Gottschalks financing falls through, investment and partnership discussions continue

New York, Dec. 19 - Gottschalks Inc. said plans for a $30 million investment by Everbright Development Overseas Ltd. will not go ahead.

But the company is continuing to discuss a possible investment by Everbright along with a strategic business partnership.

The previously announced investment was terminated after the limited due diligence review period, which expired on Dec. 15.

Gottschalks had announced on Nov. 21 a non-binding agreement for a $30 million private placement of common shares and loan with Everbright.

Everbright would have bought $15 million in shares by buying 40 million common shares at $1.80 apiece and provide a $15 million loan to the company.

Everbright would also have received warrants for 60 million shares, which are exercisable at $2.00 for three years, provided the company's shares trade at or above $8.00 per share over any 60 consecutive trading-day period and the company achieves certain performance thresholds.

Everbright would also have received additional warrants for 30 million shares, exercisable at $20.00 for four years.

Gottschalks said it is continuing discussions with Everbright about an investment as well as a strategic business partnership to establish direct sourcing and consignment product sales at Gottschalks and launch a wholesale business.

Those talks are also being held with "another party."

Gottschalks is a Fresno, Calif.-based regional department store chain.

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