IRVING, Texas ( TheStreet) -- Zale ( ZLC), the struggling jewelry retailer, rebuffed Apollo Management's offer to buy a stake in the company that involved a sale of assets, but is seriously mulling another financing proposal from Sun Capital Partners, the Wall Street Journal reports.

Apollo Management recently submitted a proposal to buy a stake in Zale and sell the jeweler's Canadian operations to raise much-needed cash to run the business, sources told the newspaper.

The proposal also included buying the company's Piercing Pagoda mall-based jewelry kiosks and inserting a management team at Zale, headed by Robert DiNicola, who served as CEO from 1994 to 2002, the Journal says. Late last week, the board voted to reject Apollo's plan, people close to the company told the Journal, but the reasons behind the move weren't clear.

Sun Capital has proposed investing between $50 million and $100 million for preferred stock that could ultimately give it a majority stake in Zale. It also agreed to provide a bridge loan to the jeweler while it attempts to refinance debt, which includes $600 million in a revolving credit facility, the Journal reports.

Meanwhile, Zale, in a recent filing with the Securities and Exchange Commissioner, said it must decide whether to pay Citigroup a $6 million penalty for not having enough credit card sales or risk an end in three months to the deal that provides financing for 40% of its U.S. purchases.

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