Ster-Kinekor Theatres has received an offer from Blantyre Capital and Greenpoint Capital for a R250 million senior secured debt facility.
The facility will fund future operations, facilitate the exit of business rescue and refinance the existing capital structure, the group’s business rescue practitioner said on Tuesday (1 March).
As part of the transaction, the shares in SKT would be transferred from the existing shareholders to the investors which result in full ownership by Blantyre and Greenpoint Capital of the equity in Ster Kinekor.
“The facility provides the quickest and most efficient manner to exit Ster Kinekor from business rescue and return it to solvency, whilst also seeking to maximise recoveries to pre-business rescue and ongoing trading creditors of the business,” said business rescue practitioner Stefan Smyth.
“If successfully voted on by the creditors, the transaction will provide much-needed security to the 776 employees currently employed at SKT. It will also return the company to solvency and provide a growth platform for SKT, underpinned by a strengthened balance sheet, which should provide the business to regain lost growth during the pandemic and expand where feasible.”
In order for the rescue plan to be successfully adopted, the requisite percentage of 75% of holders of creditors’ voting interests and 50% of independent creditors voting interests must be obtained.
Additional rental documentation needs to be concluded with landlords to finalise the new terms and to the extent necessary approval from the South African Competition Commission or other regulatory approvals.
“If the plan is approved and implemented, the objective to restructure the SKT affairs, business property, debt and equity that maximises the likelihood of the company continuing in existence on a solvent basis, will have been met,” Smyth said.
Ster-Kinekor entered business rescue at the end of January 2021 on the back of the Covid-19 pandemic and prolonged lockdown restrictions.
The group said that up until February 2020, the business was profitable and highly cash generative, with good prospects of future and ongoing profitability from the pipeline of blockbuster film content that had been scheduled.
From a trading perspective, early February 2022 weekly attendance performance appears to have returned to pre-holiday season levels, which were good. Films like Encanto, Scream 5 and Sing 2 remain in the top five films every week, Smyth said.
Led by Spider-Man, these blockbusters are meeting and exceeding their weekly forecasts, with management expecting them to continue to pull in moviegoers ahead of anticipated forecasts.
“With the continued opening up of cinemas and the release of further blockbusters, Smyth is encouraged that Ster Kinekor will regain its entertainment position across South Africa and calls upon creditors to vote in favour of the Plan by 9 March 2022.”