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Credit Card Applications » News » Other » New Agreement between Citibank and Zale

New Agreement between Citibank and Zale

May 14, 2010
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Zale Corp. And Citibank may have a brand new agreement by the month's end. This comes following the negotiations happening between the jewellery retailer based in Irving and the bank reaching an agreement to end their old one in September which was for ten years and replace it with a new one.

Citibank has also extended the time for collecting from Zale a payment in 6 million as their sales was below the amount agreed upon in the contract said chief financial officer for Zale, Matt Appel. He also said that this indicates a serious effort to reach a mutually beneficial agreement between both parties.

Citibank is also expecting Zale to pay the $6 million shortfall in which case, it would extend the running contract until March. This is the second extension granted by Citibank. Zale is also negotiating on the Canadian front with other banks as Citibank will be terminating its credit card agreement with the jeweller by June 30.

As on 31st Jan Zale has been running with heavy debts amounting to $368 million and with $67 million available to run its $500 million credit agreement backed by assets it cannot run its business for the whole year.

This is in the midst of Zale's fast approaching deadline in May for announcing a possible solution to the credit problems faced.

Last year also the revenue was less falling down to 17 percent. However it posted a quarterly profit by doing some clever expense cuts and a tax benefit amounting to $17 million. Zale has however had to close down 187 stores and kiosks in 200. It also runs mall based chains as Peoples and Mappins in Canada and also under Gordon's in US along with its namesake brand. The Piercing Pagoda kiosk chain is also operated by Zale Corp.

Following the issues at hand Zale has hired Peter J. Solomon, an investment banking firm in New York to help obtain atleast $100 million.

Speculators say Golden Gate Capital and TPG, both equity firms are being reviewed by Zale's board of directors as final bidders.

J Jill group Inc. and Eddie Bauer Holdings are both Golden Gate retail investments. It has also bought Cantina and On the Border Mexican Grill from Brinker International Inc., a Dallas based company.

TPG another equity firm along with Warburg Pincus owns Neiman Marcus Inc., a Dallas based firm.

Golden Gate as part of recapitalization has invested $170 million dollars in Dallas based door and window manufacturer Atrium Cos; faced with chapter 11 bankruptcy.

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