Zale Rejects Apollo’s Proposal, Considers Financing by Sun Capital
March 23, 10
Zale is reportedly considering a financing
deal with Sun Capital
Zale Corp.'s board rejected a private-equity firm's plan to buy a stake in the struggling jewelry retailer that involved a sale of assets, but is seriously considering another less-ambitious financing proposal from Sun Capital Partners Inc, the Wall Street Journal reported Tuesday.
Zale has seen its financial troubles mount in recent weeks. In a March 11 Securities and Exchange Commission filing, the embattled jewelry retailer repeatedly emphasized that it may not have sufficient funds to meet its operating needs.
Zale is reportedly considering an offer from Sun Capital, which proposed investing between $50 million and $100 million for preferred stock that could ultimately give it a majority stake in the company, WSJ reported, citing unnamed “people with knowledge of the deal.” Sun Capital is a private-equity firm based in
Zale’s board voted to reject Apollo Management’s proposal to buy a stake in the jeweler and sell Zale's Canadian operations to raise needed cash to run the business, WSJ added.
Apollo also reportedly offered to purchase Zale's Piercing Pagoda, a chain of mall-based kiosks that Apollo views as a good strategic fit with its Claire Stores chain and had hoped to insert its own management team, headed by former Zale CEO Robert DiNicola, if approved.
Donald Zale, a former Zale chief executive whose father founded the company 86 years ago, told WSJ that the board voted to reject Apollo's plan.
"I know Apollo submitted something in writing, but an independent board member told me they were not presented anything from Apollo in writing," said Zale.