February 16, 2006
Via U.S. Mail
Jean K. FitzSimon
Senior Vice President and General Counsel
Whitehall Jewellers, Inc.
155 North Wacker Drive
Suite 500
Chicago, IL 60606
Re: Whitehall Jewellers, Inc.
Schedule 14D-9
Filed February 13, 2006
SEC File No. 5-46037
Dear Ms. FitzSimon:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects. We welcome
any
questions you may have about our comments or any other aspect of
our
review. Feel free to call us at the telephone numbers listed at
the
end of this letter.
Schedule 14D-9
1. It does not appear that Whitehall Jeweller`s has complied with
Rule
13e-3(d), (e) and (f) as a result of it`s recommendation of the
Offer
made by and the execution of the Agreement and Plan of Merger with
Prentice Capital Management, L.P., et al. See Q&A K.2. in the
Manual
of Publicly Available Telephone Interpretations, Third Supplement,
July 2001, located at www.sec.gov. Accordingly, please file a
Schedule 13E-3 that reflects the disclosure required pursuant to
that
schedule or revise your Schedule 14D-9 to ensure that it addresses
the
disclosure required pursuant to Schedule 13E-3 and, pursuant to
Instruction F of that Schedule, incorporate the disclosure you
provide
in your revised Schedule 14D-9. Please also ensure that you
disseminate this information to your shareholders. We may have
further comments upon receipt of your response.
Item 3. Past Contacts, Transactions, Negotiations and Agreements,
page
3
2. Refer to your discussion under "Other Interests of Certain
Directors and Executive Officers," where you direct readers to the
discussion that appears in your proxy statement regarding the
"change
of control" provisions that will be triggered under Messrs.
Desjardins
and Patinkin`s severance agreements. Revise this discussion to
quantify, both individually and in the aggregate, the change-in-
control payments payable to these officers in connection with this
transaction, pursuant to the terms of the agreements that are
summarized in the proxy statement.
Item 4. The Solicitation or Recommendation, page 6
(b) Background of the Offer; Reasons for Recommendation,
page 6
(i) Background, page 6
3. We note that the Board of Directors concluded not to proceed
further with the financing that was contemplated in March, 2005.
Please revise to explain why not.
4. We note that you had "discussions with potential buyers" after
the
death of Mr. Patinkin. How were these potential buyers put into
contact with you or how you were put into contact with them?
Similarly, explain why they "decided not to present proposals."
5. We note that you and your financial advisors "continued to
contact
various parties about a potential business combination, as well as
other possible financing alternatives" in early 2005. Please
revise
to disclose how discussions proceeded, if at all, with the other
parties and what alternatives were discussed. Similarly, you
mention
that you initiated and engaged in discussions with Prentice, among
others, regarding a proposed bridge loan financing in September
2005.
What happened with the other parties you engaged in discussions
with?
6. Elaborate upon the proposals that were made by Newcastle to
address
what consideration was given to them by the Board. For example,
what
happened with the proposals made by Newcastle on September 7, 12
and
18, 2005?
7. Elaborate upon the Special Committee`s determination that the
"economics of the Prentice offer...were at least somewhat superior
to
that of Newcastle..." Quantify the special committee`s findings,
if
possible. Similarly, please elaborate upon the "relative merits
of
the Prentice Term Sheet and the revised proposal from Newcastle"
that
were discussed on September 29, 2005.
(ii) Reasons for the Recommendation, page 27
8. Please revise to elaborate upon the reasons why the Board
deemed
the offer fair instead of just citing factors that the board
considered before recommending the offer and explain how each
factor
supports or does not support the decision to reject the offer.
For
example, indicating that "the business and financial prospects of
the
Company as an independent company, and the risks and uncertainties
associated with the Company`s financial position" without
disclosing
how these factor assisted the Board in recommending the offer is
of
limited utility to security holders. Please revise.
9. Please expand the second bullet point to explain how the
historical
and recent market prices of Shares contributed to the Board`s
decision
to recommend the offer.
10. We note your indication that Duff & Phelps reviewed and
considered
certain financial projections of Whitehall. Considering the going
private nature of this transaction, any non-public information
used by
Duff & Phelps in formulating its fairness opinion should be
summarized
in the filing. Also, in an appropriate place in this disclosure,
please indicate whether the board reviewed, for accuracy and
completeness, this financial information and whether the board
found
Duff & Phelps`s reliance upon those materials to be reasonable.
11. With respect to the analyses conducted by Duff & Phelps, we
suggest that you take each analysis to the next step. In other
words,
quantify the analyses if possible, such as the Analysis of
Potential
Impact on Senior Credit Facility and Analysis of Proposed
Transaction
Fees. With respect to the analyses for which you have provided a
range, consider providing additional detail disclosing how you
arrived
at that range. Discuss what the range of numbers you disclose
means
and how they impact or relate to the determination that the
transaction is fair.
Annex III
12. We note that the opinion has been addressed "solely for the
Board
of Directors" and the limitation on reliance by shareholders that
this
language implies. Because it is inconsistent with the disclosure
relating to the opinion, the limitation should be deleted or
corrected. Alternatively, disclose the basis for the belief that
shareholders cannot rely on the opinion. Describe any applicable
legal authority addressing the availability of such a potential
defense. In the absence of any applicable legal authority,
disclose
that a court will resolve the availability of such a defense.
Also
disclose that resolution of this issue will have no effect on the
rights and responsibilities of the board of directors of Whitehall
under applicable laws. Further, disclose that the availability of
such a legal defense to either financial advisor would have no
effect
on the rights and responsibilities of the of the company`s board
of
directors under the federal securities laws.
Closing Comments
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the subject company is in possession
of
all facts relating to its disclosure, it is responsible for the
accuracy and adequacy of the disclosures it has made.
In connection with responding to our comments, please
provide, in
writing, a statement from all filing persons acknowledging that:
* the subject company is responsible for the adequacy and accuracy
of
the disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the subject company may not assert staff comments as a defense
in
any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division
of Corporation Finance in our review of your filing or in response
to
our comments on your filing.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Detailed cover letters
greatly facilitate our review. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
If you have any questions regarding our comments, please do
not
hesitate to contact me at (202) 551-3264. You may also reach me
by
facsimile at (202) 772-9203.
Sincerely,
Mara L. Ransom
Special Counsel
Office of Mergers and
Acquisitions
cc via facsimile at 212- 839-5599:
Lori Anne Czepiel, Esq.
Sidley Austin LLP
Whitehall Jewellers, Inc.
February 16, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-3628
DIVISION OF
CORPORATION FINANCE