Zale Considers Offer from Sun Capital

Zale Corp. (Irving, Texas) is considering a new financing proposal from Sun Capital Partners Inc., as the struggling jewelry retailer looks for a solution to mounting debt problems, according to The Wall Street Journal.

The Boca Raton, Fla.-based private-equity firm would invest $50 to $100 million for preferred stock that could ultimately give it a majority stake in Zale and provide a bridge loan to the jeweler.

In February, Zale hired investment banking advisers Peter J. Solomon Co. to help it find solutions to its cash woes. According to The Journal, a recent filing with the Securities and Exchange Commission reported that the company’s 2010 cash flow projections may not provide sufficient liquidity to meet its operating needs.

Zale’s board of directors rejected an offer last month from Apollo Management LP, which proposed buying a stake in the company, selling Zale's Canadian operations, and inserting a management team at Zale, headed by Robert DiNicola, who served as chief executive of Zale from 1994 to 2002.