Newcastle Capital Management LP�s potential lender will not proceed with its proposal to finance Newcastle�s replacement of Whitehall�s senior credit facility according to Whitehall Jewellers Inc. In a press release on January 9, Whitehall blamed Newcastle for initiating an unsolicited tender offer for Whitehall stock conditioned in part, on its ability to replace or obtain the consent of Whitehall�s current lenders to assume the company�s existing financing.

Whitehall�s board recommended that its stockholders not tender their shares to Newcastle, but instead submit proxies authorizing Whitehall to vote their shares in favor of Whitehall�s proposals at the special meeting of shareholders on January 19.
"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,� said Daniel Levy, chairman of the Whitehall board. �In view of this development, the board believes that Newcastle�s offer is not capable of closing,� he added.

Investment fund Newcastle Partners LP filed a lawsuit against Whitehall Jewellers Inc., on January 4, claiming the Chicago-based jewelry chain tried to stymie Newcastles takeover efforts, according to a report in Associated Press. In a lawsuit filed in New York, Newcastle accused Whitehalls directors and Prentice Capital Management LP of conspiring to rig a proxy fight over a proposed change in the companys charter, allowing the board to issue more shares and transfer control of Whitehall to Prentice.