Ster-Kinekor enters business rescue, but cinemas remain open
JOHANNESBURG, January 30 (ANA) - All Ster-Kinekor cinemas will remain open despite the company having been placed under business rescue this week.
The board of directors of Ster-Kinekor Theatres Proprietary Limited on Friday announced that the company had commenced voluntary business rescue proceedings with effect from January 27 in terms of the Companies Act.
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.
"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," a statement issued on his behalf said.
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 were only permitted to reopen under strict conditions as of the end of August 2020.
Since then the company had been operating under various forms of restriction, including curfews and mandatory limits to the number of guests per auditorium. In addition, there had been the impact of the rescheduling of blockbuster film content from the original date. The second coronavirus wave hit South Africa and other countries in December 2020, with further lockdown measures and curfews reintroduced across the cinemas.
These factors meant that Ster-Kinekor had been trading at a loss as the company continued to incur costs. The continued lack of content for the next 4-5 months meant that the business was heading for further operational and cash flow problems.
"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," the statement said.
The business rescue practitioner operates as an independent party, who together with the board and executive team, would oversee the business rescue as defined by chapter 6 of the Companies Act. The business rescue practitioner would, on a temporary basis, supervise the management, affairs, and business of the company and would devise, prepare, develop, and implement a plan to rescue the company.
“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 sanitising on arrival and inside the auditoria and mask wearing as appropriate. Every two seats are kept vacant for social distancing," acting CEO Motheo Matsau said in the statement.
Ster-Kinekor executives and the business rescue practitioner teams were engaging with employees, who had been requested to continue with their normal work duties, also under strict Covid -19 health and safety protocols.
“My team and I will immediately begin consultations with all affected persons and stakeholders and intend to communicate more fully in due course. We look forward to the support of all stakeholders in this process,” Smyth said.
Ster-Kinekor Theatres is the largest movie exhibitor on the African continent. The company operates 55 commercial cinema complexes in South Africa, with seven international sites based in Namibia, Zambia, and Zimbabwe.
- African News Agency (ANA), editing by Jacques Keet