The COVID-19 pandemic, and the resulting economic constraints, has presented a variety of operational and cash flow challenges affecting many businesses, including Ster-Kincor. A review was carried out to ensure that Steer Kinekor was in financial trouble and that a voluntary business rescue was the best course of action given the financial pressures imposed by the government. Economic shutdown in 2020.
The board of directors, after considering various factors, including the impact of the pandemic, decided that the company should initiate business rescue procedures. As a result, Ster-Kincor entered into business rescue on January 27, 2021. This decision was reached at the right time and allowed Steer-Kinekor to have a grace period while the case was pending. The timing of this decision ensures that the business rescue process begins while Steer-Kincor is still salvageable.
Ster-Kincor, which announced its business rescue plan, received an offer from Blantyre Capital Limited, a British investment firm, and Green Point Specialized Loans, a specialized credit investment management firm headquartered in Cape Town. The business rescue plan was published on February 28, 2022 and approved by the required percentage of creditors and shareholders on March 10, 2022.
Weber Wenzel assisted and advised Ernst & Young business rescue specialist Stefan Smith on all business rescue procedures. The original transaction was valued at R250m and included the refinancing and restructuring of Ster-Kinekor’s debt and the acquisition of 100% of Ster-Kinekor’s shares by Blantyre Capital Limited and Greenpoint Specialized Loans.
The firm assisted in the negotiation and preparation of major transaction documents, attending stakeholder management and negotiating leases for 57 cinema locations across South Africa. There were a number of challenges associated with obtaining approvals from the Competition Commission and the South African Reserve Bank for the transaction, which inevitably led to delays. The Business Rescue team experienced delays in landlord negotiations, due to complex landlord arrangements and negotiations and renegotiations with nearly 20 different landlords in total.
It should be noted that all of the above occurred while Ster-Kincor continued to do business, which it initially did during the ever-changing lockdown regulations, which at one point caused the business to cease entirely. This was exacerbated by insurance-related issues, which added more complexity to the issues already at hand.
The conclusion of the aforementioned transaction facilitated the successful exit of Ster-Kinkorn from business rescue on October 31, 2022, a substantial recovery for the company’s creditors as opposed to a penalty situation, continued employment of employees and refinanced existing capital structures.
The success of this rescue is due to the hard work of the Ernst & Young team, the Steer-Kinecor management team and the legal team, and the timely voluntary initiation of the business rescue proceedings by Steer-Kinecor.
Lara Khan, Ryan Smith, Rainer Nowak, Leigh Lambrecht, Hugo de Villiers, Robert Wilson, Clare-Alice Vertue, Secret Paradigm, Saleem Firfair, Mirren Sharpe, Naledi Mbaba, Navresh Tangur, Iman Said, Nick Robb, Peter Greely and Carla Collette. .
Other advisers on the deal include White & Case and Baker McKenzie, who acted for the investors.