Ster-Kinekor has announced that it has commenced voluntary business rescue proceedings with effect from 27 January 2021.
The company said it has been operating under severe restrictions due to the COVID-19 pandemic and subsequent national lockdown, which has incurred significant losses for the cinema chain.
“Up until February 2020, Ster-Kinekor welcomed millions of moviegoers every year to their cinemas,” Ster-Kinekor 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 only permitted to reopen under strict conditions as from the end of August 2020,” it added.
“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 to this, many blockbuster films were rescheduled from their original date and the second wave resulted in further lockdown measures and curfews.
“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 company said.
“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, has been appointed as the cinema’s Business Rescue Practitioner.
Cinemas remain open
Ster-Kinekor said that all cinemas will remain open while the business rescue process is underway.
“For our customers, it is important to note that our cinemas remain open for business,” said Ster-Kinekor acting CEO Motheo Matsau.
“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.
Smyth added that his team would immediately begin consultations with all affected persons and stakeholders as part of the business rescue process.
“We look forward to the support of all stakeholders in this process,” he said.
