In what a spokeswoman called “a very positive development,”
Zale Corp. announced April 25 it had extended the most senior piece of its bank
credit line to April 30, 2014. It was originally scheduled to expire this August.

“This shows the banks believe a turnaround is taking hold,”
says spokeswoman Roxane Barry.

The facility’s commitments remain unchanged at $650 million,
including a $108 million seasonal adjustment. 
The agreement also brings in a new lender, Ally Bank.

“We are particularly pleased that half of the new funding is
from a financial institution not previously part of our bank facility,” said Matt Appel, executive vice president and
chief financial officer, in a statement.

The announcement does not impact the company’s $150
million loan from Golden Gate Capital. 
However Barry adds: “As we go forward, if we have more positive quarters,
the expectation is that we can eventually replace that high-cost Golden Gate
debt.”

One observer in the investment community agreed this was a
positive move.

“One of the things that was conspicuous about the deal last year is that this
facility only went to August,” the observer said. “Now, that they got this
thing done, the next thing on the checklist is figuring out what to do with
Golden Gate and Piercing Pagoda.”

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