- Ster-Kinekor announced that it opted to commence with a business rescue process this week, to return to profitability.
- Cinemas have been left reeling by the Covid-19 pandemic’s disruption to international box office releases and lockdown restrictions of gatherings.
- The process will be led by partner at EY South Africa Stefan Smyth while movie goers will still be able to attend screenings.
Ster-Kinekor announced on Friday afternoon that its board of directors opted to commence with voluntary business rescue on Wednesday, following what has been a hellish year for cinemas in the midst of the Covid-19 pandemic and national lockdown.
The business rescue process, aimed at rehabilitating the business and returning to profitability, will be led by partner at EY South Africa Stefan Smyth. Movie goers will still be able to attend screenings during the business rescue process, according to a Ster-Kinekor statement.
The statement comes in the middle of the second wave of the pandemic in South Africa and level three of the national lockdown. Ongoing restrictions on public gatherings were always bound to hurt the bottom lines of cinemas.
In a statement released on Friday, Ster-Kinekor said business was booming for the movie theatre chain right up until February of 2020. The statement said Ster-Kinekor was "profitable, highly cash generative" and had "good prospects of ongoing profitability from the pipeline of blockbusters".
"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," the statement said.
The statement said the restriction of public gatherings domestically and the rescheduling of blockbuster films internationally as a result of the pandemic both had a significant impact on attendance by viewers and the rollout of content for the silver screen.
"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 statement said.
The statement said business rescue would provide safe harbour to Ster-Kinekor and assist the business to return to profitability as soon as restrictions have been lifted and international film distributions start to flow again.