Donut King and Gloria Jeans owner Retail Food Group has turned a first-half profit for the first time since 2017 after creditors forgave a $72 million chunk of its debt.

The bruised cafe and bakery franchisor swung to a $14.3 million statutory profit from a $111.1 million loss a year ago in a six-month period that involved an extensive recapitalisation, the signing of a new debt facility, and the continued closure of unprofitable stores.

Shares in the company jumped as much as 10 per cent and were still trading 6.45 per cent higher at 9.9 cents by 1120 AEDT. 

Retail Food Group has endured a horror three years marked by more than $450 million in losses amid wide-ranging reputational and regulatory issues after it was accused of badly mistreating franchisees.

The company behind Pizza Capers and Michel’s Patisserie in October got a last-minute reprieve as the deadline for its previous $260 million loan approached.

Creditors received $118.5 million from a 1.7 billion-share placement, and agreed to write off $71.8 million of the firm’s existing debt as part of the restructuring deal.

Retail Food said its turnaround was evident in Thursday’s results, with underlying earnings of $21.5 million on track with the FY20 guidance of between $42 million and $46 million.

Revenue and income was down 6.5 per cent to $179.5 million as another 73 local outlets and 10 vans were closed, in line with expectations.