The step comes after failed attempts to sell the business unit due to an “increasingly challenging environment”
The operator of the Domino’s Pizza brand in Russia, Türkiye, Azerbaijan, and Georgia announced on Monday that it will file for bankruptcy for its Russian business unit and exit the sanctions-hit country.
In December, the multinational chain said it was considering various options for its operations in Russia, including a divestment. Like numerous other international businesses, its exit comes amid pressure from Ukraine-related Western sanctions.
Domino’s Russian unit, DPRussia, is the country’s third-largest pizza delivery company and operates about 142 outlets.
“With the increasingly challenging environment, DPRussia’s immediate holding company is now compelled to take this step, which will bring about the termination of the attempted sale process of DPRussia as a going concern and, inevitably, the group’s presence in Russia,” DP Eurasia said in a statement.
The company added that the Russian unit’s external debt of around 520 million rubles ($5.56 million) had been settled by DP Eurasia’s Turkish subsidiary, reducing the group’s gross debt and resulting in a gross cash balance of 162 million lira ($5.97 million).
Several corporate food giants such as McDonald’s retained the right to buy back shares in their Russian subsidiaries after exiting the country. Apart from the buyback option, companies have also attempted to keep a share of their capital or a place on the board.
However, Moscow has adopted a wide range of regulations, making the exit of foreign firms or their potential return more complicated. Since December, the authorities have obliged foreign companies to sell their assets to Russian buyers at a 50% discount and have charged them an exit fee of at least 10% of the transaction value.
In July, the government tightened the exit rules, banning the transfer of funds abroad from the sale of businesses if the company is owned by an individual or parent from Russia’s list of ‘unfriendly’ nations. Foreign firms are also barred from including buyback options on the sale of their Russian assets for two or more years.
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August 21, 2023 at 07:42PM