While Newcastle believes
a cash escrow arrangement is unnecessary, Newcastle is
prepared to review an escrow arrangement. What Newcastle is
not prepared to do is to continue to guess what Whitehall's
directors and its many lawyers will require on this point.
What Whitehall's Board should be concerned with is working
with Newcastle to implement a procedure that allows all of
Whitehall's constituents to benefit from a superior proposal
rather than be forced to accept an inferior offer from
Prentice by creating artificial obstacles.
As we have continually said, we do not believe the Prentice financing
proposal is in Whitehall's or its stockholders' best interests. We would welcome
the opportunity to proceed forward and discuss any reasonable changes to the
draft merger agreement and bridge financing agreements we previously submitted
to Whitehall. Our offer is fully capable of being promptly consummated. We call
on the Whitehall Board to stop using smear tactics and misstatements in its
public filings, and to carefully review our offer and negotiate with us in good
faith. We are confident that under such a circumstance a definitive merger
agreement can be promptly negotiated and executed with the tender offer closed
by January 31, 2006. Under these circumstances, we do not understand how the
Board can justify selling up to 87% of Whitehall to Prentice for as little as
$.75 per share rather than allowing stockholders to receive $1.50 per share now
from our offer.
Newcastle and its representatives stand ready to meet with the Board of
Directors and its representatives as soon as possible. Please contact the
undersigned at (214) 661-7474 or our counsel, Steven Wolosky (212-451-2333) or
Adam Finerman (212-451-2289), to discuss any questions the Board might have.
Very truly yours,
NEWCASTLE PARTNERS, L.P.
By: Newcastle Capital Management, L.P.,
its general partner
By: Newcastle Capital Group, L.L.C.,
its general partner
By:
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Mark Schwarz, Managing Member
cc: Mr. Robert L. Baumgardner,
Chief Executive Officer"
The solicitation and the offer to buy Whitehall Jewellers, Inc.'s
common stock is only made pursuant to the Offer to Purchase and related
materials that Newcastle Partners, L.P. and JWL Acquisition Corp. filed on
December 5, 2005, as amended December 22, 2005, January 4, 2006, January 5, 2006
and January 9, 2006. Stockholders should read the Offer to Purchase and related
materials carefully because they contain important information, including the
terms and conditions of the offer. Stockholders can obtain the Offer to Purchase
and related materials free at the SEC's website at www.sec.gov, from MacKenzie
Partners, the Information Agent for the offer, or from Newcastle Partners, L.P.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Newcastle Partners, L.P. ("Newcastle"), together with the other Participants (as
defined below), has made a definitive filing with the SEC of a proxy statement
(the "Definitive Proxy Statement") and accompanying proxy card to be used to
solicit votes against proposals of Whitehall Jewellers, Inc. (the "Company")
relating to a pending financing transaction between the Company and investment
funds managed by Prentice Capital Management, L.P. and Holtzman Opportunity
Fund, L.P. and for the election of its slate of director nominees at a special
meeting of stockholders scheduled for January 19, 2006 (the "Special Meeting").
NEWCASTLE ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT
AND OTHER PROXY MATERIALS RELATING TO THE SPECIAL MEETING AS THEY BECOME
AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE
AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION,
THE PARTICIPANTS IN THE SOLICITATION WILL PROVIDE COPIES OF THE PROXY MATERIALS,
WITHOUT CHARGE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR, MACKENZIE PARTNERS, INC., AT ITS TOLL-FREE
NUMBER: (800) 322-2885 OR BY E-MAIL AT: PROXY@MACKENZIEPARTNERS.COM.
THE PARTICIPANTS IN THE PROXY SOLICITATION ARE NEWCASTLE PARTNERS, L.P.,
NEWCASTLE CAPITAL MANAGEMENT, L.P., NEWCASTLE CAPITAL GROUP, L.L.C, JWL
ACQUISITION CORP., MARK E. SCHWARZ, STEVEN J. PULLY, JOHN P. MURRAY, MARK A.
FORMAN AND CLINTON J. COLEMAN (THE "PARTICIPANTS"). INFORMATION REGARDING THE
PARTICIPANTS AND THEIR DIRECT OR INDIRECT INTERESTS IS AVAILABLE IN THE SCHEDULE
13D JOINTLY FILED WITH THE SEC ON APRIL 19, 2005, AS SUBSEQUENTLY AMENDED ON
JULY 7, 2005, OCTOBER 27, 2005, NOVEMBER 30, 2005, DECEMBER 5, 2005, DECEMBER
14, 2005, DECEMBER 29, 2005, JANUARY 5, 2006 AND JANUARY 9, 2006 AND THE
DEFINITIVE PROXY STATEMENT.
