JOHANNESBURG (Reuters) – South Africa’s Taste Holdings is in the process of placing its food businesses into voluntary liquidation after a failed attempt to offload its Domino’s Pizza franchise.

Taste’s move to liquidate the business comes after South Africa entered its second recession in two years in the final quarter of last year.

It will see 770 employees lose their jobs, while 55 stores owned by the company have closed, said Taste, whose food businesses own and license Domino’s Pizza franchises in South Africa.

In February last year Taste, which has been facing poor retail sales, estimated it required more than 700 million rand ($42 million) to achieve a positive cash flow and expand its food businesses which also included Starbucks store franchises.

But despite raising 132 million rand via a rights offer, it failed to secure the required investment. In November it said it would sell its Starbucks and Domino’s Pizza franchises in South Africa, retreating from a food industry that has been hit hard by the sluggish local economy, whose woes have been compounded by the global coronavirus outbreak.

However, Taste on Monday said a deal to dispose of its Domino’s franchise business could not be concluded on terms acceptable to all parties.

“Domino’s Pizza LLC was extensively involved in finding a buyer for our licence and approached other franchisees in their global network as potential suitors,” Taste Holdings Chief Executive Duncan Crosson said.

“However, discussions with three master franchise partners, as well as various global suitors, finally collapsed this week, triggering the voluntary liquidation decision.”

It added that it has received no communication on the date of cancellation of the franchising licence, “the group retains the regional franchising licence until further notice”.

Following the liquidation of Taste’s food businesses – Taste Food Franchising Proprietary, Taste Commissary Proprietary and Taste Food Trading 1 Proprietary Ltd – the company will have to fully impair the remaining intercompany loans, with the units valued at about 450 million rand ($27.38 million).

Taste Food Franchising Proprietary owns and licenses Domino’s Pizza franchises in South Africa.

($1 = 16.6449 rand)

(Reporting by Shanima A in Bengaluru and Nqobile Dludla in Johannesburg; Editing by Devika Syamnath and Pravin Char)

This article was first published on Reuters Africa https://af.reuters.com/article/investingNews/idAFKBN21324E-OZABS and is republished with its permission.