You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Ster-Kinekor enters business rescue

Although theatres will remain open.
Cliffhanger for Ster-Kinekor. Image: Supplied

Ster-Kinekor Theatres, South Africa’s largest cinema chain, has entered business rescue.

In a statement, it said its board decided to enter “voluntary business rescue proceedings with effect from January 27, 2021”.

Stefan Smyth, a partner at EY in the Africa Turnaround and Restructuring Strategy practice, has been appointed as the business rescue practitioner.

The group’s cinemas will remain open as the company reorganises itself.

The group, which runs 55 movie complexes with more than 400 screens and 64 000 seats, was a profitable business until the Covid-19 crisis started early last year.

“Up until February 2020, Ster-Kinekor welcomed millions of moviegoers every year to their cinemas. The business was profitable and highly cash generative, with good prospects of future/ongoing profitability from the pipeline of blockbuster film content that had been scheduled.”

The Covid-19 crisis has since crippled the business as it was not allowed to operate at all for the first five weeks of the hard lockdown starting in late March 2020.

At the end of August, the lockdown restrictions, to an extent, lifted and it was allowed to operate.

“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 reemergence of the virus in the last few weeks of 2020 placed the company in a difficult position.

“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.”

These restrictions along with the lack of content for the next four to five months meant that the business was “heading for further operational and cash flow challenges”.

All of this led the board to view that the “safe harbour that business rescue” provided, would assist it to return to profitability, “once operating restrictions have been lifted and when international film distributions start to flow again”.

The business rescue practitioner will on a temporary basis, supervise the management, affairs and business of the company and will devise, prepare, develop and implement a plan to rescue the company.

“Moviegoers 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 sanitising on arrival and inside the auditoria and mask-wearing as appropriate. Every two seats are kept vacant for social distancing,” noted acting CEO Motheo Matsau.

Please consider contributing as little as R20 in appreciation of our quality independent financial journalism.

AUTHOR PROFILE

COMMENTS   22

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

I really hope they can survive this. I like the big screen.

So do i..

SK is a glorified cafe who just happen to screen movies

I’m convinced their profit lies in the Pop Corn, sweets and Soda they sell at exorbitant prices

But then again, despite that, the outing with the family every so often is worth the money spent

One more great business brought down by these stupid lockdowns(And no, movie streaming is not to blame for this).

How do propose reducing the risk of transmission and mutation, considering that vaccines are least effective against the South African variant, without restrictions on movement?

open up Drive Ins again. Dss much more damage done by lockdown

Ordinarily, I couldn’t care less if a group of complainers decided to kamikaze themselves, but I don’t know if setting the whole world back a year or more by allowing unconstrained transmission and potential further mutation of a strain that vaccines are already less effective against is “more damaging than lockdown” at this point.

Well done ANC. Another capitalistic company going to the wall due to your well planned strategy.
Going to the movies were so colonial in any case ne !!

You would think that there would be an instant value re-evaluation of the landlords portfolios but what they do is try lie through claiming no Loan To Value effect.

No wonder L2D is advertising Sandton City like there is no tomorrow on media.

Millions of viewers ? A friend took my wife there often and on most visits there were 4/6 other folk in the theatre….

They never thought to halve ticket prices to fill seats

Funny, when I too took your wife to the movies, same, few people. Perfect of course

In my local theater they can easily leave 3 seats open between people and the cinema still wouldn’t be full.

Why would business rescue practitioners be better than management ??

Outdated business model.

They’ve been doing exactly the same thing for 80 years with almost no innovation and over the past 2 decades the quality of their product has been getting worse due to hiring unskilled operators of their equipment.

How will they compete with the home cinema?

Sad to see them go but it’s long overdue.

“ How will they compete with the home cinema?”

Spot on comment…

…add To that those cinema seats are not exactly hygienic

A study some years ago in London in the seating at movie theaters found residue of urine, feces, saliva and sweat on the arm rests

Business Rescue will basically mean:

Landlords take a bath on arrears and renegotiate.
Content owners take a bath on arrears and renegotiate.
Banks owed on equipment take a bath and renegotiate.
Employees take a bath on retrenchments.
SARS receives its dues but waives penalties.
Business Rescue Practitioners make out like bandits.

My pet peeves are the smell of popcorn and the sticky floors. My large screen TV and surround sound system in my own home is so much more pleasant. I can set the volume to my liking and pause the movie to make coffee or run to the loo. The snacks are cheaper at home and the commute is much quicker.
The only theatre I am prepared to go to is the Labia. You can enjoy a glass of wine (when Covid rules allow) while you watch the movie and there is a lovely garden to relax in afterwards.

This was so much a part of growing up. I like the idea of cinemas being there a lot more than I actually like going to them. There is nothing worse than sitting through the ads and finally getting to the start of the film, only to realise four minutes later that I am not going to enjoy it!

This is not surprising.
They failed to evolve when times were good, and are now caught with their panties down… So take the shame.

Yes jobs will be lost, but have you ever experienced the service of those entitled workers? No sympathy from me.
IF they want to continue, they should hire capable, intelligent decision makers (and not just be BBBEE compliant) to grow new ways of doing business. Like take offer a streaming platform. I know their are legal issues with the film distributors and production houses, bu hey, if you have savvy negotiators, you can work something out.

Remember, movie houses are just an intermediary to get the work of movie makers to the end-user. This model had the writing on the wall since the 2000s and they’ve made enough money over the years.
Remember what happened with Napster and iTunes…

I am so happy to sit at home and watch movies on my TV, with surround sound, on MY (clean) lounger, eating my home-made (&untainted,unsullied) snacks… With MY family and not noisy uncouth people around me.

Covid-19 and Lockdown are NOT the enemy.
The enemy is a failed, bankrupt country with an inflated government of entitled incompetents.
The US is experiencing hard times, but watch how they will bounce back within months. SA will continue to blame it’s suffering and poor performance for decades on Covid and the lockdown, while the looting will continue.

Cinemas are failing everywhere. Even where they have never heard of the ANC

The US has the Fed that is printing money out of thin air. So the US has an unfair advantage. Bob from Zim tried that tactic to his countries detriment.

You can’t compare any country to the US – well until the fraud is found out and other countries stop using the US dollar for international trading.

I believe China, Russia and others are starting to wake up, so the game might be up for the US (and its dollar).

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles:
Click a Company: