Cinema chain Ster-Kinekor has successfully exited the business rescue process and has returned to solvency.
This was confirmed by the group’s business rescue practitioner (BRP) Stefan Smyth on Friday morning.
The announcement, which is likely to be welcomed by cinema goers and landlords, comes after the company voluntarily entered business rescue on 26 January 2021 after it was impacted by the Covid-19 pandemic and the subsequent hard lockdown.
In a statement issued on Friday, Smyth noted that the transaction involved the capital raising of R250 million from United Kingdom-based asset manager, Blantyre Capital, and from South African asset manager Greenpoint Capital.
The two asset managers lead the business rescue of Ster-Kinekor and will now jointly own the group.
Ster-Kinekor’s BRP says all necessary regulatory requirements for the transaction were fulfilled, including approvals from the South African Reserve Bank and the Competition Commission.
As part of the business rescue process Ster-Kinekor has renegotiated lease agreements with its landlords, a material condition precedent for the conclusion of the transaction.
“We are very pleased that we were able to raise the necessary capital to rescue Ster-Kinekor,” notes Smyth.
“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,” he adds.
Ster-Kinekor says its creditors will assist in maintaining and further developing its “market leading position” moving forward.
Smyth points out that cinema attendance continues to improve with the “stellar performance” of Top Gun: Maverick.
He says that cinema attendance is expected to pick up further into the holiday season when much anticipated films including Avatar: The Way of the Water and Black Panther 2 will be released.
“The brand-new V&A [Waterfront] 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,” he adds.
The end of the business rescue process comes after Ster-Kinekor indicated during the onset of the pandemic that a lack of blockbuster content due to delays from the UK and United States, together with the second national lockdown in December 2020, added further strain to its income-earning operations steam. It noted that this severely affected its ability to pay its debts as and when they were due.
“We thank all the Ster-Kinekor employees, creditors and relevant stakeholders and new stakeholders whose efforts assisted us in exiting business rescue and creating a foundation for its future,” Smyth adds.
“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.”
Nondumiso Lehutso is a Moneyweb intern.