Brian Kazungu, 29/01/2021
The Covid-19 Pandemic has forced Ster-Kinekor Theatres to adopt the voluntary business rescue route in order to rehabilitate the once profitable business whose cash generation has been negatively affected by lockdown measures meant to contain the spread of the virus.
Below is a Press Release detailing circumstances that has necessitated the business rescue option and highlighting the way forward and the prospects of the business in both the short and the long run.
Ster-Kinekor Theatres Press Release
29 January 2021
Ster-Kinekor enters Business Rescue
All Ster-Kinekor cinemas remain open
The board of directors of Ster-Kinekor Theatres Proprietary Limited today announced that the company has commenced voluntary business rescue proceedings as with effect from 27 January 2021 in terms of the Companies Act. Business Rescue aims to facilitate the rehabilitation of a company.
Up until February 2020, Ster-Kinekor welcomed millions of movie goers every year to their cinemas. The business was profitable and highly cash generative, with good prospects of future/ ongoing profitability from the pipeline of blockbuster film content that had been scheduled.
As a result of the Covid-19 pandemic and the consequent economic lockdown instituted by the South African Government at the end of March 2020, all cinemas were required to shut down, and only permitted to reopen under strict conditions as from the end of August 2020. Since then the Company has been operating under various forms of restriction, including curfews and mandatory limits to the number of guests per auditorium. In addition, there has been an impact of the rescheduling of blockbuster film contents from the original date. The second Covid wave hit South Africa and other countries in December 2020, with further lockdown measures and curfews reintroduced across the cinemas.
These factors have meant that Ster-Kinekor has been trading at a loss, as the company continued to incur costs.
The continued lack of content for the next 4-5 months means that the business is heading for further operational and cash flow challenges. The board is of the view that the safe harbour that business rescue provides, in terms of providing a legal moratorium, will assist the business to return to profitability, once operating restrictions have been lifted, when international film distributions start to flow again.
Stefan Smyth, a Partner at EY South Africa, where he leads their Africa Turnaround and Restructuring Strategy practice, has been appointed as the Business Rescue Practitioner.
The Business Rescue Practitioner operates as an independent party, who together with the board and executive team, will oversee the business rescue as defined by Chapter 6 of the Companies Act. The Business Rescue Practitioner will on a temporary basis, supervise the management, affairs and business of the company and will devise, prepare, develop and implement a plan to rescue the company.
Ster-Kinekor cinemas remain open
“For our customers, it is important to note that our cinemas remain open for business. Movie goers can continue to book their movie tickets through our website, App or in-store. All cinemas have instituted strict Covid-19 protocols, which mean temperature checks and hand sanitizing on arrival and inside the auditoria and mask wearing as appropriate. Every two seats are kept vacant for social distancing”, noted Acting CEO Motheo Matsau.
Ster-Kinekor executives and Business Rescue Practitioner teams are engaging with employees, who have been requested to continue with their normal work duties, also under strict Covid -19 health and safety protocols, delivering the exceptional service that customers have come to expect from Ster-Kinekor.
“My team and I will immediately begin consultations with all affected persons and stakeholders and intend to communicate more fully in due course”, noted Smyth.
“We look forward to the support of all stakeholders in this process”, concluded Smyth.
Affected persons can contact the business rescue practitioner via email on firstname.lastname@example.org.
Issued By: Louise Brugman
On Behalf Of: Business Rescue Practitioner of Ster-Kinekor Theatres
Tel: 083 504 1186