Ster-Kinekor in business rescue due to ‘economic lockdown’
'The board is of the view that the safe harbour that business rescue provides will assist the business to return to profitability, once operating restrictions have been lifted.'
Cinemas across China have been shut for six months due to the coronavirus. AFP/GREG BAKER
Cinema company Ster-Kinekor announced on Friday that it has began with its commenced voluntary business rescue proceedings in terms of the Companies Act.
In a statement, business rescue practitioner (BRP) of Ster-Kinekor spokesperson, Louise Brugman confirmed that the process took place with effect from Wednesday, 27 January 2021.
Stefan Smyth, who heads EY South Africa’s turnaround and restructuring strategy practice, has been appointed as the BRP.
Brugman noted that the decision to place Ster-Kinekor under business rescue was due to the Covid-19 pandemic and the consequent economic lockdown.
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,” Brugman said on behalf of the company.
She continued to say: “The continued lack of content for the next four-five 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.”
Meanwhile, Acting CEO Motheo Matsau has assured the public that Ster-Kinekor cinemas would 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,” Matsau said.
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