South Africa's biggest movie exhibitor, has successfully concluded the business rescue process.
This was announced by Ster Kinekor Business Rescue Practitioner, Stefan Smython Friday.
The transaction, which returns the company to solvency, involved the capital raising of R250 million from the UK based asset manager, Blantyre Capital and from the South African asset manager Greenpoint Capital, and forms the basis of the Business Rescue Plan, (‘The Plan’).
In January 2021, Ster-Kinekor annoucned that cinemas will remain open despite the company having been placed under business rescue.
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.
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 business rescue practitioner said that all the necessary regulatory requirements for the transaction were fulfilled, including approvals from the South African Reserve Bank and the South Africa Competition Commission. Lease agreements have been renegotiated with the landlords which were a material condition precedent for the conclusion of the transaction.
Smyth said, “We are very pleased that we were able to raise the necessary capital to rescue Ster Kinekor. Not only does this investment give the business a solid foundation on which to build its future, it has also meant that some 800 jobs have been retained and a dividend has been paid to creditors as proposed in the accepted plan. Trade creditors will further benefit from on-going trading with the company.”
Creditors include strategic international partners who are vital to the market leading position that Ster Kinekor holds and will assist in this position being maintained and developed further in the next chapter of the company.
Smyth further said, “We are seeing that cinema attendance is picking up since the stellar performance of Top Gun: Maverick, which is expected to continue to improve yet further into the holiday season with eagerly awaited additional films being released like Avatar: The way of water and Black Panther 2. The brand new V&A 13 screen cinema in Cape Town continues to perform well since its launch during Business Rescue and is expected to continue its upward trajectory with the recent addition of the latest technology IMAX plus Kids, Prestige and D-box offering in.
“We thank all the Ster Kinekor employees, creditors and relevant stakeholders and new shareholders whose efforts assisted us in exiting Business Rescue and creating a foundation for its future. Our thanks also goes to our loyal customer following and we look forward to entertaining you with new formats and great new content in the future, ” Smyth went on to state.
BUSINESS REPORT