CHICAGO-Whitehall Jewellers Inc. says it has learned that Newcastle Capital Management LP’s potential lender will not move forward with its proposal to finance the replacement of Whitehall’s senior credit facility. Despite the news, Newcastle has initiated an unsolicited tender offer for Whitehall stock conditioned in part on its ability to obtain replacement of, or the consent of Whitehall’s current lenders to assume the company’s existing financing.

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.”

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