SYDNEY - [AAP] Shares in Retail Food Group (ASX: RFG) have rebounded more than 10 per cent after the embattled franchisor extended the life of $150 million worth of debt facilities to 2020.

The move sets at rest speculation over the company's financial health after its shares dived nearly 50 per cent following a profit warning and allegations it is driving franchisees to the wall by charging them exorbitant fees.

Retail Food Group, which owns brands including Gloria Jean's and Donut King, said its lenders had agreed to extend a $100 million facility to January 2020 and a $50 million facility to December 2020.

Both facilities were previously set to mature in December 2018.

In addition, the company has reduced existing five-year debt facilities maturing in December 2020 by $25 million, taking its total senior debt facilities to $319 million.

The company's shares climbed on the news, and were up 10.4 per cent to $2.54 by 1120 AEDT.

The stock had tumbled to an eight-year low after media reports earlier in December accusing the company of oppressive business practices, including exorbitant fees and a lack of support for its franchisees.

Retail Food Group denied the reports, but warned that its half-year profit was set to fall by more than a third, partly blaming the negative publicity and a tough retail environment for the sales decline.

 

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