The Deal
Sunday, November 8, 
6:31 am

Whitehall an example of a roll-up gone bad

  Share     E-Mail    Discussion    Print Story
whitehall.gifWhitehall Jewelers Holdings Inc. is a painful example of how tough it can be for retailers these days to try and roll up acquisitions.

Continue reading below

Also on Dealscape

The jewelry retailer bought 78 stores of Friedman's Inc. out of that retailer's own bankruptcy just two months ago -- after an on-again, off-again flirtation with Friedman's -- and was still struggling with their integration when Whitehall lapsed into Chapter 11 on Monday.

Chicago-based Whitehall was cleared to acquire the stores for roughly $14.5 million on April 10 and now wants to sell those assets along with all its others in going-out-of-business sales, although it still hopes for a last-second going-concern bid.

"The debtors, like many other retailers in this difficult economic environment, continued to experience significant losses and decreased sales," Whitehall said in its filing with the U.S. Bankruptcy Court for the District of Delaware in Wilmington. Whitehall pointed to the tight capital markets and particularly cited the luxury goods retail section as being hard hit because of a plunge in discretionary consumer spending.

Whitehall was able to attract postpetition financing, however, even if there weren't many places to look. Prepetition lenders Bank of America NA and Wells Fargo Retail Finance LLC are supplying the $80 million revolving debtor-in-possession loan, which will refinance a $125 million prepetition revolver.

Both loans are backed by the twinkling collateral of Whitehall's diamonds, gold, precious and semiprecious jewelry, and watches, which proved to not be such an allure when prepetition lenders already held liens on all the shiny assets. Court papers show third-party lenders were unwilling to supply a DIP because of the liens, the size of the loan, the state of Whitehall's business, the immediacy of its funding need and other reasons.

Whitehall operated 375 retail jewelry outlets under the Whitehall Jewelers and Lundstrom Jewelers brands as of June 23. - Terry Brennan

For more, see the full story from The Daily Deal



Post a comment





The Deal Pipeline

Deal Video


Inside The Deal: Linklaters' Schmidt says how regulators handled Pfizer Inc.'s acquisition of Wyeth is an outlier of how others merger reviews will be conducted.


More video...

Crisis On Wall Street
Technology
Deals of The Decade

Community

Industry Insight

Dealing with frozen bank lending

If your bank is not willing to lend, what can you do as your company continues to seek growth?


Judgment Call

The coming age of the renminbi

The Chinese currency will play an increasingly important role in international commerce and finance.


Industry Insight

Banking on PE investments

Howls of protest greeted the FDIC policy statement, but the financial services industry should get over it.


footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg


©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.