EXCELLENT! Sink the rich! – S.African cinema group Ster-Kinekor, hit by COVID-19 curbs, files for bankruptcy
JOHANNESBURG (Reuters) – South Africa’s Ster-Kinekor, Africa’s largest cinema group, has filed for voluntary bankruptcy, the firm said on Friday, citing losses due to COVID-19 and related restrictions prohibiting large gatherings in public spaces.
With over 1.4 million cases, South Africa has the continent’s highest number of coronavirus infections.
The country has been in lockdown since March. Restrictions were eased but ramped up again when cases soared following the discovery of a new coronavirus variant suspected of being more infectious.
Business has suffered as consumers were forced to stay home and also faced soaring unemployment.
Ster-Kinekor, which operates 55 commercial cinema complexes in South Africa and seven in neighbouring Namibia, Zambia and Zimbabwe, said in a statement it started voluntary business rescue proceedings on Wednesday.
Business rescue is a local form bankruptcy protection. An independent expert is appointed by the distressed company to take over management with the aim of salvaging the business or achieving an acceptable liquidation.
The cinema group said the various stages of lockdown, curfew, restrictions on gathering and delays in releases of blockbuster films had hit revenues hard.
“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 firm said in a statement.
“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.”
Rival cinema group Nu-Metro, which has around 30% share of the market, has also reported falling revenues.
In 2019, films released in South Africa earned 1.2 billion rand ($79.45 million), according to the National Film and Video Foundation.