Zale up on report it is deferring payment to Citibank
New York City Shares of Zale Corp. rose after the jewelry retailer said it has reached an agreement with Citigroup's Citibank to defer a $6 million payment until May 31, the Associated Press reported.
The agreement was reported in documents filed with the Securities and Exchange Commission Monday. The deal was brokered Thursday, Zale said in the filing.
Zale owes Citibank $6 million as a penalty for a shortfall in credit sales. The fee was due at the end of March, but Citibank had extended it to the end of April. The latest agreement gives Zale more breathing room as it negotiates with the bank on a new credit-card arrangement.
The company has seen its sales tumble during the recession, hurt by tighter credit. Zale has closed hundreds of stores over the past two years. Its CEO and other executives left in January following a tough holiday season.
Zale is working with adviser Peter J. Solomon Co. on ways to improve its cash situation, including a possible sale of all or part of the company. It has reportedly been in talks with several private-equity firms, although Zale has not confirmed this.