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CHICAGO-Just weeks before she was about to commence full-time employment as the Whitehall Jewellers Inc.’s CEO, the company received a letter from Beryl Raff advising that she is resigning all positions. Further, she indicated that she would be returning all compensation paid to her thus far.

According to SEC documents obtained by GSR, Raff was scheduled to receive an initial annual base salary of $500,000. Under the terms of her employment agreement, she would also receive cash payments in the amount of $1.95 million as transition compensation, payable in four equal installments of $487,500 on each of August 12, 2005, February 1, 2006, February 1, 2007 and February 1, 2008. Raff was also to receive an additional transition payment of $15,000 on August 12, 2005.

Raff’s credentials include several esteemed positions, including serving as senior vice president and general merchandise manager of fine jewelry for J.C. Penney Co. since 2001. Previously, Raff was with Zale Corp. for six years, including as its chief executive officer from September 1999 to February 2001 and as chairman from September 2000 until February 2001. Prior to joining Zale in 1994, Raff worked for Macy’s Department Stores, where she held executive jobs with responsibility for Macy’s jewelry business. Raff is a member of the Board of Directors of Jo-Ann Stores Inc.

Raff’s letter comes on the heels of NYSE questions arising from unusual market activity on Tuesday, in which the company saw a 22% decline in its stock value. The company did not respond to the query. According to a Whitehall statement, the company is, however, assessing its legal and other alternatives in light of Raff’s letter. Additionally, it is reviewing its financial situation in light of current and forecasted operating results and management changes.

At this point, the company admits that it needs additional capital to support its operations. To meet those needs, Whitehall execs are evaluating various alternatives, including the raising of additional debt or equity financing. The gem retailer has requested temporary extensions of payment terms from some of its key suppliers in order to manage liquidity and has also slowed its accounts payable schedules.

While the company is “actively engaged in discussing alternatives with its bank lenders and other parties,” it warns that “there is no assurance that the discussions will result in additional financing or that an alternative transaction will be available.” If Whitehall is not able to procure additional financing or otherwise able to obtain additional liquidity, the company says it may be forced to pursue other alternatives, including a restructuring of its obligations.

By the end of Thursday’s trading day, Whitehall shares had plunged 68.26% to close at $1.26.

Whitehall Jewellers Inc. is a national specialty retailer of fine jewelry, operating 388 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.

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