But Whitehall's board is recommending that its stockholders not tender their shares to Newcastle, and instead submit proxies authorizing Whitehall to vote in favor of the company's proposals.
"The board has consistently indicated its willingness to consider a binding offer that has a commitment for the refinancing and the other funds needed to close the transaction within the time frame required," says Daniel Levy, Whitehall's chairman of the board. "In view of this development, the board believes that Newcastle's offer is not capable of closing."
In a letter to its shareholders dated Jan. 6, the company contended that Newcastle needs "put up or shut up." The company claims that Newcastle is attempting to do little more than take over the board of directors. Calling Newcastle's tender offer "another in a long series of highly conditional, illusory proposals over the past several months," the board contends that Newcastle's proxy solicitation is an attempt to acquire control without paying for it.
In October 2005, Whitehall entered into a series of financings with Prentice Capital Management and Holtzman Opportunity Fund to improve the company's financial condition and liquidity. The company continues to support this relationship, but says unless Whitehall secures further financing in the next several weeks there is "substantial doubt" whether the company will have sufficient capital to continue operations. In such a case, it is likely that the company may be forced to file for bankruptcy protection.
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