Ster-Kinekor’s business rescue practitioner (BRP) Stefan Smyth says there are reasonable prospects of rescuing South Africa’s largest cinema operator, following progress made on the implementation of its amended business rescue plan and sufficient liquidity for ongoing trading.
Smyth says the company’s June performance was better than in May due to the release and showing of ‘Top Gun Maverick’ which performed better than expected in South Africa. His latest report adds that ‘Jurassic World’ and ‘Dr Strange’ are also boosting monthly cinema attendances.
Ster-Kinekor has been in business rescue since January 2021, after the initial financial fallout from Covid-19-related trade restrictions and a drop in cinema audience numbers.
“Monthly attendees continue their upward trajectory and will be aided by the recent removal of Covid-19 health regulations restricting attendees,” the BRP’s latest report notes.
Smyth says Ster-Kinekor’s liquidity has remained stable and improved marginally on a month-on-month basis since the amended plan was adopted on March 10.
The cinema group’s 14th business rescue report indicated that action being taken in accordance with its business rescue plan includes:
- Finalising drafted transaction documents;
- Reviewing several transaction documents by various affected parties to the agreements;
- Conducting weekly transaction update meetings with Blantyre Capital, Greenpoint Capital and associated legal representatives regarding progress made with the implementation of the transaction;
- Ster-Kinekor’s interactions with investors and the Competition Commission towards a final outcome;
- Approval by the South African Reserve Bank; and
- Finalising amended lease agreements.
“Successful implementation of the business rescue plan remains subject to, inter alia, various transaction CPs (conditions precedent), Competition Commission approval (as applicable) and finalisation of the transaction agreements,” according to the report.
The current transaction’s ‘long stop’ date is 17 August 2022 – the maximum time it would take the CompCom to issue its decision.
“Once the conditions attaching to the deal have been successfully implemented, it is anticipated that dividend payments to creditors will be made shortly thereafter,” the report notes.
Smyth says there is a steady upward trajectory for overall attendances, which reflect an increasing desire for cinema watching together with showing stronger content. However, he indicated that the move to higher load shedding stages may have varying impacts on attendance going forward.
Nondumiso Lehutso is a Moneyweb intern.