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Zale strengthens on newly closed loan


Dallas Zale Corp. said late Monday it has closed on a new $150 million, five-year senior secured term loan provided by private-equity firm Golden Gate Capital.

In addition to interest and fees on the GGC Loan, GGC will receive a 25% equity stake in Zale Corp., pending required shareholder approval, and two GGC representatives will serve on the company’s board of directors.

Zale said it has also closed on a new bank credit facility (led by Bank of American as administrative agent and General Electric Capital and Wells Fargo Retail Finance as co-borrowing base agents) that amends and extends its existing asset-backed credit facility to provide total commitments of $600 million, including a $100 million seasonal adjustment.

After debt reduction of the existing bank facility, Zale said it expects to have approximately $160 million in debt and available liquidity of approximately $250 million.

Zale also announced that it has reached agreement with TD Financing Services to offer a proprietary credit-card program to its Canadian customers effective July 1, replacing its existing agreement with Citi Cards Canada that expires on June 30.

“The agreements announced today are important steps in positioning Zale for the future,” said Theo Killion, president and interim CEO. “With the completion of our financial restructuring, we will now be able to focus 100% of our time on key merchandising, in-store and marketing initiatives to grow sales and return to profitability.”

Zale announced that Stefan Kaluzny and Peter Morrow have been elected to its board of directors. Kaluzny focuses on several sectors, including multichannel retail, consumer products and restaurants, and currently serves as chairman of the board at Express.

Morrow is a principal at GGC, where he focuses on several sectors, including multichannel retail and consumer products. Simultaneously, Thomas C. Shull and David M. Szymanski have resigned from the board of directors.

In addition, John B. Lowe, Jr., chairman, has advised Zale that he will not run for reelection to the board when his current term as a director expires at the next annual meeting.

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