Retail Food Group bounces on locking in financing

RETAIL Food Group shares have bounced back after the embattled franchisor extended the life of $ 150 million worth of debt facilities to 2020.

The move puts to rest speculation over the company’s financial health after its shares dived nearly 50 per cent following a profit warn- ing and allegations it was driving franchisees to the wall by charging them exorbitant fees.

Retail Food, which owns brands including Gloria Jean’s, Michel’s Patisserie, Crust Gourmet Pizza and Donut King said yesterday that its lenders had agreed to extend a $ 100 million facility to January 2020.

They had also agreed to extend a $ 50 million facility to December 2020, the group said. Both facilities were previously set to mature in a year.

The company has also reduced existing five- year debt facilities maturing in December 2020 by $ 25 million, taking the total value of debt facilities from senior lenders – those who take priority in the event a company collapses – to $ 319 million. Shares in Retail Food, which is led by chief executive Tony Alford, rallied on the announcements yesterday, closing 9.1 per cent higher at $ 2.51.

The stock had tumbled to an eight- year low in recent weeks following reports the company had been oppressive in its business practices, charging exorbitant fees to franchis- ees and providing them with insufficient support.

Retail Food denied the reports, but warned shareholders earlier this month that its first- half profit was set to fall by more than a third.

Delivering the profit warning, it partly blamed the negative publicity surrounding the allegations, along with a difficult retail environment.