Whitehall Jewel (NYSE:JWL)
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From May 2019 to May 2024
Whitehall Jewellers, Inc. (NYSE:JWL) (the "Company")
announced today that it entered into a series of transactions on
October 3, 2005 designed to significantly improve its financial
condition. The Company has entered into agreements with investment
funds managed by Prentice Capital Management, L.P. and another
investor (collectively, "Prentice") to provide financing to the
Company. The first stage of this financing is a $30 million secured
bridge loan being made today. The bridge loan bears interest at the
rate of 18% per annum and matures as early as December 31, 2005. In
connection with the bridge loan the Company issued 7-year warrants
with an exercise price of $.75 per share to Prentice for 2,792,462
shares of the Company's common stock (i.e., 19.9% of the number of
shares currently outstanding).
The agreements also call for the issuance of $50 million of
secured convertible notes not later than January 31, 2006. Proceeds of
the planned issuance will be used to pay off the bridge loan and
provide additional liquidity for operations. The notes will bear
interest at the rate of 12% per annum, which will be payable in shares
of common stock (valued at $.75 per share) for three years. The
Company generally will have the option to extend the maturity of the
notes for up to two years beyond the current three-year maturity,
during which interest would be paid in cash. The notes will be
convertible into common stock at a conversion rate of $.75 per share.
Both the bridge loan and the convertible notes are being secured by a
lien on substantially all of the Company's assets ranking junior to
the liens securing the Company's bank debt. The issuance of the
convertible notes is subject to a number of conditions, including
shareholder approval of a 1-for-2 reverse stock split, the share
issuances contemplated under the notes, and the election of persons
designated by Prentice to constitute a majority of the Company's board
of directors. Giving effect to an assumed conversion of the notes, the
payment of shares as interest and an exercise of the warrants,
Prentice would own 87% of the Company's common stock.
The Company also announced that it had commenced an arbitration
proceeding relating to Beryl Raff's employment with the Company.
In addition, the Company, its banks and Prentice have entered into
an agreement with key trade vendors who hold more than 90% of the
Company's trade debt. This agreement will facilitate the purchase of
fresh inventory for the holiday season and provide for full payment of
all amounts owed to those vendors over time, secured by a lien on
substantially all of the Company's assets ranking junior to the liens
securing the Company's bank debt and debt to Prentice. Finally, the
Company announced that it also has reached agreement with its banks,
LaSalle, Back Bay and Bank of America, to increase the maximum
borrowings under its credit facility, depending on borrowing base
calculations, by $15 million to $140 million and extending the term of
the facility until 2008.
Whitehall is pleased to announce its renewed partnership with key
vendors and the new arrangement with its banks. The Company sincerely
appreciates their support through this challenging period. Whitehall
looks forward to an outstanding partnership with Prentice Capital,
which has extensive experience in the retail sector.
Jonathan Duskin, a managing director of Prentice Capital, stated:
"Whitehall is a company with great brand equity and a rich history.
With the remarkable support of the Company's key vendors, its banks
and its dedicated employees, Prentice is very excited about the future
of Whitehall Jewellers."
Whitehall Jewellers, Inc. is a national specialty retailer of fine
jewelry, operating 387 stores in 38 states. The Company operates
stores in regional and super regional shopping malls under the names
Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers.
