Cinema group Ster-Kinekor is confident that it is in a ‘stable’ condition, with current improved attendance levels and a continual boost from the country’s ongoing vaccination rollout and reduced Covid-19 cases.
The group went into business rescue at the end of January 2021.
Business rescue practitioner (BRP) Stefan Smyth says that given positive discussions with key stakeholders to date, this upward trajectory is still expected towards the end of the financial year as it is “supported by a strong ‘slate’ of film content”.
“Attendance at cinemas have recovered to levels prior to the last level 3 lockdown and exceeded these levels in specific opening weekends, such as [that of] James Bond ‘No time to die’, where attendance levels were almost double of what was forecast, within the context of Covid,” Smyth said.
“This recovery assumes allowance for a potential [fourth Covid-19 wave], but not as acutely as wave 3, given the progress to date and the ongoing vaccine rollout.”
Due to funding into the business and now the ongoing generation of cash which has allowed for continued trading while options are assessed, Smyth remains of the view that there are reasonable prospects of rescuing the company.
“The business is generating liquidity. New, quality content is coming on board which is driving attendances up and we are following the larger market trends in [recovery], aided by [the] vaccine roll out,” added Smyth.
“Our exit options to recapitalise the business are underway and on track. We have forecast for a fourth wave and so we are in a position to manage and mitigate the effect of a fourth wave, should it occur. We are focused on the rising trajectory of strong attendance recovery and an exit from business rescue.”
Ster-Kinerkor says it remains committed to its plans to exit business rescue and its positive progress regarding the “front runner” deal.
“We are increasingly focused on options to exit the business and intend to publish a rescue plan as soon as possible. Good progress has been made with the ‘front runner’ deal where due diligence is targeted to be completed within the next two weeks. Other potential interested parties continue to be kept updated of the process,” Smyth noted.
In addition, a term sheet has already been signed by the BRP, in respect of the above proposed deal.
Smyth is set to continue overseeing operation activities in line with his statutory obligations and the decisions that have been taken in line with this pursuit include (but are not limited to):
- Creditor claim assessment and acceptance
- Liquidity assessment and continuous monitoring
- Development of a detailed and ‘fit for purpose’ three-year financial model by site along ith regular and ongoing updates required for any significant changes in the outlook of the expected ‘recovery period’
- Finalisation of detailed strategic and financial assessments of each operating site
- Ongoing discussions with stakeholders in respect of potential exit options from rescue
Further updates to the business rescue process will follow in due course.