Citigroup (NYSE: C) gave Zale, a struggling jewelry retailer, a one month reprieve on a $6 million fee that the New York-based bank hoped to collect in order to cover a shortfall in credit sales required under an existing contract between the two companies.
The bank said that it could end its agreement to handle Zale store credit cards if the payment was not received. Citigroup also said that it will not renew its existing agreement when it expires in March 2011.
Citibank extended the payment deadline until the end of April, according to a Securities and Exchange Commission filing made by Zale on Tuesday.
The struggling jewelry retailer is working with adviser Peter J. Solomon Co. to improve its cash situation, including a potential sale of all or part of the company.
Zale has closed hundreds of its stores during the last two years. The company’s CEO and other executives left in January following a tough holiday season.