Safe Harbor Statement
This release contains certain forward-looking statements (as such
term is defined in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934) and information
relating to the Company that are based on the current beliefs of
management of the Company as well as assumptions made by and
information currently available to management including statements
related to the markets for our products, general trends and trends in
our operations or financial results, plans, expectations, estimates
and beliefs. In addition, when used in this release, the words
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"predict," "opinion" and similar expressions and their variants, as
they relate to the Company or our management, may identify
forward-looking statements. Such statements reflect our judgment as of
the date of this release with respect to future events, the outcome of
which is subject to certain risks, including the factors described
below, which may have a significant impact on our business, operating
results or financial condition. Investors are cautioned that these
forward-looking statements are inherently uncertain. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary
materially from those described herein. The Company undertakes no
obligation to update forward-looking statements. The following
factors, among others, may impact forward-looking statements contained
in this release: (1) our ability to execute our business strategy and
our continued net losses and declines in comparable store sales; (2)
our ability to manage our liquidity and to obtain adequate financing
on acceptable terms and the effect on us if an event of default were
to occur under any of the Company's financing arrangements; (3) a
change in economic conditions or the financial markets which
negatively impacts the retail sales environment and reduces
discretionary spending on goods such as jewelry; (4) reduced levels of
mall traffic caused by economic or other factors; (5) increased
competition from specialty jewelry retail stores, the Internet and
mass merchant discount stores which may adversely impact our sales and
gross margin; (6) the high degree of fourth quarter seasonality of our
business and the impact on the Company's sales, profitability and
liquidity; (7) the extent and success of our merchandising, marketing
and/or promotional programs; (8) personnel costs and the extent to
which we are able to retain and attract key personnel and disruptions
caused by the loss of key personnel; (9) the availability, terms and
cost of consumer credit; (10) relationships with suppliers including
the timely delivery to the Company of appropriate merchandise on
acceptable payment, delivery and other terms; (11) our ability to
maintain adequate information systems capacity and infrastructure;
(12) our leverage and cost of funds and changes in interest rates that
may increase financing costs; (13) developments relating to the
Securities Purchase Agreement, Notes, Warrants and Registration Rights
Agreement with Prentice, including the impact of any adverse
developments with respect to such agreements, that may require the
Company to seek new financing, for which there can be no assurance of
availability on acceptable terms or at all; (14) our ability to
maintain adequate loss prevention measures; (15) fluctuations in raw
material prices, including diamond, gem and gold prices; (16) the
impact of current or future price reductions on margins and resultant
valuation allowances taken on certain merchandise inventory identified
from time to time as items which would not be part of the Company's
future merchandise presentation as well as alternative methods of
disposition of this merchandise inventory and resulting valuation
allowances taken; (17) developments relating to settlement of the
consolidated Capital Factors actions, the non-prosecution agreement
entered into with the United States Attorney's Office, the SEC
investigation, and shareholder and other civil litigation, including
the impact of such developments on our results of operations and
financial condition and relationship with our lenders or with our
vendors; (18) regulation affecting the industry generally, including
regulation of marketing practices; and (19) the risk factors
identified from time to time in our filings with the SEC.
Additional Information
In connection with Whitehall's solicitation of proxies with
respect to the meeting of shareholders to be called with respect to
the approval of the reverse stock split, share issuances contemplated
under the convertible notes and election of certain directors,
Whitehall will file with the Securities and Exchange Commission (the
"SEC"), and will furnish to shareholders of Whitehall, a proxy
statement. Shareholders are advised to read the proxy statement when
it is finalized and distributed to shareholders, because it will
contain important information. Shareholders will be able to obtain a
free-of-charge copy of the proxy statement (when available) and other
relevant documents filed with the SEC from the SEC's website at
www.sec.gov. Shareholders also will be able to obtain a free-of-charge
copy of the proxy statement and other relevant documents (when
available) by directing a request by mail or telephone to Whitehall
Jewellers, Inc., 155 North Wacker Drive, Suite 500, Chicago, Illinois
60606, Attention: Investor Relations, Telephone: 312/732-6800 or from
Whitehall's website, www.whitehalljewellers.com.
Whitehall and certain of its directors, executive officers and
other members of management and employees may, under the rules of the
SEC, be deemed to be "participants" in the solicitation of proxies
from shareholders of Whitehall in favor of the actions described
above, Information regarding the persons who may be considered
"participants" in the solicitation of proxies will be set forth in
Whitehall's proxy statement when it is filed with the SEC. Information
regarding certain of these persons and their beneficial ownership of
Whitehall common stock as of June 1, 2005 is also set forth the
Schedule 14A filed by Whitehall on June 8, 2005.
For Investor Relations info: investorrelations@whji.com
Internet Website: www.whitehalljewellers.com